Journal Register files for bankruptcy


The Journal Register Company (The New Haven Register and The Trentonian) has again filed for bankruptcy protection (9/5) and is looking for a quick sale, said Digital First Media, which operates the company along with the MediaNews Group.

The Chapter 11 filing comes three years after Journal Register emerged from a prior bankruptcy case.

Digital First Media says it expects normal operations to continue during the sales process. Journal Register would be sold at auction, it said, and had signed a stalking horse bid from an affiliate of Alden Global Capital.

Digital First CEO John Paton, said Journal Register had more than doubled its digital audience in the last two years. But he said the company was still struggling with print advertising and legacy costs.

In making the announcement, he sent an e-mail to the staff:

Today Digital First Media announced Journal Register Company has filed

for Chapter 11 bankruptcy and will seek to implement a prompt sale.

We expect the auction and sale process to take about 90 days, and I am

pleased to tell you the company has a signed stalking horse bid for

Journal Register Company from 21st CMH Acquisition Company, an affiliate

of funds managed by Alden Global Capital L.L.C.

So why file Chapter 11?

The company exited the 2009 restructuring with approximately $225

million in debt and with a legacy cost structure, which includes

leases, defined benefit pensions and other liabilities that are now

unsustainable and threaten the company’s efforts for a successful

digital transformation.

From 2009 through 2011, digital revenue grew 235 percent and digital audience

more than doubled at Journal Register Company. So far this year,

digital revenue is up 32.5 percent. Expenses by year’s end will be down more

than 9.7 percent compared to 2009.

At the same time, as total expenses were down overall, the Company has

invested heavily in digital with digital expenses up 151 percent since 2009.

Journal Register Company has and will continue to invest in the


But also from 2009 to 2011 Journal Register Company’s print

advertising revenue declined 19 percent and print advertising represents more

than half of the company’s revenues. Print advertising for the

newspaper industry declined approximately 17 percent over the same time

period, according to the Newspaper Association of America. As well,

both print circulation and circulation revenue have also declined over

the same time period.

Since 2009, printing facilities have been reduced from 14 to 6; 9 of

the 50 owned facilities have been sold and 8 distribution centers have

been outsourced.

During the same time period, debt was reduced by 28 percent with the company

currently servicing in excess of $160 million of debt.

All of the digital initiatives and expense efforts are consistent with

the company’s Digital First strategy and while the Journal Register

Company cannot afford to halt its investments in its digital future it

can now no longer afford the legacy obligations incurred in the past.

Many of those obligations, such as leases, were entered into in the

past when revenues, at their peak, were nearly twice as big as they

are today and are no longer sustainable. Revenues in 2005 were about

two times bigger than projected 2012 revenues. Defined Benefit Pension

underfunding liabilities have grown 52 percent since 2009.

After a lot of thought, the board of directors concluded a Chapter 11

filing was the best course of action.

Journal Register Company’s filing will have no impact on the

day-to-day operation of Journal Register Company, Digital First Media

or MediaNews Group during the sale process. They will continue to

operate their business and roll out new initiatives.

If you have questions just ask ­ you know how to reach me.

I know this announcement will leave you with questions ­ ask. Your

managers, I and any member of senior leadership at Digital First Media

will be available to answer.

And while I get this news may make some of you nervous, don’t let it.

Concentrate on the job at hand and we will work through this. This

really is the right decision for Journal Register Company.