A Dallas Downtown News staffer who went to the company’s bank to cash his payroll check on Valentine’s Day caught an unsettling glimpse into the financial plight of the bold little weekly that has analyzed city and neighborhood affairs for the past eight years. The account was on hold, the staffer was told. The Dallas Downtown News had to make a deposit before the staffer could claim his money.
Even the soundest of companies hits a cash flow dam occasionally. But this incident, coupled with other recent developments, suggests the Downtown News rests on feeble pins. For the past several months, employees, creditors, and media junkies at large have worried that the paper teeters at the edge of the abyss.
So far, the paper’s doors have opened each day, but cost-cutting has been brutal. Freelance columnists have been cut back or dropped entirely. Company contributions to an employee insurance plan have been eliminated. Beginning March 15, Editor Kit Bauman was put on half time, at half salary, for a period of three months.
In the first week of February, 28,000 subscribers and those who pick up 18,000 copies distributed free in restaurants and office buildings nearly missed an issue. Dallas/Fort Worth Suburban Newspapers, Inc. (formerly News Texan), an AH. Belo Corporation subsidiary that prints the Downtown News on contract, refused to run the presses, apparently because of unpaid bills. The February 3-9 edition appeared a day late and managed that only when another printer jumped in at the last minute.
Parties to the printing dispute would not discuss their disagreement, but according to other sources, the dispute arose on Friday, the day the paper was delivered to the printer, who demanded a pledge of assets to secure unpaid bills. Publisher Lyn Dunsavage put him off, saying stockholders had to approve any such provision. He promised to continue printing, pending a new agreement.
However, on Saturday, when the ink should have flowed, the printer refused to run a single copy without a new agreement in hand. Dunsavage hastily arranged printing at Dallas Offset, Inc.. which, at this writing, continues to produce the paper.
Since Definitely Downtown. Inc., which owns the Downtown News, is a privately held company, detailed financial data were not available. However, Dunsavage confirmed that her company owes a sizable sum to Suburban Newspapers, and educated guessers put the total at roughJy $46,000. “We were paying them off a little each week,” says Dunsavage. “I don’t know what precipitated the action.”
Despite current struggles, the Downtown News itself seems healthy. It’s a sick sister called the North City News that has swamped Definitely Downtown. Inc. in a sea of red. Some weeks, the 12.000 copies distributed free in far North Dallas contained as few as two paid ads. According to Dunsavage, the parent company is not liable for the mounting debts of the North City News, but indications are that the ailing property has sapped the firm’s resources of between $11,000 and $15,000 a month. Says Dunsavage: “The two companies are separate entities, and to [assess] the financial soundness of one company based on financial information from another would be incorrect….”
About the first of this year, Dunsavage put a For Sale sign in front of the North City News. Several prospective buyers are on the string, she says, and a sale could solve her financial problems. Reportedly, she is asking $50,000 cash and a series of notes and contract agreements that would boost the sales price to about $200,000 over a period of ten years.
Just what a buyer would get for that kind of money is a puzzler. An unaudited (and extremely muddled) balance sheet Dunsavage hands out to potential purchasers paints a grim picture. By this account, which is labeled as the accounting sheet of the North City News but which may include revenues and expenses from both papers, current liabilities of the North City News, at $207,000, outstrip assets by almost $72,000. Making generous allowances for the paper’s name and good will, the value of the property soars, perhaps, to zero.
Buried somewhere in the data Dunsavage has passed out is a number that may prove to be the real key to the current problems at the Downtown News and North City News. It is on a line called “Accrued Payroll Taxes,” and it totals roughly $41,000. That much in back taxes owed by a company with estimated gross annual revenues of under a quarter of a million dollars could spell trouble.
Still, the publisher remains optimistic about the future of The Dallas Downtown News. As soon as the North City News is off her back, she says, she plans to build on strength. Without talking specifics. Dunsavage hints at stronger city government coverage and more from columnists like Alex Burton and Norm Hitzges who give the Downtown News its sparkle.
“Things are tight.” says Dun-savage. “They are very tight. But we plan to continue publishing the Downtown News. We’re going to make it better than ever.”
Dunsavage has worked wonders at the Downtown News in the past eight years. More than once, she has pulled out a rabbit when times were bleak. This time it may take more than magic to do the trick.
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