Newspapers in Arkansas Face Another Foe: Debt

We’ve talked alot here about the challenges the Internet has presented newspapers. Now Arkansas Business media reporter Mark Hengel talks about another challenge facing newspapers: debt.

Here in Arkansas, two newspaper companies are struggling with debt: Morris Communications, which owns the Log Cabin Democrat in Conway, and GateHouse Media, which owns eight newspapers here:

Morris Communications of Augusta, Ga., purchased Conway’s Log Cabin Democrat in the mid-1990s, during a period of acquisition. The company recently sold 14 papers to raise money to pay down debt, but even after the $85 million payment, Morris remains $418 million in the red, according to a Securities & Exchange Commission filing.

Moody’s Investors Services, which rates bonds, now rates Morris’ bonds as Caa1, low even for junk-bond status. The rating means that Moody’s believes there is a 35.7 percent chance Morris will default on its loans, something Morris said in May was a possibility.

Last month, Morris announced that it would discontinue the company match on the employee 401(k) program. The move appears to be a cost-cutting measure to help raise money to further pay down the company’s debt.

GateHouse Media of Fairport, N.Y., which owns eight papers in Arkansas, is also struggling with its debt. The company had total debt of $1.2 billion at the end of 2007, according to the company’s annual report.

The company’s Arkansas properties include daily newspapers in Arkadelphia, Helena, Hope and Stuttgart.

In the annual report, the company said that its debt might endanger dividend payments and basic operations.

Mark contrasts those situations with the seemingly healthy state of two other Arkansas newspaper companies, Wehco, which owns the Arkansas Democrat-Gazette and other newspapers, and Stephens Media Group, which owns the Arkansas News Bureau and papers in central and northwest Arkansas.

Stephens Media’s president, Sherman Frederick, hints that other newspapers’ troubles might mean expansion opportunities for its operation:

“We are interested in any newspaper in Arkansas,” he said. “That’s what everybody is wondering: Whether there are going to be any bargains out there.”

Much more from Mark and ArkansasBusiness.com here.

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2 Responses

  1. I heard that a newspaper in Seattle is having to close down after 150 years of production because of this terrible market. It’s so sad.

  2. What specific newspaper are you talking about?

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