Articles about "Journal Register Company"


‘Mean Girls’ reporter lands at sister paper to the one that fired him

Isaac Avilucea is now covering courts and schools at The (Torrington, Conn.) Register Citizen.

The North Adams Transcript fired Avilucea in October after he quoted a high-school athlete saying her old school was like “the movie ‘Mean Girls.’ ”

The Transcript is owned by MediaNewsGroup. The Register Citizen is owned by 21st Century Media, formerly known as Journal Register Company. Both companies are managed by Digital First Media. In an email to Poynter Thursday, Avilucea said he was at his “14-day anniversary” at the paper. “So I still have time to break my record,” he wrote. He was at the Transcript for 18 days. Read more

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Paton: ‘Bad CEOs and worse editors’ are trying to ‘kill our future’

John Paton

Speaking at the Global News Editors conference in Paris, Digital First Media CEO John Paton said Friday that “editors resisting change are aided and abetted by lousy CEOs and news executives.”

Paton posted text and slides from his speech, scheduled to be delivered Friday afternoon Paris time, on his blog. In it he presents a slide he says “solves for the percent of dollars in print advertising, digital advertising, subscription revenue and all other revenue plus expenses and, of course, profit.”

By Paton’s calculations, Lee Enterprises and McClatchy will continue to lose money while Digital First Media — whose Journal Register Company filed for bankruptcy last year — is experiencing an operating profit.

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Journal Register sale delayed by union vote

Digital First Media

An agreement between the Newspaper Guild of Detroit and 21st CMH Acquisition Co. has delayed the sale of Journal Register Company, Adrienne LaFrance reports.

The deal eliminates 15 positions, including laying off five circulation clerks, three janitors and seven paginators who worked at the Macomb Daily and the Daily Tribune. Unionized employees had been braced for worse, including 15 percent across-the-board pay cuts. JRC newspapers elsewhere in the country are also reporting layoffs on the horizon, including 11 cuts to news and circulation staff at The Daily Freeman in New York. A letter was sent to all Journal Register employees in February that said the new company will decide which employees it will hire.

The sale had been scheduled for Tuesday. Journal Register Company filed for bankruptcy in September. Read more

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Court approves Journal Register bankruptcy sale

Digital First Media

The U.S. Bankruptcy Court for the Southern District of New York has approved Journal Register Company’s sale to 21st CMH Acquisition Co., JRC said this morning in a press release. The sale is scheduled to occur April 2.

21st CMH Acquisition Co. is a unit of Alden Global Capital, which already owns Journal Register. When Journal Register announced its bankruptcy, Digital First Media CEO John Paton told employees the company could “no longer afford the legacy obligations incurred in the past.” Selling the company, even to a unit of its current owners, could allow it to shed some of those obligations.

21st CMH is negotiating with the Guild at JRC’s Michigan papers. Guild members say 21st CMH asked for a 15 percent across-the-board pay cut and wants the ability to outsource jobs. (Efforts to locate a 21st CMH spokesperson have so far proven fruitless.) A Guild bulletin Poynter obtained (embedded below) says the next bargaining sessions are scheduled for March 30 and 31 and April 1. Read more

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Mich. unions say JRC has ‘declared war,’ threaten strike

Journal Register Company and 21st CMH Acquisition Co., the hedge fund unit that plans to buy it out of bankruptcy, have “declared war,” a bulletin sent to union members says. The bulletin cites what it says are previous union-busting tactics in other markets. In Philadelphia and New York, the union says:

21st CMH sent letters to JRC employees telling them they could apply for their own jobs when 21st CMH becomes the employer. 21st CMH would selectively hire some employees. The new terms of employment by 21st CMH, according to the letters, include:

  • 15% pay cut.
  • employees pay 50% of health insurance cost and 50% of future premium increases.
  • elimination of all pension plans.
  • reduced vacation schedule.
  • reduced severance pay if jobs are eliminated.
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Journal Register Company, hedge fund sign purchase agreement

Journal Register Company
The Journal Register Company signed a “stalking horse” agreement with 21st CMH Acquisition Co., a unit of Alden Global Capital. JRC declared bankruptcy in September.

The purchase may seem a little weird because Alden already owns Journal Register Company. At the time JRC declared bankruptcy, Digital First Media CEO John Paton sent an FAQ to employees (PDF) that said the company could “no longer afford the legacy obligations incurred in the past.”

Many of those obligations, such as leases, were entered into in the past when revenues, at their peak, were nearly twice as big as they are today and are no longer sustainable.

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Journal Register likely to reduce print frequency at some papers

The new slimmed-down Journal Register company, being pieced together in a bankruptcy proceeding, is likely to eliminate at least some daily print editions at several of its 20 dailies.

