MediaNews Group, the Bay Area’s largest publisher of daily newspapers, is disputing newspaper industry analyst Emile Courtney’s assertion that the chain is in danger of default. If anything, MediaNews contends, its debt situation should improve this year, not get worse.
MediaNews issued its retort through a story in its flagship paper, The Denver Post. The story quotes company president Jody Lodovic (pictured at left) as saying MediaNews will weather this storm as it has survived in the past. “This is not our first rodeo,” Lodovic said. The quote sounds oddly like something that would be said by Lodovic’s boss, chief executive Dean Singleton (right), owner of four cattle ranches.
As the Press Club Web site reported April 11, MediaNews has stopped releasing its financial information to the public. Yet the Post article provided some insight into the highly leveraged MediaNews empire:
- MediaNews reported carrying $645.7 million under its senior debt facilities as of Feb. 14. Its banks require that debt not exceed 6.75 times the cash flow the company generates.
That ratio ratchets down to 6.5 on June 30 and 6.25 on Sept. 30.
Publishers can pursue several strategies to avoid a default, including selling off assets, raising outside capital or cutting costs to boost their cash flow.
MediaNews has increased ad staff companywide in a “feet on the street” sales strategy, has reduced page counts to save on newsprint and is sharing editorial content with other publications.
Meanwhile, a commentator for the online newspaper the Minnesota Post (which is competing with Singleton’s St. Paul newspaper), says yesterday’s brink-of-default report about MediaNews is old news. However, commentator David Brauer says he’s concerned about the company’s decision to stop reporting its financials to the public:
- I asked Courtney if Standard & Poors could continue to follow the company as closely, given the circumstances. He said his firm will still rate MediaNews debt, but “we may not likely publish financial statements to the same extent as in the past, which often happens when we have a public rating for a company with private numbers.”
In other words, if bankruptcy comes, the public may have less warning.
(Photo credit: MediaNews Web site)