MediaNews Group plans to restructure its debt, reported to be about $1 billion, in the first three months of next year. That’s the headline from a 4-page memo CEO Dean Singleton (right) and President Jody Lodovic (left) have sent their employees nationwide. And that’s obviously good news for the owner of several Bay Area newspapers including the Mercury News and Contra Costa Times. Will that mean an end to furloughs? Not so fast, they say. “The Company must see clear evidence of improving economic conditions before such decisions are made. We will keep all options open, including reinstatement on a phased approach.” Below is the text of the memo. (Thank you to those who e-mailed us, you know who you are!):
- TO: MNG/MNGi Employees
- FROM: Dean Singleton and Jody Lodovic
- SUBJECT: 2009 is almost gone. Thanks for getting us through it!
- First and foremost, let us thank you for your hard work and dedication during this difficult economic period, a time particularly hard for the newspaper industry. You have been asked to do more with less, and we truly appreciate your efforts and sacrifices.
- While the past three years have been particularly challenging (especially 2009) for MediaNews Group and the newspaper industry, we are proud of your performance and many accomplishments, and we are confident that our strategies will lead us and the industry into a bright future. Let us highlight just a few of your/our accomplishments during this challenging period:
- • Advertising — While advertising revenue has been severely challenged, your performance has been near the top of the industry throughout 2009. For the three-month period ended September, for example, your advertising revenue declined 24% as compared to the industry decline of 28.2%. This performance was consistent with the first two quarters. Furthermore, in markets such as St. Paul, the Bay Area, and Los Angeles, we significantly outperformed other newspapers in the regions.
We have made significant progress in transforming our sales organization and have invested in new tools, such as iShare, training and laptops, to position us to meet the ever changing needs of our advertisers. Your success has been noted and is appreciated.
- • Circulation — Your circulation performance is second to none. In the September ABC 6-month report, MediaNews Group had circulation growth even as the industry lost 10.6%. That increase included The Denver Post growth which came after the demise of its primary competitor, The Rocky Mountain News. However, not including Denver, the company’s loss was 4.8%, still the best performance in the industry by far. This performance moved the company from number 4 to number 2, as measured by circulation.
- • News — Our circulation performance would be impossible if not for the excellent news products each of your newspapers produce. There is not enough space here to comment on all the awards your newsrooms have won this year. While we, like others, have had no choice but to trim news staffs, we have tried to consolidate infrastructure to preserve reporting staff when possible. And with hard work and creativity, your newsrooms have re-invented themselves and continue to do excellent journalism. We are so proud of our outstanding editors and their dedicated staffs.
- And speaking of creativity, we are awed by the outstanding work you are doing online. As our traffic continues to soar, our audiences between print and online have never been larger.
• Operations — The year has brought major plant consolidation for many of our newspapers. Added to creative circulation and route consolidation and new ways of doing production, you have achieved efficiencies we never would have dreamed possible while improving the service you provide.
• Denver — We completed a significant restructuring in Denver after the closing of the Rocky Mountain News. While we were sad to see the Rocky go, we are excited about our future in Denver. The performance of the Denver Post during this transition has been nothing short of remarkable as we held most of the Rocky unduplicated circulation and operating performance continues to improve each month.
• Internet Strategy — A group from your newspapers met offsite last April to chart our digital course for the future. Since that time, several task forces have been working to put more meat on the bones. We are now in position to start implementing the strategies we developed. Step one is to install a new content management system that will serve as the foundation for our strategies. Upon completion, we will begin building new local.com and news.com websites in each of our markets. Our largest markets should be up and running by mid-2010. In addition, we are working to implement strategies to protect and monetize our content. New pay models will begin testing in some markets early next year.
• Mobile — Mobile (and other portable reading devices) represents a significant opportunity for us. Accordingly, we have engaged outside mobile expertise to help us develop our mobile strategies. We have completed phase 1 of the process and hope to have a fully mapped out mobile strategy early in 2010.
MediaNews Group is committed to making the necessary investments to implement its strategies. However, these investments must be made prudently and cautiously given the challenges we face to improve our balance sheet. As always, we must balance the need to move quickly with resources and capital available.
MediaNews, like many other newspaper companies, entered the current downturn with a reasonable level of debt based on historical measures. However, the current newspaper industry environment bears no resemblance to any previous newspaper downturn, and the magnitude of the structural and cyclical decline was simply unimaginable just a few years ago. Consequently, we, along with much of the industry, have more debt than is comfortable.
We have been working closely with our banks to restructure our debt and position MediaNews Group to execute its strategies and lead our newspapers into a positive future. Yes, we believe newspapers have a bright future! We are near agreement on the terms of a restructuring plan which we expect will be completed toward the end of the first quarter of 2010. Upon completion, MediaNews expects to have a manageable level of debt, and we look forward to working with each of you to take your newspapers into a changing but exciting future.
As we near the end of 2009, you may have questions regarding annual reviews, 401(k) contributions, health care benefits, and future furloughs, etc. While it is our hope and desire to reinstate Company-wide salary reviews and 401(k) contributions as soon as possible and avoid future furloughs, it is premature to make those decisions. The Company must see clear evidence of improving economic conditions before such decisions are made. We will keep all options open, including reinstatement on a phased approach. As you can imagine, these are not easy decisions. Our highest priority is positioning MediaNews Group for a bright future and preserving/protecting its most valuable asset — its employees. We will let you know as soon as those decisions are made.
Let us say again how much we appreciate your efforts. Your contributions are vital to the future success of MediaNews Group and the newspapers it publishes. We’re probably biased, but we believe you all comprise the best newspaper team in the business. We’re proud to work with you. Let us wish you and your family happy and healthy holidays and a happy new year!