“I would consider and am considering a reduction in print frequency in some markets — (which ones) to be determined,” CEO John Paton wrote me in an e-mail interview earlier this week. “I think it makes sense to think about the frequency of print as print revenues decline and digital revenues increase.”

In his blog, Paton has already praised Advance Publications’ decision to shift the New Orleans Times-Picayune to a three-day-a-week print publication at the end of this month  (with the qualifiers that the announcement was poorly handled and the website needs improvement quickly to support the change). For Journal Register, Paton said the change need not be dropping four weekday editions — eliminating one or two would still have benefits in moving readership to digital platforms.

While he was not specific about when the changes were coming or the criteria to be considered in picking where, it is not hard to connect the dots. Paton will be looking for titles where digital first initiatives are yielding strong advertising growth and website improvements, at the same time targeting papers that lack the resources to produce seven good print papers a week.

At the Times-Picayune and nearby Alabama papers, Advance has laid off about half the legacy newsroom as it reduces print days, but with promises to hire back about half of those positions for expanded digital operations.

It is not clear whether Paton would pick up that part of the playbook. To date, Journal Register has kept news staff levels at its papers about the same while redirecting more of their effort from the daily print product to digital versions.

The financial context

Journal Register is profitable on an operating basis, Paton told me. But taking into account interest, taxes and special charges, “it is not profitable on a net earnings basis. Difficult to estimate when it will be, but some of the legacy overhang costs being dealt with in the bankruptcy process will make that easier to achieve.”

Paton was not willing to venture an estimate of how much legacy cost — like pension and lease obligations –  will be shed in the bankruptcy proceeding and said “there are no resolutions as of yet with creditors.”

My colleague Andrew Beaujon asked me on the morning of the bankruptcy announcement how it was possible for Alden Global Capital to be the seller and another Alden entity the likely owner after bankruptcy is completed and the company put up for auction.

That is a complicated point of bankruptcy law (and a contested one in a recent Supreme Court decision and several in lower courts), but a senior debt holder like Alden can apply that debt to a repurchase in a so-called “credit bid.” Paton added in his e-mail, as the initial release also said, that despite that advantage, Alden could be outbid by someone else in the auction.

Paton declined to discuss what miscalculations in a bankruptcy plan three years ago, under different management, left the company with too much debt to carry again so soon. He also said it would be wrong to assume the same issues are creating an equal financial problem at MediaNews Group, the much larger chain controlled by Alden and managed by Paton’s Digital First company for just over a year.

The initial Journal Register bankruptcy news earlier this month provoked a host of analyses including several pieces slamming Paton as an evangelist for rapid print-to-digital transformation that has failed to deliver results.

Last week, digging through the bankruptcy filing and getting additional information from Paton, CJR put together the best financial picture yet of the changes at the private company, which had so far released only selective information.

CJR confirmed that Journal Register started with particularly weak websites, making it relatively easy, initially, to record high percentage gains. In 2011, digital ad revenue had grown to $30.1 million compared to $167.1 million in print advertising and $86 million in print circulation revenue.

That brings Journal Register’s digital ad base (15 percent of all ads) somewhat ahead of the industry average for 2011 (13.5 percent) but still trailing companies at the top end digitally like McClatchy and The Washington Post. Paton told CJR that digital advertising is growing at a 33 percent annualized rate so far this year — while the industry as a whole is showing disappointing gains of only about 2 percent for the first six months.

So put Journal Register down as rounding the corner on a switchover to a digital revenue base but not profitable yet, in part because the digital initiatives have required many high-level hires and other expenses. More detail will follow as the bankruptcy process unwinds in coming months.

Clarification: Paton did not say the papers could go to three days a week, that was our interpretation. Read more

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JRC made $30 million in digital revenue in 2011

CJR | CJR
Digital First Media CEO John Paton shared some financial information with Columbia Journalism Review reporter Ryan Chittum, who also posts a Journal Register Company bankruptcy document filed with a court in New York.

Of JRC’s $295 million in revenue last year, $167.1 million of it was print ads, $86 million was print circulation, and $30.1 million was digital ads. That means digital ads were 10.2 percent of JRC’s total revenue, up sharply from the pre-Paton era when it was a miserable 2.8 percent.

Chittum points out three important caveats: Read more

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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. Read more

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Journal Register can’t afford for legacy costs to derail Digital First progress

Journal Register filed for Chapter 11 bankruptcy protection Wednesday. Hey, aren’t these the same folks who have been touting as breakthroughs each step along the way of their fast-track digital transition?

