Journal Register Company files for bankruptcy
John Paton | Digital First Media | Employee FAQ
The Journal Register Company will seek protection under Chapter 11 "and will seek to implement a prompt sale," according to Digital First Media head John Paton.
Journal Register is one of the companies operated by Digital First Media; the others are MediaNews Group and Digital First Ventures. In a blog post, Paton calls the bankruptcy "Another Tough Step" and says the company "has a signed stalking horse bid" from an investment group affiliated with Alden Global Capital. Alden sold The Philadelphia Inquirer, the Philadelphia Daily News and Philly.com to a group of local investors earlier this year.
Alden purchased Journal Register in 2011 and owns stakes in other newspaper publishing companies. In February, Rick Edmonds wondered whether Alden "may have concluded that the suburban cluster" of papers Journal Register operates in the Philadelphia region "has the better business prospects."
Journal Register last filed for bankruptcy in 2009. James W. Hall, the CEO at the time, promised it would emerge "stronger, leaner and more financially viable in the current environment."
Digital revenue is up sharply at JRC, Paton writes, "But also from 2009 to 2011 Journal Register Company’s print advertising revenue declined 19% and print advertising represents more than half of the of the Company’s revenues." What this means for Digital First Media is a little unclear. Paton says in his post the filing "will have no impact on the day-to-day operation of Journal Register Company, Digital First Media or MediaNews Group during the sale process."
“They believe in the plan and they believe in you and me,” CEO John Paton told employees this morning at Digital First’s Thunderdome headquarters.
“It doesn’t affect you,” John said. “We’ll continue to do what we’ve been doing.”
In a letter to staff, Paton said, "...while I get this news may make some of you nervous, don’t let it. Concentrate on the job at hand and we will work through this. This really is the right decision for Journal Register Company."
In an FAQ for employees, Paton said employees decisions about continued employment "will be made by the ultimate purchaser. As always, the best way to secure our jobs is to keep doing a great job." Senior managers won't take bonuses "related to the restructuring process," the document says.
Highlights from the FAQ:
What Happens To My Job After The Sale Is Complete?
That decision will be made by the ultimate purchaser. As always, the best way to secure our jobs is to keep doing a great job.
Journal Register Company Went Through Bankruptcy in 2009. Why Is This Happening Again?
The Company exited the 2009 restructuring with approximately $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that are now unsustainable and threaten the Company’s efforts for a successful digital transformation. ...
All of the digital initiatives and expense efforts are consistent with the Company’s Digital First strategy and while the Journal Register Company cannot afford to halt its investments in its digital future it can now 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.
Revenues in 2005 were about two times bigger than projected 2012 revenues. Defined Benefit Pension underfunding liabilities have grown 52% since 2009.
After a lot of thought, the Board of Directors concluded a Chapter 11 filing was the best course of action.
How Does This Affect Our Day-To-Day Operations?
During the sale process, we will continue to operate as usual. Our management will be unchanged. Our operations will remain the same and we will ensure that our business continues in the ordinary course.
How Long Will This Take?
It’s impossible to predict how long this process will take, but we anticipate the auction and approval of sale will take place in the next 90 days. Company management will keep you informed of the progress.
In the 2009 bankruptcy senior managers received bonuses for leading the Company through that process. Will senior managers receive bonuses this time?
No. All senior managers, including CEO John Paton and President Jeff Bairstow, will not accept any bonuses or enhanced compensation or salaries related to the restructuring
How Will This Affect Employees?
During the sale process, there won’t be any changes to salaries, paychecks, insurance or expense reimbursement. Paychecks will be issued on the same schedule the Company has always used.
Expense reimbursements will follow the usual schedule and process, and there will be no impact on employee health insurance.
Related: Alden Global Capital's Randy Smith speaks up for newspapers | How Alden Global Capital has become a major player in the media business