Seattle, Maine Newspapers Sing the Blues

(MoneyWatch)  Imagine if just four years ago, an industry analyst estimated the value of your family's majority-owned (50.5 percent) newspaper company at $900 million.

Then, two years ago, when a publicly- traded national chain took over the minority stake (49.5 percent), it placed the value of its investment at $120 million.

Now, in its most recent SEC filing, your minority partner has downgraded the value of its share to just $7.9 million. Although your one percent ownership advantage means your piece of the company is more valuable than your partner's, because you have voting control, this nosedive suggest that your company may have lost up to 98 percent of its value over the past four years!

Well, this isn't someone's bad dream, this is the terrible reality facing the Blethen family, owner's of the Seattle Times Co. Earlier this week reporter Bill Richards published a revealing portrait of the Times Co. in Crosscut, one of the fascinating new breed of hybrid news sites that combine professional journalism with citizen-generated content. Richards writes that his analysis of the company's financial losses suggest that the Times Co. is "possibly one of the worst performers in a troubled newspaper industry."

Earlier in November, the company announced a deal to sell off its struggling Blethen Maine Newspapers group to a local investor group (including former U.S. Secretary of Defense William Cohen) that is trying to save the Portland Press Herald, the state's largest newspaper, and two smaller dailies, The Kennebec Journal, and The Morning Sentinel.

But so far, no sales price has been disclosed, and there have been signs that Cohen and his partners may be having difficulty in this tight credit market securing the financing they need to close the deal.

Meanwhile, even assuming the Maine sale goes through, Richards reports that the Seattle Times Co. is carrying outstanding loans estimated at "well over $100 million." It laid off 150 employees recently, and insiders expect another round of cuts in to come as soon as February.