Bankruptcy could kill Philly Daily News
The gritty and colorful tabloid – whose circulation is about a third of its sibling, the Philadelphia Inquirer – is the most logical place for publisher Brian Tierney to find the significant operating savings that will enable him to restructure the debt that has overwhelmed his young media company.
Tierney and the investors who helped him buy the papers in 2006 all but certainly lost their collective investment of about $150 million when Philadelphia Media Holdings on Sunday filed for Chapter 11 bankruptcy protection. The filing, which seeks to protect the company from creditors owed some $412 million in debt plus additional accumulared interest payments, is the fourth by a major publisher in three months.
Journal Register Co. sought bankruptcy protection on Friday, the Minneapolis Star Tribune sought protection in January and Tribune Co, sought protection in December. The relative financial health of certain other publishers is detailed in the most recent iteration of the Default-O-Matic.
Although the Philly Daily News has a loyal following with an average of 97,694 copies per day, the costs of producing a second title may be something Tierney no longer can bear in the worst environment for newspaper advertising in history. The long-running secular declines in readership and advertising have been aggravated by the continuing deterioration of the global economy.
Closing the Daily News would enable Tierney to achieve across-the-board savings on everything: editorial, production, marketing and circulation. The shutdown of the Daily News presumably would give management the ability to eliminate certain positions mandated today under contracts with the unions that produce and deliver its papers.
Most of the savings probably would be go toward repayment of the company’s debt in the new deal that Tierney has said he hopes to craft with his lenders. When the economy turns around, any surplus profits generated by the surviving Inky could be used to fund such potential strategic projects as suburban weeklies or online and mobile initiatives.
Although shuttering the Daily News would be painful, Tierney has an advantage in the evident familiarity that a substantial number of Daily News readers have with the Inky. The Inky’s circulation swells to 556,426 on Sunday from 300,674 during the week, suggesting that a fair number of Daily News readers take the Inky on Sunday.
To ease the transition for Daily News readers, the Inky would prominently feature signature features and writers from the Daily News and might even consider publishing a tabloid edition of itself for six months. The Chicago Tribune recently began printing a tab version of itself to boost street sales and mimic the format of the competing Chicago Sun-Times.
FOOTNOTE: Things aren't all glum in Philly. Forbes Magazine reports that it discovered in the bankruptcy papers that Tierney got a 38% pay raise two months ago to $850,000.