Strib Bankruptcy: Pulling the Pin...and Let's See What Happens
As long anticipated, the Star Tribune filed for bankruptcy today, now the second company (after Tribune's big splash) to do that. Expect more.
All the parties are now in a mad scramble to protect their interests. The labor unions have been ready, their knowledge of bankruptcy greatly increased. They know they have got to make their cases made in first-day filings, as creditors maneuver to protect their interests. The next dance thus begins, as owner Avista blames labor unions (other than the Guild, which agreed to concessions) for pushing the paper into bankruptcy, looking for a scapegoat. The unions can correctly point out that they are only a (small) part of Avista's problems. Like Sam Zell, Avista thought it was buying a bargain property — hey, this looks like a half-price sale — and instead bought way above the bottom, for which all of us are still feeling.
What happens to the workers, the creditors and, oh yeah, the readers, is fairly uncharted as newspaper meltdown, larger economic meltdown and the vagaries of bankruptcy proceedings (a hundred experts, a hundred opinions) proceed.
One thing is certain. As Avista filed for bankruptcy, it pulled the pin. That's a pin being pulled in various ways at various newspaper companies. It's the newspaper business model being blown up. Dailies that aren't dailies. Less home delivery. Hollowed-out newsrooms. 150-year brands disappearing overnight.
So in pulling the pin, you're never sure what is going to happen. The grenade could be a tiny one, or a dud. Or it could lead to new unimaginables.
In the Twin Cities — my alma mater, where I served as managing editor of the Strib's rival, the Pioneer Press, in the '90s — this may be just another big step in a vastly changed newspaper landscape. For decades it was Cowles in Minneapolis and Knight-Ridder in Saint Paul, two sensible, if sometimes stodgy, newspaper companies.
Then, with McClatchy buying and selling the Star Tribune, and buying and selling the Pioneer Press to MediaNews, it's a different world. Strangely, it is one of the few metro areas with two competing dailies, both of which have seem big layoffs and buyouts (spawning MinnPost).
So now what?
The Strib is bankrupt.
MediaNews skirts on the edge of default, though Dean Singleton recently assured his top execs that they'd avoid it. Two weak companies, and an economy that seems to be getting worse.
The one thing we can't expect is the status quo. With second newspapers being rapidly dispatched to the guillotine (Seattle Post-Intelligencer, Rocky Mountain News), how long can two completely separate operations — with two big cost bases — survive? It's hard to see either company buying out the other, given their financial straits. Maybe a third party? The Opperman family, who cashed on in selling West Publishing (remember L.A. background?) to Thomson a while back, is whispered in the cities as a potential consolidating buyer. They're well-connected, with deep community roots and deep pockets — and one of several new possibilities in a fast-changing market.