As Star Tribune owner Avista Capital Partners files Ch. 11 bankruptcy for the Minnesota newspaper, all of their fingers are pointed at the paper's failures in a slumping economy that has been terrible to the industry.
But one media economist said the Avista can only blame itself for the crumbling newspaper.
Media economist Robert Picard said the Strib and Tribune Company bankruptcies in the last month are unique to the newspaper climate and not a sign of more to come. The economy wasn't to blame for the Strib's filing, he says.
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"They're blaming the changes in the industry, they're blaming the economy, they're blaming the unions -- when clearly the blame belongs in New York with the managers of Avista," Picard told E&P today.
Picard, a well-known academic expert on media economics who is editor of the Journal of Media Business Studies, argues that the expensive debt amassed by the Avista private equity group is the real reason the newspaper is filing for reorganization.
"This is a company that's still making a profit," he said. "They can't withstand (economic conditions) now because their debts are so high. It was almost all debt in the financing of the acquisition."
This isn't the first time we've heard this argument. The unions have also been blaming Avista for the collapse as they struggled to continue slashing staff and salaries to accommodate their cost-saving requests.
Avista said the newspaper's earnings before interest, taxes and debt payments were about $26 million in 2008, down from $115 million in 2004. Avista bought the paper in 2006 for $530 million.
Read the rest of Picard's analysis here