The Moody's downgrading of MediaNews Group: What's it mean for Denver newspapering?
As if the Denver newspaper scene couldn't get any more confusing...
Yesterday, word surfaced that Moody's Investors Services downgraded the credit rating of Denver-based MediaNews Group, declaring that the Dean Singleton-run newspaper chain is at significant risk of default. Indeed, the firm, whose holdings include the Denver Post, was said to be in potentially worse shape than the Tribune Co., which recently filed for bankruptcy.
Unfortunately, confirming this condition is difficult, since MediaNews is a private company that doesn't have to publicly disclose its financials -- something Singleton has used to his advantage in the past. Our current feature article about the for-sale Rocky Mountain News recalls a June article by the Rocky's David Milstead. For that report, Milstead asked Singleton about a previous credit downgrade, which caused analysts to predict that MediaNews might default on its debt by the end of 2008. At the time, Singleton responded, "That is their opinion" -- and he's pretty much taking the same tack now.
A MediaNews statement quoted in the Editor & Publisher article linked above reads in part, "By far, the largest debtholder of MediaNews is our partner" -- the Hearst Corporation, which teams with MediaNews in more than 100 newspapers. That makes MediaNews' situation "a lot different than Tribune," the memo continued. But no specifics were included, leaving readers in the position of choosing whom to believe based on far less than complete information.
In a conversation with yours truly for Westword's article about the Rocky, Singleton said, "I'm not going to comment about MediaNews" when asked about the debt reports that preceded the new Moody's declaration. Instead, he focused on the situation in Denver, emphasizing that "MediaNews has fulfilled its obligations as it's needed to fulfill them in a very difficult environment. But neither newspaper is generating enough profit out of the [Denver Newspaper] Agency to cover their newsroom costs. So they're both losing money."
E.W. Scripps pointed to these shortfalls as its reason for putting the Rocky on the block -- and if MediaNews is in shaky condition, potential buyers have even less of an incentive for buying into the current joint-operating agreement than they would under other circumstances. Moreover, the conditions afflicting the newspaper industry aren't going to improve anytime soon, if ever. As such, there's a very real possibility that in six months, Denver will have gone from having two independent, competing dailies to a single survivor owned by a company in bankruptcy. Welcome to the brave new world. -- Michael Roberts