Media: GateHouse on it’s ‘funeral march?’
On the first trading day after its stock reached a new low, GateHouse Media saw the value of its stock plummet to an all-new low of 66 cents a share. The stock rebounded to 90 cents a share, less than what’s needed to avoid delisting on the New York Stock Exchange.
The drop is being blamed both on declining prices for troubled newspaper companies, and on bad news in particular for GateHouse:
Moody’s questioned management’s thinking in noting that Gatehouse Media was relying “upon proposed asset sales to provide financial flexibility.” The rating agency pointed out that the newspaper publisher had but $25 million in its pocket and all but $11 million of that was the remaining balance on a revolver line of credit that Moody’s says is doubtful its lender would permit Gatehouse to use.
“At the end of March 2008, GateHouse’s credit agreement-defined results provided the company with a modest 3% cushion within its total leverage financial ratio tests,” the Rating agency noted. “Moody’s considers it highly questionable whether GateHouse will be able to comply with this covenant test over the near term without the benefit of proceeds from asset sales or another equity cure from its largest shareholder.”
“Assett sales.” As in “selling the Journal Star,” not to mention any of the many GateHouse properties in Illinois.
No doubt any new buyer will demand their own cuts in personnel.
And like C.J. Summers, I’m not hopeful we are going to see any coverage of this in the Peoria Journal Star, or any other local media organization.
Tags: GateHouse Media, Journal Star
Cuts perceived as a shame are absolutely vital and should no longer be viewed as something newspaper owners do not want to do. Cuts should be made aggressively at every newspaper in the land or that newspaper will lose its economic viability in the brave new world we are entering.
Cuts protect remaining jobs more than keeping personnel which can no longer be afforded.
Competing with the Internet is folly. Newspapers, radio and television were the Internet – now the Internet rules, and especially in the vital age demographic of those 30 and under – who do not read newspapers and will likely never read newspapers.
The industry is changing so rapidly that business models being used now are all hopelessly irrelevant. Newspapers must evolve into hybrids in order to remain profitable. There is no shame in shrinking, in better directing focus and in making better use of peoples’ talents.
We only face the end if we fail to act. At Gatehouse, one imagines that the weeklies will always remain relevant and strong and profitable. It is the dailies which are problematic. The dailies need to become hybrids. Everything about them needs to come face to face with the new reality facing them. Today’s cuts look like child’s play compared with what is coming – but it is not the end. We’re not facing the end. We’re facing the beginning of a new era.. Welcom it. Embrace it. Get with it. Sooner rather than later. Those waiting till later won’t be around very long.
Newspapers will never lose their place