* I don’t know who would ever buy it, but the State Journal-Register may be selling its building on the city’s East Side…
[State Journal-Register publisher Walt Lafferty’s] disclosure came during a recent newsroom meeting called to discuss the efforts of GateHouse Media, the newspaper’s owner, to turn around sagging financial fortunes. GateHouse stock, which sold for more than $20 a share during the initial public offering five years ago, is virtually worthless, selling for as little as four cents a share last week. The company has more than $1 billion in debt due in 2014.
Lafferty told the news staff that he will likely contact a broker about selling the building after Jan. 1, according to multiple sources who attended the meeting.
“He said ‘I need to make this a priority,’” said one source who spoke on condition of anonymity. […]
The basement press was shut down last spring, with printing moved to Peoria and a loss of more than 50 jobs in Springfield. The newsroom staff has also shrunk, as has the advertising department. The reduction in employment is reflected in the empty spaces in the newspaper’s employee parking lot, which overflowed with vehicles prior to GateHouse buying the newspaper in 2007. Today, there is plenty of room to park on any given day.
That company simply did itself in. It borrowed extensively to buy papers when the market was hot, and now it’s stuck with all those newspapers while the market is in a deep trough. That $1 billion debt payment next year may put it under.
…Adding… This post in no way should be meant to be seen as gloating over the SJ-R’s troubles. It’s a sad day for the paper and for Springfield. I have friends over there, and stories like this make me worry about them. Try to take this to heart in comments.
* Meanwhile, Crain’s reports that the Sun-Times is in negotiations to sell the company…
Merrick Ventures LLC CEO Michael Ferro Jr. is assembling a group of investors that includes Madison Dearborn Partners LLC Chairman John Canning Jr. to make a bid for Sun-Times Media Holdings LLC, according to people familiar with the effort.
The high-roller group is weighing an offer of about $14 million plus assumption of debt, but it’s not clear when a formal bid will be made for the Chicago-based newspaper chain, the people said. […]
Mr. Ferro has been discussing an offer for the newspaper publisher over the last several weeks, the people said. […]
In the two years since the group bought the newspaper publisher out of bankruptcy, the company has outsourced printing and distribution of its flagship Sun-Times newspaper to rival Tribune Co., shutdown some of its suburban newspapers and cut hundreds of the 1,800 employees who worked there when the group took over.
Messrs. Ferro and Canning already have shown an interest in Chicago media with their investment last year in the Chicago News Cooperative, which publishes city news on its website and on the Chicago pages inside the New York Times twice a week. Mr. Canning is chairman of CNC’s board and Mr. Ferro also sits on its board.
* But Sun-Times Media’s chairman says the paper is not for sale…
But Halbreich said the company has received numerous inquiries from potential purchasers since part-owner James Tyree died in March. Tyree, then the chairman of Mesirow Financial, recruited investors to buy the company for $5 million out of bankruptcy in the fall of 2009.
“The paper and the company have never been put up for sale. We’ve not been shopped. We are not being marketed,” Halbreich said.
In an e-mail to employees, Halbreich said, “The fact that our competition is speculating about our future is due in no small measure to the success of the turnaround that we are in the middle of.”
- Son of a Centrist - Thursday, Dec 1, 11 @ 11:48 am:
Yet another newspaper that bemoans the state’s financial situation… while its own house is burning down.
- Rich Miller - Thursday, Dec 1, 11 @ 11:49 am:
===bemoans the state’s financial situation… while its own house is burning down. ===
Yeah, well, put it this way, they know first hand how borrowing can put a company in the tank.
- Cal Skinner - Thursday, Dec 1, 11 @ 11:56 am:
State government will buy it.
- Pot calling kettle - Thursday, Dec 1, 11 @ 11:57 am:
This is a very good example of how you can take a profitable company and sink it with unnecessary debt. The current model of make-a-buck-now has overridden the approach to management that takes a much longer view.
- Rich Miller - Thursday, Dec 1, 11 @ 12:00 pm:
Cal, the state has been moving away from downtown for the past few years. A decade ago, the state might’ve bought the building. Now, not so sure.
- Small Town Liberal - Thursday, Dec 1, 11 @ 12:05 pm:
- borrowing can put a company in the tank. -
Borrowing to gamble is a little different than borrowing to get a better rate. I’m pretty sad about the idea of newspapers going under, and I realize that some of the problem is the growth of electronic media. However, another part of the problem is the economic crisis, and it would be nice if these newspapers reported more accurately about who the real culprits were in tanking the economy.
- Pot calling kettle - Thursday, Dec 1, 11 @ 12:36 pm:
==another part of the problem is the economic crisis==
True, but it looks like the company went to the very limit of what they could borrow based on a rosy forecast of future business. That makes sense in the short term, but not in the longer view when an downturn or at least a hiccup is inevitable. The lenders were at fault as well, but again, it made sense in the short run.
- CircularFiringSquad - Thursday, Dec 1, 11 @ 12:40 pm:
Looks like Capt Fax is all mended and having compassion for the overly indebted.
Maybe Isringhausen can buy it. They seem to be snapping up downtown land lately.
In the meantime, where is the SJR planning to locate their remaining staff?
- wordslinger - Thursday, Dec 1, 11 @ 12:55 pm:
I don’t think newspapers saw how quickly and devastatingly the EBays and Craiglists of the world would take away their classified ad business. They all thought the papers would always own the local markets.
