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Dorian Benkoil senior consultant at Teeming Media. An award-winning journalist and editor, he was a foreign correspondent for AP and Newsweek, and international and managing editor for At ABC News he moved to the business side, handling sales integration and business development, before joining Fairchild Publications as General Manager for their Internet division, becoming editorial director for, then a consultant for Teeming Media in New York. He graduates this year with an MBA from Baruch's Zicklin school of business. Learn more about him at or his blog -

Robert Cauthorn is a journalist, former vice president of digital media at the San Francisco Chronicle, and was the third recipient of the Newspaper Association of America's prestigious Digital Pioneer Award. He launched one of the first five newspapers web sites in the world and is generally considered to have delivered the first profitable newspaper web site in 1995. Cauthorn has been in the middle of the transition from old media to new and is recognized as frank-talking critic when he believes newspapers stray for their mission. In mid-2004 he became the president of CityTools, LLC a new media startup based in San Francisco.

Ben Compaine has divided his career between the academic world and private business. He was a journalist when manual typewriters were considered state of the art, but also led the conversion of his college newspaper to cold type. He has started and managed weekly newspapers. His dissertation at Temple University in 1977 was about the changing technologies that were going to unsettle the landscape of the staid and low profit newspaper industry. Since then he has focused his research and consulting on examining the forces and trends at work in the information industries. Among his most well-known works (and the name of his blog) is "Who Owns the Media?".

Vin Crosbie has been called "the Practical Futurist" by Folio, the trade journal of the American magazine industry. Editor & Publisher magazine, the trade journal of the American newspaper industry, devoted the Overview chapter of executive research report Digital Delivery of News: A How-to Guide for Publishers to his work. His speech to the National Association of Broadcasters annual conference was one of 24 orations selected by a team of speech professors for publication in the reference book Representative American Speeches 2004-2005. He has keynoted the Seybold Publishing Strategies conference in 2000; co-chaired and co-moderated last year's annual Beyond the Printed Word the digital publishing conference in Vienna; and regularly speaks at most major online news media conferences. He is currently in residence as adjunct professor of visual and interactive communications and senior consultant on executive education in new media at Syracuse University's S.I. Newhouse School of Public Communications, and meanwhile is managing partner of the media consulting firm of Digital Deliverance LLC in Greenwich, Connecticut.
About this blog
Two forces have shattered the news media. Technology is the first. Although media technology is undergoing its greatest change since the day in 1440 when Johannes Gutenberg first inked type, for more than ten years now the news industry has mistaken new technologies merely as electronic ways to distribute otherwise printed or analog products. Estrangement is the second. The news media has lost touch with people's needs and interests during the past 30 years, as demonstrated by rapidly declining readerships of newspapers and audiences of broadcast news. How we rebuild news media appropriate to the 21st Century from the growing rubble of this industry is the subject of this group weblog.
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Rebuilding Media

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September 21, 2008

How the Credit Crisis May Affect Highly Leveraged Publishers

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Posted by Ben Compaine

The current financial crisis only rubs salt into the wounds of the newspaper industry. Already hemorrhaging advertising linage and revenue (The Philadelphia Inquirer is reduced to putting car dealer display ads in the main news section where attractive full pages of department store ads used to be), a recession would further erode advertising. But now comes a credit and liquidity crunch that could affect newspapers companies carrying high debt loads, especially if the debt needs to be refinanced in the near term.

The “Heard on the Street” column of The Wall Street Journal last Friday noted that “Of the U.S. media companies whose debt is rated by Standard & Poor's ... 86% are speculative-grade, a higher percentage than any other industry.” Those companies planning to pay down debt through asset sales, such as The Tribune Co., may find that potential acquirers will have less access to financing. With $12 billion in debt, it was expected to pay some of that down through the sale of the Chicago Cubs. But that is not a done deal.

McClatchy Balance Statement

For example, McClatchy, the third largest newspaper publisher, is laden with debt from its 2006 acquisition of Knight Ridder. Its long term debt is still 10 times higher than pre-Knight Ridder even after using proceeds from sales of some newspapers to pay down debt. At the end of June, McClatchy had $1 billion in revolving and term bank notes loans as well as $50 million in public debt that will come due in 2009.

Its Long Term Debt to Equity is 5.8, up from 0.1 in 2005. And its stockholders equity is down 72% from its 2005 level. All this gives the owner of the Miami Herald and Raleigh News & Observer little wiggle room for raising additional capital. This crunch is reflected in its recent dividend announcement, cutting in half its dividend to conserve cash. That step is in addition to a 10% reduction in its workforce.

Holding higher relative amounts of debt is called “leverage” in the financial world. Used judiciously, leverage can help an enterprise grow without diluting the holdings of the owners. But when access to debt is too cheap and easy, it can also lead to making poor strategic decisions. And once laden with debt, it restricts further flexibility when, as now, credit comes with more strings and tighter knots.

With the decline in advertising and circulation, restrictive and more expensive credit may only accelerate the slide for some media companies.

Comments (7) + TrackBacks (0) | Category: Newspapers


1. BETTY H on September 22, 2008 8:40 AM writes...

The model of the Newspaper Conglomerate (excluding specialty papers-W.SJ., IBD, BARRONS) cannot continue; especially in leveraged form.

The following factors: raw material inputs, energy, organizational structure, and dependence on low compensated "independent contractor" home delivery carrier distribution systems, threats from lawsuits and government actions regarding independent contractors (see P.C.F.), represent long-term fatal flaws in model.

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