Singleton memo: Post blindsided by Rocky sale, ‘first step’ to closure
The owner of the Rocky Mountain News notified the owner of the Denver Post it “planned to close the Rocky Mountain News as soon as practical” more than two weeks ago, The Post’s owner, Dean Singleton, wrote in a memo on Thursday. Earlier that day, the Rocky’s owner, E.W. Scripps Co., announced its newspaper was for sale. “As you know,” Singleton wrote in the memo, “an announced sale is usually the first step leading to a failing newspaper’s closure.”
The sale announcement came as a surprise to Singleton, who wrote that his company, MediaNews Group — entangled with Scripps since 2001 in a federally sanctioned Joint Operating Agreement (JOA) that shares revenues and expenses from publishing the two Denver dailies — has spent the last two weeks “[negotiating] with Scripps on the financial details of the Scripps departure from the market” because the smaller, tabloid-style newspaper was draining the JOA’s revenue disproportionately.
“Some will be tempted to immediately write the obituary of The Rocky,” Scripps CEO Rich Boehne said in a statement announcing the sale Thursday, “but we’re hoping this step will open the way for a creative solution to the financial challenges faced by Denver’s great newspapers.” Boehne and other Scripps executives put an optimistic face on the announcement, but analysts see little hope the Rocky — beset with $15 million in losses this year and saddled with debt — will find an owner in a toxic credit market that has seen newspaper ad revenues in freefall.
MediaNews Group has a right of first refusal on any sale of the Rocky, which many expect the company to exercise so it can consolidate operations by shutting down the rival newspaper to achieve market domination.
From Singleton’s memo, which was obtained by KUSA-TV:
MediaNews has sought assurance from Scripps that it would fund its share of Denver Newspaper Agency obligations, such as pensions, among others.
MediaNews was surprised that Scripps made the Thursday announcement without resolving the open financial issues. But I’m sure these issues will be worked out either amicably or otherwise.
“We would expect to end up with the JOA interest,” Singleton told the Rocky’s David Milstead on Thursday, “but it would not be practical to publish two newspapers.” Singleton said he doubted the Rocky would find a buyer before Jan. 15, the date Scripps said it will “examine its other options for the future of the Rocky Mountain News.”
“The JOA does not generate enough profit to support two newspapers,” Singleton told the Rocky. “The Rocky has been dragging the agency down for four years — not because it’s not a great newspaper, but because of the (advertising sales).”
The Rocky’s smaller pages — made even smaller last year in a redesign — only yield half the revenue of the Post’s broadsheet pages, though both newsrooms share equally in the JOA’s revenue.
Click here to read Singleton’s memo [PDF].