Paper Money

Apr 9, 2009

Newspapers aren’t assets to be flipped, leveraged, and stripped.

Each time a newspaper company closes or files for bankruptcy—as Sun-Times Media, the owner of the Chicago Sun-Times and 58 other newspapers, did this week—analysts are quick to hammer another nail in the coffin of the printed word. Roughly coinciding as they do with the advent of the Kindle 2, the failures give ammunition to voices who say newspapers are obsolete. Now that both of the Second City’s major newspapers are operating under the umbrella of Chapter 11, and with papers in Denver and Seattle shutting down, it’s tough to argue with those who say the industry has useless management, a fundamentally unviable business model, and not much of a future.

While newspapers have serious problems, the recent failures of several newspaper companies (here’s a list of list of four others that have gone BK in recent months) shouldn’t necessarily lead to visions of the apocalypse. Virtually every newspaper in the country has experienced a sharp drop in advertising and is suffering losses. But not every newspaper company in the country has gone bankrupt as a result. And the failures may say more about a style of capitalism than an industry. Each company was undone in large measure by really stupid (and in one case criminal) activities by managers.

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