Saying its share of operating income from a Joint Operating Agreement (JOA) in Denver is not enough to cover editorial costs, E.W. Scripps put the Rocky Mountain News up for sale. If no buyer is found by mid-January, Scripps says it will “examine its other options” for the newspaper.
Scripps previously shut down two of its daily newspapers in markets where its property was the #2 player in the market – Cincinnati and Albuquerque. The situation is a little different in Denver, where “The Rocky,” as it is affectionately called, is pretty much even with MediaNews Group’s Denver Post. According to a Post article just last month, weekday circulation at the Post was 21,858 for the Post and 210,281 for the Rocky at the end of September, with each down 6.6% over the preceding six months. Daily circulation for both fell nearly 12% in 2007.
The two newspapers have been in a JOA since 2001, splitting the take 50/50 from the Denver Newspaper Agency, which handles ad sales, printing and distribution for both, while the newspapers maintain separate editorial staffs. Scripps said its share of operating income fell more than 50% to $5 million in the first nine months of 2008, while editorial expenses for The Rocky were nearly $16 million for the same period.
“The decision to seek a buyer for The Rocky would have been unthinkable until very recently,” said Scripps CEO Rich Boehne. Scripps has owned the newspaper since 1926.
Scripps said there will be no changes at The Rocky or rockymountainnews.com as it seeks a buyer for the newspaper and its 50% stake in the Denver Newspaper Agency, which, by the way, is carrying $130 million in long-term debt from its recently completed consolidation of production facilities.
RBR/TVBR observation: 2009 looks to be a tough year for newspapers. Journal Register has already announced plans to shut down a couple of Connecticut dailies unless someone steps up to buy them. We will not be surprised to see a few others fold their tents as well. Newspapers have very high fixed costs to cover before they generate any cash flow, so unlike radio and television stations, there is not always someone waiting in the wings to pick up a newspaper on the cheap and keep it operating.