Wednesday, August 24, 2011
Where there's smoke, there's fire: Bulletin files Chapter 11
The top story was the paper itself. It filed bankruptcy to reorganize its $18 million debt.
The Bulletin revealed that since 2007, when Junior was still president, profits have declined 25 percent. This triggered a loan rate increase from its lender, Bank of America, from 6 percent to 12 percent, but that number was reduced to about 10 percent.
The Bulletin is the flagship paper of the Chandler family-owned Western Communications. WesCom owns six other newspapers along with the Nickel ads in Central Oregon. The newspapers are: The Triplicate in Crescent City, Calif.; The Curry Coastal Pilot in Brookings, Ore.; The Union Democrat in Sonora, Calif.; The Baker City (Ore.) Herald; The Observer in La Grande, Ore.; and the Redmond (Ore.) Spokesman.
The key question is if The Bulletin is doing as well as its editor has claimed over and over again, why can't the newspaper just go to another bank, one not loaded with baggage like B of A, but some other solvent institution, to take out a new loan.
The answer is that they can't. Banks believe newspapers are bad risks. This has little to do with the current economic climate but rather the dismal showings newspapers nationwide have returned to investors in the digital age.
The only paper of real value in the WesCom portfolio is The Bulletin itself.
I'm sure B of A would want WesCom to shed all the other papers. The problem is that there are few buyers out there for underperforming daily or weekly newspapers. And, WesCom is not interested in closing those papers or selling them at a substantial loss.
WesCom may not have a choice after bankruptcy proceedings run their course.
The bitter irony of this bankruptcy filing is that The Bulletin may be forced to do what it has long called government to do: Cut spending even if it means massive layoffs and loss of key services.
As WesCom chairwoman Betsy (Chandler) McCool said, "If we were going to do what they wanted us to do we'd have to lay off mass quantities of people."
Well, as Michael Corleone would say, "It's just business, Sonny."
And, in another stroke of irony, B of A, whose original name was the Bank of Italy in San Francisco, was founded by a reputed loan-sharker named Amadeo Gianini.
As an article in The Bulletin noted: "Other newspapers around the country have filed Chapter 11 bankruptcy in the past several years, including the Minneapolis Star Tribune; the Tribune Co., which owns the Los Angeles Times, Chicago Tribune and other dailies and television stations; and Freedom, a company that owns the Orange County Register and other papers.
"Closer to home, The Columbian in Vancouver, Wash., emerged from bankruptcy in January 2010."
It's easy to say that newspapers have failed to adapt to the Internet age. The industry survived radio, movies and television, but it is lost in the digital era.
Still, it is sad when a punching bag like The Bulletin loses its stuffing.
WesCom sponsors many events in its dominion including the annual fireworks display on Pilot Butte in Bend.
Well, the late editor Robert W. Chandler never did like spending money on those fireworks, but former publisher Greg Cushman, who is married to a Chandler daughter, knew that the new Republican Party loved such vacuous displays of patriotism.
Chandler was editor and publisher of the paper for decades from the early 1950s until he relinquished publisher duties to Cushman in the 1970s.
Now, the paper has a high-paid publisher, editor and chairwoman. The advertising, circulation and financial managers also make substantially more than a market like Bend can afford.
It's no wonder that with such high overhead costs and with the rank-and-file employees bearing the brunt of the cost-saving measures, something had to give.
The answer is bankruptcy.
And you don't need a weatherman to know which which way the smoke is blowing.