Radio and television are a tiny part of MediaNews Group, but according to FCC ownership reports the broadcast stations are not under the holding company which is preparing to file for Chapter 11 bankruptcy reorganization.
MediaNews Group announced that Affiliated Media Inc., the holding company for its newspaper properties, has reached agreement with debt holders on a pre-packaged Chapter 11 filing to be made in the next few days. Even for the 54 daily newspapers and many more non-dailies, CEO Dean Singleton insists that there will be no change in day-to-day operations.
“One critical advantage of our plan, compared with those by some other media companies, is that it is a pre-packaged plan that has the approval of lenders and unlike other filings, this one does not involve our newspaper operations,” Singleton said in announcing plans for the Chapter 11 filing. He said the company is current on all vendor payments and expects to remain so.
Senior lenders of Affiliated Media Inc. are owed approximately $590 million and there are subordinated notes with a face value of $326 million outstanding. Under the pre-packaged reorganization, senior lenders will receive a pro rata share of a new secured loan “in a smaller principal amount but with more collateral and a more financially sound borrower,” the company announcement stated. The senior lenders will also get the majority of new equity in the reorganized company, subject to gradual dilution due to restricted stock grants to key employees. Subordinated note holders will receive warrants for future equity. “All existing equity interests in Affiliated Media will be cancelled,” the company said.
According to a report in the Denver Post, the company’s largest newspaper, Singleton and Joseph Lodovic, President of MediaNews Group, will own 20% of the equity in the reorganized company and have the right to appoint four board members, giving them control. The bank group, led by Bank of America, will appoint three directors. The Denver Post story said the senior loan will be reduced to $150 million. The current shareholders being wiped out in the reorganization, according to the story, include the Scudder family, which had been involved in MediaNews Group since its founding, and Hearst Corporation.
“This reorganization does not come without pain. Current shareholders will be losing the value of their holdings. But we believe that adopting this plan will give us a far better platform from which to develop, grow and participate in the consolidation and re-invention of the newspaper industry,” Singleton said.
Although revenues for the newspaper industry have deteriorated badly over the past three years, MediaNews Group says its papers have performed better than the industry as a whole. All but one of its newspapers are profitable, the company said.
As for the broadcasting side, MediaNews Group’s sole TV station holding is via its 95% ownership of Alaska Broadcasting Company, licensee of KTVA-TV (CBS) Anchorage. MediaNews Group owns 100% of Graham Newspapers, the licensee of four radio stations: KSWA-AM & KWKQ-FM Graham, TX and KROO-AM & KLXK-FM Breckenridge, TX.