Journal Register Co. seeks bankruptcy protection
PHILADELPHIA (AP) — The Journal Register Co. has filed for bankruptcy protection for the second time in three years and hopes to reduce pensions and other costs through a quick sale of the news company's assets.
Journal Register has 18 newspapers and other media properties in 10 states, including the New Haven Register in Connecticut and The Oakland Press in Pontiac, Mich. The company expects normal operations to continue during the Chapter 11 reorganization.
Alden Global Capital, a New York hedge fund, acquired Journal Register last year. An Alden affiliate has posted an initial bid to buy the company at a bankruptcy auction expected within 90 days. Alden has been investing in distress sales of various newspaper and media concerns, including Philadelphia Newspapers, in recent years.
Journal Register, based in Yardley, also operates The Daily Local News in West Chester, among other newspapers. A company called Digital First Media currently operates Journal Register along with MediaNews Group.
In a press release Wednesday, Digital First Chief Executive John Paton said Journal Register has more than doubled its digital audience in the past two years. But he said the company still is struggling with print advertising declines and legacy costs such as pensions and leases.
An internal memo distributed Wednesday and later posted on the poynter.org journalism website called defined pensions for employees "unsustainable."
"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," the Digital First memo said.
Other media companies have likewise shed defined pensions in recent years, often through bankruptcy reorganizations, amid the steep decline in advertising and circulation revenue. Chapter 11 gives federal protection to businesses unable to pay their debts and allows them to restructure their operations.
"As difficult as they are, the steps we announced today are steps that will ensure the company's future," Paton said in a news release. "(The digital) transformation is threatened by a decline in print advertising revenue — the company's largest revenue source — and legacy costs incurred when Journal Register Company's total revenues were nearly twice the size it is today. Since 2009 the company's pension liabilities grew 52%."
When it filed for bankruptcy protection in early 2009, amid an industry-wide decline in newspaper advertising, Journal Register listed $596 million in assets and $692 million in debt. The restructuring plan cut what the company owed to secured lenders to $225 million in return for ownership. The plan wiped out stockholders, largely investment funds, and split a $2 million pool among unsecured lenders.
A judge approved the plan despite objections from the Newspaper Guild, as well as Connecticut and Pennsylvania state officials, who objected to plans for paying up to $1.7 million in bonuses to top executives.
Alden Capital bought Journal Register last year for an undisclosed price.