Newspaper Publisher Journal Register Files for Bankruptcy and Plans for a Sale


 

6:38 p.m. | Updated The Journal Register Company, whose newspapers include The New Haven Register and The Trentonian, has again filed for bankruptcy protection and hopes for a quick sale, said Digital First Media, which operates the company along with the Mediavews Group.

The Chapter 11 filing announced Wednesday comes three years after Journal Register emerged from a prior bankruptcy case.

In this profile from last year, John Paton, the chief executive of Digital First Media, which operates the Journal Register Company, argued that newspapers had to move quickly to digital from print.

Digital First Media says it expects normal operations to continue during the sales process. Journal Register would be sold at auction, it said, and had signed a stalking horse bid from an affiliate of Alden Global Capital.

The chief executive of Digital First, John Paton, said Journal Register had more than doubled its digital audience in the last two years. But he said the company was still struggling with print advertising and legacy costs.

Journal Register operates news and media operations in 10 states.

Mr. Paton has been seen as an innovator in the newspaper industry and has proudly pointed out how much progress the Journal Register has been made in cutting costs and adjusting to a digital age. In a memo Mr. Paton sent to employees, he said the newspaper group more than doubled its digital audience in the last two years. It drastically cut its expenses and reduced its debt load by 28 percent. It also cut back its number of printing facilities and outsourced its distribution.

But Mr. Paton stressed that all of these efforts cannot make up for the company’s advertising revenue losses, which declined by 19 percent from 2009 to 2011. It also faces growing legacy costs. The company still carries $160 million in debt. It is also burdened by the leases it signed to house employees it needed when the company was nearly double its size. And its pension fund liabilities only continue to grow.

“This is about taking the necessary steps to deal with the obligations the company entered into when it was bigger. The company was nearly twice the size in revenue in 2005,” said Mr. Paton in an interview. “What we can’t do is pay for the past. If we could, we would.”

Newspaper industry experts say that the Journal Register’s problems plague the entire industry. Alan D. Mutter, a newspaper consultant who blogs at Reflections of a Newsosaur points to Newspaper Association of America data that shows annual advertising sales revenue for the industry shrunk to less than $24 billion in 2011 from $49.4 billion in 2005. He said that an industry shrinking that quickly cannot afford the obligations like the pensions of employees who retired years before in the current economy.