Big story for the dailies is coping with parent companies

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The parent companies of both the Soutn Florida and could be under mounting pressure to sell newspaper businesses in the face of fallint ad revenue andsuffocating debt, accordinvg to industry sources and published reports. Despitr their parent companies’ problems, both newspapers are regarded assolidlg profitable, and the Herald’s headquarters offers the bonu of a prime waterfront location in downtown The challenge for a potential sale would be whethefr a buyer is willing to step forwar d in the middle of a recessioj to bid on businesses with declining revenue. Financingv is another hurdle. In a Dec. 9 the Herald reported parent Sacramento, Calif.
-based had been in talks to sell thedaily – which has an average dailyt circulation of 288,179 to condo king Jorge Perez and sugat executive Alfonso Fanjul. Herald spokeswoman Elissa Vanaver said the pape r had no more information beyondits story. “It is and that is all there isto say,” she said The day Chicago-based , owner of the Sun-Sentinel, and Chicagio Tribune, among other papers, filed for Chapter 11 bankruptcy undee the stress of a $13 billion debt deliverexd at the hand of real estate mogul Sam The Tribune chairman and CEO used an employeee stock ownership plan to craft his $8.2 billionb leveraged buyout to take the companyy private last December.
As for McClatchy, it took on $3.176 billion in debt to buy the Herald and the rest of the newspapert chainin 2006. It sold off several newspapers to help pay downthat debt. “Most newspapers, on an operating basis, are profitable,” newspaper analyst John Mortonn said. “They are too overly leveraged.” Morto said such high leverage makes it difficult to ride out thiseconomicv downturn. But, selling won’t be a walk in the either. “This is a terrible time to sell a Morton said. “First of all, there are no and second, newspaper values have dropped in half in the past five Morton said theTribune Co.
bankruptcy is the firstf he can recall for a major company since he entereds the industryin 1970. said it will continuse to operate its mediabusinesses – television stations and interactived media – and has sufficienft cash to do so through the bankruptcy process. But, that may change once the case hits bankruptcy courtr and the company faces the challenge of draftinv an acceptablerestructuring plan, according to Porter managing partner of , a New York City-basexd merchant bank that specializes in media companuy investments. “A good part of the less-than-core businesses will be sold off. It is as much strategg as it is financial,” Bibb said.
He said Tribune’s Floridq papers could be vulnerablebecause “they don’tf contribute very much to the needs of Tribund Co.” Tribune has already sold New York’xs Newsday. Bibb estimated operating profits for most newspapers stilpl hover at about18 percent, whichb is down from the 20 percent to 30 percenr of three years ago. The Sun-Sentinel recently signed a 10-yead deal to print The Palm Beachj Post, a publication that is cutting 300 jobs by closinbg itsprinting plant. The Sun-Sentinel’s printinhg plant in Deerfield Beach is aprofitf center. It also prints , The , Barron’s and New Times, the Post said in announcingf itsmove there.