- Cal Skinner - Thursday, Dec 1, 11 @ 1:13 pm:
It certainly is a showcase building that would make any department head proud to occupy its executive suite.
Maybe the Office of Education could move out of the building it has leased since Roland Burris was head of state leasing under Dan Walker.
- Anonymous - Thursday, Dec 1, 11 @ 1:20 pm:
Gatehouse isn’t alone. Lee is in the same boat, saddled with a billion in debt from the Pulitzer purchase, and it, too, has been selling properties. And the staff downsizings continue, with fewer people asked to do more and more. It’s not that local newspapers aren’t viable, though. Lots of people think they are a defunct business model. They’re not. Local businesses still buy ads and readers still subscribe. No, I wouldn’t do what Warren Buffett just did in buying the Omaha publishing company, but there is still money to be made with the right business model, at least for a few more years. Is online the future? I don’t know. When you look at the paltry revenue that comes from online compared to the dead trees product, there’s only enough there to support an editorial staff that consists of an intern typing up press releases. I’ve been doing this for a living for 35 years, and these are difficult days, to say the least.
- Coach - Thursday, Dec 1, 11 @ 1:26 pm:
=== In the meantime, where is the SJR planning to locate their remaining staff? ===
In a two-bedroom apartment somewhere near the Capitol.
- Yellow Dog Democrat - Thursday, Dec 1, 11 @ 1:27 pm:
@wordslinger - you left out the 800 lb gorilla, Google. Which many newspapers still erroneously refer to as a “search engine” when in fact it is a classified ad company.
My grandmother was a reporter for the SJR back before Rich was born, and they are still one of the best sources of state policy reporting, so I wont gloat over their woes.
- Moderate REpub - Thursday, Dec 1, 11 @ 1:50 pm:
Its location is perfect for the county to centralize a lot of its leases. I would look for them to buy or lease it. Its right next to the newer county building. Maybe the newly combined County/city Heath Department?
- Retired Non-Union Guy - Thursday, Dec 1, 11 @ 2:21 pm:
Maybe someone (Rich?) should offer to do a highly leveraged buyout / package deal of both the building and the local newspaper …
Be a shame if the SJ-R moves to other facilities; the building is a great landmark. My cousin spent a lot of years there as a pressman. One of my prize possessions from him is the actual printing plate showing our wedding announcement about 27 years ago; it’s on the living room wall.
- Dan Shields, Springfield, IL - Thursday, Dec 1, 11 @ 2:46 pm:
Very sad, the SJ-R was a reliable and wothwhile news sourcee before Gatehouse bought it. I refuse to subscribe to it now.
- western illinois - Thursday, Dec 1, 11 @ 3:23 pm:
Gatehouse made a bet that small papers would survive the internet -thye were right on teh small papers but a now former exec convinced them that Springfield and Rockford were small towns and then I am sure some bailed out banks lent them the whole purchase price.
I wonder how the banks are booking those loans. i wonder if thye were able package them and dump them on some unsuspecting investors.
- Stark's Boys - Thursday, Dec 1, 11 @ 5:47 pm:
This is very unfortunate, indeed. I have always held the SJ-R in high regard. Bernie seems to often be the only reporter on the beat who has the temerity to call the BS of legislators who simply blurt out talking points. Their edit board understands how the process works, knows there has to be some give and take, and doesn’t seem to have its own personal agenda/vendetta. Looking at you, Trib.
Hope this all works out.
- Newsclown - Thursday, Dec 1, 11 @ 6:26 pm:
There is newly-opened-up space at the former offices of the Springfield Shopper, next to the Monroe street Starbucks.
Setting aside the bad financial dealings of Gatehouse, the SJR’s model even before then was unsustainable, in that they kept cutting the content creators to save a buck. But with less and less original content, what’s left but re-treaded AP newswire copy and advertorial content? THAT’s why most people don’t buy the SJ-R. Without the content, it’s only fishwrap and birdcage liner.
And no amount of cost-cutting makes that lack of content any more appealing. Folks don’t stop reading news - they go find better news coverage elsewhere.
I think the future of the newspaper is something like the aggregator model of Slate.com and Huffpost. Only they would actually PAY their writers:-)
What I mean is, like our pioneering good friend Rich here, I foresee the reporters all becoming their own syndicated source and brand, free agents, so to speak, there is no building to go to, and the aggregator site is just the handy virtual location where they all have links and access points. The aggregator still uses ad banners, and offers free editorial pages and certain content like weather and wire service content. It shows the headlines and lead paragraph of the story. Then you use micropayments like paypal or bitcoin or whatever, and a buffet-like selection process to “pick your paper” and get a custom stream or download to your phone or whatever. Once you get the setup the way you like it, you can get your favorites with one click each day.
“I’ll take these three beat reporters, the crime reporter, that politics reporter, local sports, the education reporter, the editorial page, and these three columnists”. Bam. Served. Later in the day you’ll get a text or bumper message that so-and-so’s story has an update if you want to pay for it. Or you can get the update for free if you accept a banner ad with it. Those banner ads are now hyper-customized based on the subject of the article. Or for a higher annual sub, those all get pushed to you automatically for free for any story you bought *once*. That’s a good deal for any story with “legs” like a Blago story. The reporters each get paid directly based on their hits and subscriptions. The aggregator handles the payments and negotiates the rights if a story goes national.
Would work for phones and tablets and computers. I’m trying to think of a model where it makes sense to have a hard copy printout, but I got nothin’ there.