Journal Register bankruptcy gets second-day analysis
The Journal Register Company announced it was declaring bankruptcy Wednesday. Digital First Media operates JRC; its CEO, John Paton, said in the announcement that a subsidiary of JRC's current owners has made a bid for the company, so possibly when the company emerges from bankruptcy it will enjoy the same management, just with less debt. It's not an easy business move to get one's arms around. Here are a couple of explainers.
• JRC editor Matt DeRienzo calls the bankruptcy a "big, pain-in-the-ass distraction in the short-term" but is optimistic: The company "remains very profitable on an operating basis," he writes, and newsroom spending is "flat" company-wide. "That’s a remarkable achievement in the environment and economy of today," DeRienzo writes, "and I’d challenge you to find another major newspaper company that hasn’t cut newsroom spending over that time period." The Pension Benefit Guarantee Corp., DeRienzo writes, will see that JRC employees won't lose their retirement.
• Steve Buttry, DFM's director of community engagement, says he has "confidence that [Paton] is leading our company where it needs to go."
I won’t pretend that I liked learning that my company was back in bankruptcy court. But I was never under any illusion that the path to Digital First success would be straight or easy.
• JRC adviser Jeff Jarvis says the bankruptcy is necessary: "These are hard decisions with difficult consequences for many people. But not addressing the issue will only turn out worse, squandering dollars every day the tough decisions are put off."
After too many years in denial, we all know now that newspapers, no longer monopolies and having lost their pricing power in the face of abundant competition, must be smaller if they have any hope to survive; there is no magic bullet that will set things “right” and return the business to what it was.
• Nieman Journalism Lab's Joshua Benton says it's "more than a little crappy that JRC’s employee FAQ says decisions about everyone’s job status will be 'made by the ultimate purchaser' — when that ultimate purchaser is apparently just another arm of the current owner." He writes that the bankruptcy will give Paton a definitive test of his digital-first strategy:
In around 90 days, he’ll have had his chance to shed the costs he wants to shed. No longer will “we were built for print” be a good excuse; if two bankruptcies can’t clear out all those cobwebs, I’m not sure what could. “Digital first” will move from a slogan to a corporate name to a foundation of the company’s business structure.
• Poynter business analyst Rick Edmonds notes that Paton "is also a financial guy."
Paton’s diagnosis of cost challenges, while unwelcome in an industry struggling to find a positive business story about itself, seems to me largely on point.
• Nieman's Martin Langeveld writes that Alden Global Capital, which owns JRC, "seems more interested in squeezing the mop, rather than investing in any more." He also drops the B-name.
My guess is that the stalking horse bid is simply there to help gain creditor buy-in to the structured bankruptcy deal, and that at the end of the day, [Alden honcho Randall Smith] would be happy to let someone outbid him. Who knows, maybe that would be Warren Buffett.
• CJR's Ryan Chittum read JRC's bankruptcy filing and notes that its biggest creditor is the "state of Connecticut, which it owes $4.3 million." The company's legacy costs, he writes, "were slashed by some two-thirds just three years ago in bankruptcy court."
They can spin it all they want, but Paton’s digital bonanza hasn’t been quite what he’s implied, and it hasn’t been enough to stave off bankruptcy.
• GigaOm's Mathew Ingram compares JRC's reorg to upheavals in airline, automotive and photo industries.
...the reality is that the tide is rising faster, not slower, and the upheaval it is going to cause won’t be measured in months or years, but in decades.