The New Haven Register’s corporate CEO was headed to town Wednesday to address the newsroom about the company’s latest news: It has just filed for bankruptcy protection again.
The CEO, John Paton, announced the Journal Register Co. bankruptcy filing Wednesday on his blog and on the website of his company, Digital First Media. Read the official release here. Digital First Media is an umbrella corporation that manages the Journal Register Co, the New Haven Register’s owner, operating in 10 states; and the Media News chain, which operates in 10 states.
This is the second time in under four years that a corporate owner of New Haven’s print daily has filed for bankruptcy. (Read about the previous case here.) It is filing in federal bankruptcy court in New York.
This time, the company is planning no staff reductions as part of the bankruptcy, Register Publisher Tom Wiley told the Independent Wednesday.
“I can’t comment on what we may do in the future. But we don’t have any plans in place” to reduce the staff, Wiley said. “It’s not part of the plan.”
“This has almost no impact on the local operation,” Wiley said of the filing.
Paton is expected to spend the late afternoon, from around 3 to 5 p.m., onsite with Register employees.
Another aspect of this filing that may differ from the past: Digital First may be setting up to sell itself to corporate structure under the umbrella of its major owner, a hedge fund called Alden Global Capital. An “affiliate of funds managed by” Alden has signed a “stalking horse bid” to buy the company out of bankruptcy at an auction and sale by year’s end, according to the company’s release.
The company sought to reassure employees about the changes in a letter and in an “FAQ” (frequently asked questions) document. The letter reported that no senior managers will receive extra bonuses as part of restructuring—a sore point from 2009, when then-state Attorney General Dick Blumenthal fought “shutdown bonuses” that were part of that bankruptcy.
Here’s what Question #4 said in the “FAQ” document:
“4. 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.”
Click here to read the full FAQ document.
In the past few years Paton has received national praise for trying to rebuild the company by gradually shifting its focus to online news. (Read about that here and here.)
In the press release issued Wednesday, Paton reported that despite the growth in digital investments and revenue, and despite cost-cutting, the company still reeled from a 19 percent drop in print advertising revenue between 2009 and 2011. Print revenue remains “more than half of Journal Register Company’s total revenue.”
At a meeting at the Register today, Paton is expected to reassure staffers that, unlike with similar past developments, the company expects no layoffs or changes in management.
Rather, the company is looking to protect itself from debts. One open question is whether the small number of long-serving employees with pensions will be affected.
In a blog post Wednesday, Paton encouraged employees to contact him with any concerns. “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,” he wrote. Read the full post here.
As part of its cost-cutting, the Register is trying to sell its largely empty Long Wharf plant to move into smaller and more centrally located offices in downtown New Haven. Tuesday night it won unanimous approval for a zoning change to help sell the building; read about that here.
Nationwide the decline in print advertising has battered the finances of legacy dailies. The New Orleans Times-Picayune, for instance, is the latest major daily to decide to switch to a three-day-a-week print publishing schedule.
One industry analyst Wednesday posited that this second bankruptcy presents Paton with a “time to deliver” challenge for his nationally watched experiment.
“In around 90 days, he’ll have had his chance to shed the costs he wants to shed,” wrote the analyst, Joshua Benton of the Nieman Journalism Lab. (Full post here.) “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.”