Newspapers Getting in Line at Bankruptcy Court

(MoneyWatch)  A year from now, we'll be talking about 2009 as one year-long train wreck for the newspaper business. We'll also review the significant number of obits we had to write for major magazine titles, book sellers and book publishers.

That's a year from now. For the present, all we can do is watch the train wreck approaching in its exquisitely painful slow-motion.

The number of major newspaper publishers seeking Chapter 11 Bankruptcy protection during this business cycle has doubled over the past few days, to four. Joining Tribune Co. (December) and the Minneapolis Star Tribune (January) in bankruptcy court over the weekend were Philadelphia Newspapers LLC and Journal Register Co.
So, who's next?

You can make a pretty strong case for McClatchy Co. or Lee Enterprises, both of which have seen their stock value fall to around fifty cents as they struggle to manage debt in an era of disappearing ad revenue. I'll wager both will seek bankruptcy protection later this year. Several big-city markets (Detroit, Seattle, Portland, Me.) could well lose at least one metro dailies this year. Many smaller regional newspapers will go belly up as well -- probably dozens, perhaps even hundreds.

The bigger, sexier brands -- New York Times, News Corp., Time Warner, Gannett, even Washington Post Co. -- are all hurting but seem to have access to enough capital to muscle their way through this year, at least. The Times has Mexico Slim's cash, and its non-essential asset sale deals; Murdoch has Fox (though he is under pressure to spin off Dow-Jones now); Gannett and the Post appear to be in no real short-term danger.

But all of these companies have been laying off people, and you've got to expect them to continue doing so. Already, you can't turn around without bumping into yet another unemployed journalist these days. (Come to think of it, I'm one of them. I forgot to post about my own layoff, as editor-in-chief of Predictify, last month, though others covered that story better than I could have anyway.)
Admittedly, the business of predicting future headlines, as I'm doing here today, is a bit dodgy, but the fundamentals of newspapering are so weak, there appears to be little chance that the weaker companies listed above will be able to weather what Philadelphia Newspapers LLC, Chief Executive Brian Tierney calls a "perfect storm," i.e., the convergence of a "dramatic decline in total revenue, the worst economic conditions since the Great Depression and a debt structure which is out of line with current economic reality."
All of which, he says, forced his company into bankruptcy.