The outlook is rocky for The Rocky
In a toxic environment for newspapers exacerbated by the worst recession in two generations, it seems highly unlikely that a buyer will emerge to sustain the feisty tabloid put up for sale today by its owner, the E.W. Scripps Co.
While Scripps and everyone else would be tickled if someone turned up to buy the paper, the announcement more likely is the death knell for the oldest newspaper in Colorado.
That's because a new buyer not only would have to be willing to pay Scripps a reasonable price but also would have to be prepared to fund an operating loss that is expected to reach $15 million this year and potentially could grow in the future.
The purchase of the Rocky by even a well-heeled third party would be further complicated by the fact that the Rocky cannot function as a standalone newspaper.
As the partner in a joint operating agreement with the Denver Post, the Rocky and POst share such crucial chores as selling ads, printing the papers and delivering them. The two respective newsrooms are the only truly independent parts of the operation.
Given the circumstances, the only logical buyer for the Rocky is the Post, which is owned by MediaNews Group. Inasmuch as MediaNews already publishes one newspaper in Denver and doesn’t need any more operating losses, the only reason Media News would buy the Rocky is to shut it down to save the costs of producing it.
In buying the Rocky, MediaNews would have more to gain than any other buyer, because the purchase would give it unrivaled control of the market. Thus, it could afford to pay $1 more than any other prospective buyer and still come out ahead.
In a typical transaction to unwind a JOA, the surving publication agrees to pay the departing parner an annuity for a number of future years.
The offer to sell the Rocky to all comers, which expires at the end of the year, helps insulate Scripps and MediaNews from any accusations that the sale was improperly anticompetitive under the antitrust statutes. When the search comes up empty, then Scripps likely will move forward with the sale to MediaNews.
Before a sale can take place, federal law requires that a company employing more than 100 workers must give its employees 60 days notice when a plant is targeted for a shutdown.
Add together the time it takes to hunt for buyers and the notice period required prior to a shutdown, ant it appears the Rocky has only about 90 more days to live. Ironically, its closing would come weeks before its 150th anniversary in April.
(CLARIFICATION: In my original version of this post, I estimated the number of days at 60, because I did not include the time it would take to hunt for an alternative buyer.)
When the ritual is complete, the Denver JOA almost certainly will be terminated, just as nearly a score of similar arrangements have succumbed in other markets over the years.
Three of the most recent JOA shutdowns were at the Scripps-owned properties in Albuquerque, NM; Birmingham, AL and Cincinnati, OH. If you know your ABCs, you know that D, as in Denver, unfortunately is next.