In a story this morning about Tribune Co. filing for Chapter 11 (local hedge fund Highland Capital had $200 million in the company), there appeared the following two graphs:
Fitch analyst Mike Simonton said more worrisome than the number of newspaper publishers in default is the fact that some, including A.H. Belo Corp. and Sun-Times Media Group, are unprofitable on a cash-flow basis, and aren’t in a position to service debt.
“That should raise red flags,” Mr. Simonton said, adding that newspapers can no longer offset revenue declines with cost cuts. “Closing some of them down as a loss-avoidance strategy may make more sense.” [Ed: that’s the print version; the online version is a bit different.]
I have to say that while we’ve been discussing A.H. Belo’s balance sheet and how bad it looks, I’ve been thinking that surely we are overlooking something, some part of the equation that makes the situation for the News look less dire. Reading those words in the Journal — “Closing some of them down as a loss-avoidance strategy may make more sense.” — was shocking. So what will Dallas look like without the Dallas Morning News? It now seems a fair question.