Though attempts to reemerge from bankruptcy by the new owners of Philadelphia Newspapers LLC's assets and the Tribune Company have seen their share of obstacles, both got news in the last week that they'll each be getting something they respectively need: time and help.
Philadelphia Media Network Inc., which bought the Philadelphia Newspaper's assets including the Philadelphia Inquirer and the Philadelphia Daily News, had until Aug. 31 to finalize the $139 million purchase, which required approval by 14 unions tied to the publications, agreed to following a Spring auction. That date came and went, which originally was thought to be a potential death knell. However, Chief Bankruptcy Judge Stephen Raslavich extended the deadline by two weeks, to Sept. 14, late in the game.
Though it was thought that the dominos would fall into place with its agreement with the Philadelphia Newspapers Guild, which included concessions such as pay cuts and an agreement not to continue an appeal to disallow the sale, two of the 14 unions tied to the publications remained holdouts.Three unions have made agreements with Philadelphia Media Network in the last week. One of the two remaining holdouts, a Teamsters union representing drivers, is scheduled to vote Sunday.
Meanwhile, Tribune Co., publisher of the Los Angeles Times and Chicago Tribune among many diverse assets confirmed that a mediator has been brought in to assist with the vitriolic negotiations for its bankruptcy exit. Judge Kevin Gross was appointed to the position by the U.S. Bankruptcy Court for the District of Delaware. It's part of Tribune's attempt to backtrack and build some type of consensus among the various stakeholders after allegations of wrongdoing that included complaints from lower-level creditors.
Tribune watched its plan to exit bankruptcy evaporate in late August. Many creditors originally cried foul over what appeared to be a deal that would leave smaller stakeholders with little to nothing. But even as more eventually came on board with the plan, creditors of various sizes who formerly supported the Tribune's plan to exit bankruptcy withdrew amid widespread allegations that the 2007 leveraged buyout of Tribune, which also owns more than 20 television stations, essentially amounted to a massive fraudulent financial transfer. There were also reports circulating that a group of unsecured creditors would file their own Chapter 11 reorganization plan without the support of Tribune.
More time for Philadelphia Media Network and a helping hand in the form of a mediator for Tribune essentially were necessities for each to move forward. However, the road is far from smooth from here.
Bruce Nathan, Esq., Lowenstein Sandler PC, noted in last week's eNews that many publishing groups like these are facing massive long-term challenges because of overleveraged books, recession-driven decreases in advertising revenue and a shrinking readership and advertising based on various free and/or online options. Nathan called it a deadly combination.
"I mean, I don't even get the paper anymore. I read the [New York] Times online, and I'm an old goat," he said.
Brian Shappell, NACM staff writer