GR EXTRA!

Update on the MedaNews bankruptcy

Consolidation with the Chronicle in the works?

03 Feb 2010

California Media Workers Guild

The MediaNews bankruptcy marches ahead.

So far, proceedings in Delaware bankruptcy court seem to agree with the idea that Chapter 11 proceedings will be limited to MNG's holding company, Affiliated Media Inc., and will not affect employees or union contracts.

David R. Hock of Cohen, Weiss and Simon represented The Newspaper Guild/Communications Workers of America locals at the first day hearing on Jan. 26. It appears the pre-packaged bankruptcy will come to a swift conclusion, heading for confirmation without objection on March 4.

The U.S. Trustee is not inclined to convene a creditors' committee. Local counsel of record will keep us updated on any court filings.

What the bankruptcy documents have shown so far:

* Hearst loses its $300-$400 million investment in MNG, but will get warrants that someday could be converted to stock.

* MediaNews President Jody Lodovic and Chairman and CEO Dean Singleton will continue to control the company post-bankruptcy.

* Under the reorganization plan, Singleton gets $634,000 in annual salary, an annual bonus of up to $500,000, and another $360,000 in salary from the Denver Post Corp. (Read AP's story here: http://abcnews.go.com/Business/wireStory?id=9643608)

* Lodovic gets $1 million in annual salary and an annual bonus of up to $500,000. He already got $500,000 in bonuses for leading the reorganization, and stands to get an extra $250,000 bonus when the bankruptcy is official.

Guild attorneys will continue to monitor the proceedings, including scouring all Local agreements and pension plans for any mention of Affiliated Media.

The full text of the bankruptcy disclosure statement can be read here: http://price-news.com/disclosure-statement7.pdf

Consolidation with the Chronicle?

At this point, a main concern for all of us should be whether this bankruptcy will pave the way for even more consolidation -- including a potential merger of the Bay Area News Group with the San Francisco Chronicle.

Singleton has been open about his desire to pursue more aggressive consolidation post-bankruptcy, telling the Washington Post that to imagine where such mergers might occur, "You can look at the map."

As blogger Alan Mutter notes, "The long-running losses at the Chronicle, plus the MediaNews bankruptcy, may be sufficient to persuade regulators that an antitrust waiver is necessary to sustain journalism in Northern California."  (Read the rest here: http://newsosaur.blogspot.com/2010/01/next-for-medianews-rolling-up-ailing.html)

Over the past few years, both the Chronicle and the Bay Area News Group have suffered huge cuts to staffing, benefits, and our news hole. Guild members at all our region's newspapers have endured significant personal sacrifice to help keep our companies afloat.

We understand the financial realities of our industry. Our bargaining units have always sought to act as partners rather than adversaries. When our companies succeed, we all benefit.

But when we see our owners making grave mistakes, we must stand in their way. If cheapening and worsening of our product continues, our readers and advertisers will lose their last shreds of faith in our ability to serve the public, and provide accurate, comprehensive and timely information.

Corporate owners routinely push for mergers and less competition. That's never been in the best interest of workers or the community; it's illegal in many cases.

The Guild will fight any attempt to eliminate newsroom jobs, or entire newsrooms. We need a real, long-term business plan that values quality jobs and quality journalism. Cuts and consolidation alone cannot save the news business.

One last thought on the MNG bankruptcy, and local vs. corporate ownership, from the Seattle Times:

"Newspapers need to be in the hands of people who care about them. Those are almost always investors with a strong local connection. The San Jose Mercury News ought to be owned by people from San Jose — not by a company in Denver owned by another company in Denver owned by a bank in Charlotte, N.C."

Read the rest here: http://seattletimes.nwsource.com/html/editorialsopinion/2010889537_edit26singleton.html