Nieman Journalism Lab examines the 'default option'
Posted by Emily Dilling on July 2, 2009 at 1:49 PM
In a Nieman Journalism Lab article, Martin Langeveld recently addressed the changing business model of newspapers, and the role that a "restructuring event," or bankruptcy, plays in the transition from the old model to a new one.
Langeveld cites characteristics of a successful business plan for the modern newspaper, such as reduced printing and delivery schedules, and posits that such downsizing and cuts cannot "carry the company's legacy debt load," and thus require chapter 11 to allow for the necessary reorganisation of the paper.
Langeveld cites characteristics of a successful business plan for the modern newspaper, such as reduced printing and delivery schedules, and posits that such downsizing and cuts cannot "carry the company's legacy debt load," and thus require chapter 11 to allow for the necessary reorganisation of the paper.
Langeveld views bankruptcy in a different light. According to Langeveld, filing for chapter 11
"may be closer to sustainable business models than those who are still
paying their bankers."
Recently, several major newspaper firms have been reported to be near defaulting on their loans. Gannett, the largest U.S. newspaper publisher, has been lowered to junk-bond status by credit raters while Tribune Co. is filing for bankruptcy and McClatchy's failure to exchange enough debt has left them in default.
Langeveld proposes that the increasing trend of filing for bankruptcy among newspaper publishers will lead to a new generation of news organizations, writing that "the likely outcome is that underlying newspaper assets will be sold individually, often to local groups wishing to regain control of their local news enterprise." The result could be necessary investments in the future of these local newspapers, retrofitting them to survive in the new era of news gathering and sharing.
"In fact" Langeveld wrote, "it might be an essential path, because the current owners have no resources or flexibility left to complete the needed transformation."
Recently, several major newspaper firms have been reported to be near defaulting on their loans. Gannett, the largest U.S. newspaper publisher, has been lowered to junk-bond status by credit raters while Tribune Co. is filing for bankruptcy and McClatchy's failure to exchange enough debt has left them in default.
Langeveld proposes that the increasing trend of filing for bankruptcy among newspaper publishers will lead to a new generation of news organizations, writing that "the likely outcome is that underlying newspaper assets will be sold individually, often to local groups wishing to regain control of their local news enterprise." The result could be necessary investments in the future of these local newspapers, retrofitting them to survive in the new era of news gathering and sharing.
"In fact" Langeveld wrote, "it might be an essential path, because the current owners have no resources or flexibility left to complete the needed transformation."
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