MEDIANEWS GROUP’s OCEAN OF RED INK PUTS THE CROSSHAIRS ON THE BERKSHIRE EAGLE, or “What is the Boring Broadsheet to Do?” THE PLANET HAS THE ANSWERS
BY DAN VALENTI
In Septmber 1995 Denver-based Media News Group purchased the storied Berkshire Eagle from the Miller family. A bad combination of a faulty real estate purchase and switch over to color presses left the Millers deep in debt. They had leveraged almost $18 million at a time when the market was going south. That’s when MediaNews swept in, dictated terms, and bought at firesale prices.
The first thing the chain did was fire every last Eagle employee. Those wanting to remain faced pay cuts up to 40 percent only after the indignity of reapplying for their jobs, possibly to be turned away. The paper did its best under trying circumstances. They had some editorial talent carry over from the Miller days (Joel Librizzi, Ruth and Milt Bass), cultivated new talent (Jack Dew), and had to good sense to appoint a credible chief editor to run the newsroom (David Scribner).
Scribner soon faced the problem that all MediaNews editorial managers run up against: How do you run a credible news operation when the business side sucks everything out of news and funnels it back to Denver? An inevitable war of attrition set in against high journalistic standards, a conflict the Boring Broadsheet could not win. Fast forward to 2011. What do the Eagle’s diminishing number of readers see: an anorexic paper that recycles press releases from city hall, prints randomly selected wire stories, and consistently ignores the real news.
William Dean Singleton, MediaNews Group chairman and CEO, needed every cent from the Eagle he could get. Singleton had the reputation as the industry’s most heavily-leveraged media mogul. In building up the chain under the holding company of Affiliated Media Inc., Singleton acquired almost 60 dailies and more than 100 non-daily newspapers by pyramiding debt, buying distressed properties at pennies on the dollar, bleeding them for cost-out, them flipping for profit.
The risky business plan worked for awhile, until 2008. It was the mortgage crisis of that year in miniature, when greed masked as speculation, when speculation hid as investment, and when investment was built upon essentially worthless paper. When the market tanked, MediaNews ran into alarming problems. The same thing that had happened to the Eagle in the early 1990s happened to MediaNews Group — It became unable to service its enormous debt load.
By 2010, Singleton’s business plan had run up $930 million in debt against assets that were a mere fraction of that large number. All of a sudden, the media mogul and his lieutenants were drowning in an ocean of red ink that the dropping circulation of newspapers like the Berkshire Eagle could not evaporate by one drop. In fact, the Eagle and most of its kin only made the ocean grow larger.
The perfect storm continued with the rise of personal computers, interactive and technologically sophisticated mobile internet devices, and new, inexpensive platforms for delivering media and content. Newspapers started to see the writing on the wall. It spelled: “Doom.”
Around the bend, off of a sudden came that red sea. Though the sun looked over the mountain’s rim, it bathed its yellow rays upon the internet and made, as the poet Robert Browning might put it, “straight a path of gold for him.” The rumors that started last year about the Eagle being for sale stemmed directly from Singelton’s precarious debt position.
The Newhouse chain at one point looked into a purchase but backed off once their bean counters got a look at the the Eagle’s books. The ledgers scared them clear out of town. The Hearst and Scudder families reportedly expressed mild interest, the way a group of vultures might circle Don Knotts dying in the desert. There wasn’t enough meat there to bother.
The Eagle got beat at their own game by the Internet. They put up a web site for the “free” online paper but haven’t invested in the site, which remains stodgy and woefully dated. The essence of a complicated social trend, i.e., the downfall of the newspaper, that is the Internet began draining the Eagle’s ad revenue at an alarming rate.
That’s not what Singleton wanted to hear, of course, and it’s made for a rough year at 75 S. Church St. It also explains why the paper would bring in an editorial empty suit as its top editor, a sports guy who plainly is in over his head in directing a newsroom that needs more than anything else a leader who has news in his blood, a person willing to fight for his troops with the front office and not be corporate’s enabler. Yes, that’s one tough job, but isn’t that the point?
TO BE CONTINUED. LOVE TO ALL TILL THEN.
In January 2010, MediaNews filed in court for Chapter 11 bankruptcy protection. It filed what it called a “prepackaged plan” worked out in advance with creditors. The idea was that this would make the court doings move more quickly. MediaNews’ action marked the 13th newspaper publisher to file for bankruptcy in the prior 13 months.