Star Tribune "is on the brink of bankruptcy," NY Post reports
New York Post articles claims Star Tribune on verge of bankruptcy, has hired Blackstone Group
The New York Post is reporting that the Strib is on the verge of bankruptcy, sourcing unnamed insiders:
May 4, 2008 -- The Minneapolis Star Tribune, reeling under a heavy debt load and plummeting advertising sales, is on the brink of bankruptcy, The Post has learned.
One of the nation's top dailies, "The Strib," as it is known to readers in the Twin Cities, recently hired the Wall Street powerhouse Blackstone Group to restructure its balance sheet after failing to meet its debt obligations, according to people familiar with the company.
The broadsheet is unlikely to shutter its doors, but its creditors, including the banking giant Credit Suisse Group, figure to eventually end up controlling the paper. Down the road, the creditor group could then sell it after dramatically cutting costs.
The private-equity firm Avista Capital Partners, run by former Credit Suisse deal maker Tom Dean, purchased the Star Tribune from the McClatchy Co. in 2006 for $530 million. The New York firm, which put up $100 million of its own money and borrowed the rest, stands to lose its entire investment, sources said.
In response to the article, Strib Publisher Chris Harte has issued a statement, which you can read here.
Take the jump for analysis, local reax, and updates ...
In some ways, it's not surprising: We knew times were tough for newspapers, and that was before the Par Ridder judgment put a very big financial albatross around the Strib's neck. Still, to see it reported in a New York newspaper, albeit with unnamed sources, is telling. Expect to see some kind of announcement from 425 Portland Avenue on Monday.
Media wonk David Brauer has insider analysis here.
Reax thread on MnSpeak here.
Blotter recently reported that another 58 layoffs were coming at the Strib.
January saw the release of a grim memo about the paper's future.
December was marked by the resignation of embattled publisher Par Ridder.
For a complete summary of the troubles leading up to this, complete with an inside-the-court view of the Par Ridder case, read Trials and Stribulations.