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Newspapers have tried to adapt to the changing realities of the the news business by maintaining more blogs like this one, but their uphill climb may only be getting steeper.
The Journal Register Co., which owns The New Haven Register, The Trentonian and 19 other daily newspapers, had its credit rating downgraded--again--by Moody's Investors Service. The company's rating is virtually the equivalent of a default declaration. And it's not alone. Even Advance Publications, the publisher of one of its rivals, The Times of Trenton in New Jersey, is in a fix. Reports surfaced last week that even The Star-Ledger in Newark, N.J., is in peril. "The owners of The Star-Ledger will sell the newspaper if they cannot win union concessions ... and persuade non-union fulltime workers to take buyouts," according to the published report. Star-Ledger employees have until Oct. 1 to accept a buyout. The Star-Ledger, along with its sister paper, The Times of Trenton, has been losing $30 million to $40 million a year, the paper said, and pointed to a plunge in classified advertising revenues. The poor economy is one reason, but a bigger one is the Internet. Classified ads had been the divine province of newspapers; yes, they'd soften in tough economic times, but they'd eventually come back because newspapers had a classified ad monopoly. Now the Internet--most notably in the form of Craigslist--offers an option at least as effective. "Unlike other recessions, many newspapers have lost so much revenue on the classified side due to the Internet," Moody's said before Journal Register latest default on July 23. "The newspaper was once the only place to put your classified." The Yardley, Pa.-based Journal Register was downgraded by Moody's after it entered into a forbearance agreement on its twice-previously amended $200 million revolver with J.P. Morgan Chase Bank NA. "Interest will now be paid-in-kind in cash with its lenders [and] is tantamount to an event of default," Moody's said in its probability of default downgrade to "D" from "Caa3." Many newspapers have been on the brink of default before, but banks were usually willing to renegotiate due to their relatively strong cash-flow positions. No more. All that has changed with the plunge in classified ads and the prominence of the Internet. The Star-Ledger and Journal Register are only two examples of newspaper companies that are in trouble. But plenty of others, such as McClatchy Co. and Gannett Co., are also on shaky ground. -- Terry Brennan Categories Deal Video
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