Analyst: Give the Rocky Mountain News 90 days, then it’s gone
The announcement Thursday that Denver’s Rocky Mountain News is on the block for the next 30 days starts a clock ticking that will “almost certainly” lead to the 149-year-old newspaper shutting down in 90 days, writes Alan D. Mutter, who blogs about the news business in Reflections of a Newsosaur.
“Given the circumstances,” Mutter wrote Thursday afternoon, “the only logical buyer for the Rocky is the [Denver] Post, which is owned by MediaNews Group.” The Post, which is published along with the Rocky in a Joint Operating Agreement (JOA) between MediaNews Group and E.W. Scripps Co., is bleeding money as freely as the Rocky, so “the only reason Media News would buy the Rocky is to shut it down to save the costs of producing it.”
In buying the Rocky, MediaNews would have more to gain than any other buyer, because the purchase would give it unrivaled control of the market. Thus, it could afford to pay $1 more than any other prospective buyer and still come out ahead.
The two newspapers entered into the JOA with Justice Department oversight in 2001 when the longstanding newspaper war threatened to take both newspapers down. It allows a single entity — the Denver Newspaper Agency — to run printing, ad sales and circulation, while maintaining two independent newsrooms. JOAs were a dodge around anti-trust laws intended to foster competing news voices, but they were established in the days before the Internet, which has been leaching readership from big-city newspapers even before the economic downturn sapped ad revenue.
The offer to sell the Rocky to all comers, which expires at the end of the year, helps insulate Scripps and MediaNews from any accusations that the sale was improperly anticompetitive under the antitrust statutes. When the search comes up empty, then Scripps likely will move forward with the sale to MediaNews.
Scripps has unwound three JOAs and shut down its newspapers in recent years in Albuquerque, Birmingham, and Cincinnati. “If you know your ABCs, you know that D, as in Denver, unfortunately is next,” Mutter tolls.
Because federal law requires 60 days’ notice before shutting down a plant employing more than 100 workers, Mutter points out, expect a shuttering of the Rocky about that many days after Scripps fails to find a buyer or the Post owner tenders a bid. “Ironically,” he notes, “its closing would come weeks before its 150th anniversary in April.”
Any other buyer intending to operate the Rocky would face huge financial obstacles beyond the tanking economy, which has seen newspaper ad revenue tumble by $2 billion in the third quarter — a historically high 18 percent dive likely to accelerate at year’s end. Included with the Rocky would be $130 million in debt on a new printing plant, on top of an estimated $15 million operating loss this year, plus the tangles of the JOA, which would limit any buyer other than the Post from realizing the full gains from any upturn.
As the sole publisher in a one-newspaper town, the Post could immediately save printing and distribution costs on 210,000 daily copies of the Rocky, in addition to shutting down the competing newsroom.
“We are committed to Denver,” MediaNews owner and Post publisher Dean Singleton told the Rocky on Thursday, saying he plans to “wait and see what happens.”
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