MediaNews: No layoffs in bankruptcy, but...
Although no one at MediaNews Group will be laid off because of the upcoming bankruptcy of the parent company, employees were told there are no guarantees that there won’t be staff cuts in the future.
“Our decisions about staffing have always been – and will continue to be – in response to business conditions, not our finances,” said a question-and-answer sheet distributed internally after MediaNews announced that it intends to shed some $765 million in debt by reorganizing under Chapter 11 of the bankruptcy code.
The company said bankruptcy would not result in layoffs, but pointedly declined to rule out future cuts. “While there is no guarantee that advertising or circulation won’t deteriorate further and force us to adjust accordingly, there are no layoffs planned as a result of our financial restructuring, ” said the handout.
Affiliated Media, the parent company of MediaNews Group, said late Friday that it planned to file for bankruptcy to eliminate all but $165 million of its $930 million in debt.
A press release issued late on the eve of a three-day weekend said the company’s lenders agreed to a prepackaged bankruptcy that would give them 80% of the equity of the company, with Chief Executive Officer William Dean Singleton and President Jody Lodovic owning 20% of the business and controlling the company’s board.
Privately held Media News is the second largest newspaper chain by circulation in the United States, operating 54 dailies and more than 100 non-daily publications in 12 states.
The MediaNews announcement followed by only a day the news that Morris Publishing Group is taking a similar approach to dispensing with $278 million in debt that it cannot pay.
Morris, which operates 13 newspapers in the Southeast, said it planned to gain approval of a federal bankruptcy court for a prepackaged plan that would give its lenders equity in a reorganized company.
A prepackaged bankruptcy refers to a case in which the creditors being wiped out agree prior to filing to a reorganization that gives them a continuing interest in the business.
The two upcoming filings will bring to nine the number of newspaper publishers that have been forced to file for bankruptcy because they inauspiciously took on unsustainable debt in advance of the fiercest decline in newspaper advertising in history.
The publishers preceding the class of 2010 in bankruptcy court are Freedom Communications, Heartland Publications, Journal Register Co., Minneapolis Star Tribune, Philadelphia Newspapers LLC, Sun-Times Media Group and, the biggest of them all at $13 billion, Tribune Co.