Well, yes. Some will view the bankruptcy filing, the company’s second in three years, as evidence that Journal Register has been blowing smoke about how much digital revenue is there for the taking. And some will suggest that CEO John Paton may want to step back from his conference circuit role as avatar of the industry’s future.

Paton, not surprisingly, doesn’t see it that way. His public and in-house announcements contend that the digital transition has been going well and should continue without a course correction. The problem, he said, is legacy costs that cannot be reduced quickly enough.

In an e-mail July 17 and in subsequent conversations, Paton told me he believes many other companies face the same financial pressures. He wrote:

All newspaper companies have legacy issues to deal with. The Digital First part – concentrating on new digital product lines, processes and news culture, etc – is the easy part. The hard part is dealing with the legacy infrastructure – costs, buildings, leases, pensions and debt. All of that was incurred on a much bigger revenue base. And all of that has to get worked out.

That seemed startling to me at the time. Hadn’t Paton been saying that half-steps to digital were not working and that a massive refocus with talented people not wedded to print traditions was essential — even if it entailed drastic disruption? Hardly easy.

My read is that Paton meant what he said and will continue as a digital evangelist, in a lower key, who practices what he preaches. But this juncture shows another side of Paton. He is also a financial guy, who worked for some years as a deal-making investment banker and created his previous company, ImpreMedia, in part by assembling disparate Hispanic-targeted media businesses under a single roof.

So I don’t find it surprising that he is a congenial executive for Alden Global Capital, the hedge fund that owns Journal Register, a controlling interest in MediaNews, and Digital First, an umbrella management company for both. A related Alden company has already bid to take back control of Journal Register if it emerges from bankruptcy as planned within 90 days.

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.

Newspapers are typically half the size (in revenues) that they used to be but still comfortably profitable on an operating basis. So far, so good. But a reasonable margin on a much-reduced revenue base brings an assortment of problems.

Most obviously: Debt incurred with expensive acquisitions before the 2007 revenue crash are a ball and chain. Some papers — the Philadelphia Inquirer and the Star Tribune of Minneapolis — went into bankruptcy protection, as did chains like Tribune, Freedom and Morris. McClatchy still applies most of its earnings to paying down interest and principal on its 2006 Knight Ridder acquisition. With a round of refinancing coming around in 2013, Media General was forced this spring to sell its newspaper division to stay in business.

Pension obligations (similar to acquisitions) were taken on in better times of high profits. Not only are much smaller companies stuck now with these generous benefit packages,  investment returns have fallen drastically. Companies face a legal obligation to keep the pension plans adequately funded. Requirements for this year were eased by Congress over the summer, but that just pushes the problem ahead a year or two.

Also, newspapers typically have much larger buildings than they need now that their operations are so much smaller. A number (Philadelphia, Atlanta, Ann Arbor) have moved from showcase downtown headquarters to generic rented office space, especially if they outsource or relocate printing. Paton is the first executive I have heard to suggest this is a systemic industry problem — and that some papers may effectively be stuck where they are with long-term leases.

As is typical with bankruptcy filings, plenty of the details of what is next for Journal Register are not yet on the table. Clearly, however, the object of the exercise is to reduce debt (currently $160 million, according to Paton), bargain out of some of the pension obligations and break some leases.

To date, none of the Journal Register publications have reduced to three-day-a-week print frequency. Nor has Paton embraced digital paywalls, preferring to assemble as large an audience as possible and place his bets on the national advertising possibilities that opens.

Later this month will mark Digital First’s birthday as a company and its takeover of management of MediaNews, a much larger company than Journal Register. Digital revenue growth has been strong at these newer properties too, Paton told me. But an obvious question for another day is whether MediaNews, itself emerging from a quick bankruptcy reorganization in 2010, will need to follow the same path to shed legacy costs.

Josh Benton of the Nieman Journalism Lab, in a knowledgeable post, asks whether the bankruptcy could be a prelude to Alden and Paton trying to engineer further acquisitions or management agreements once back on their feet. Dean Singleton, who built MediaNews and remains its executive chairman, told me a year ago that one of the attractions of Alden as an investment partner was that its principals share his view that more consolidation will be needed for the industry to prosper.

Without naming names, Paton suggested in our conversations that other newspaper companies may need to seek reorganization as debt refinancing and pension liabilities hit next year. If so, he is again the industry iconoclast, out front of the pack — but on a different, largely financial issue.

Conversely if Journal Register and MediaNews do not deliver sustainable results in 2013 and beyond, while peers scrape by, expect a chorus of I-told-you-so’s — print had a lot more economic more life left in it, at least for most papers — than Paton has supposed. Read more

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