More from Lean Dean

I believe that Media News had a similar deal with Gannett in California in the past.

 

This is correct (AG Cap). So, in essence, it is a merger.
And what will happen next quarter when performance is "sagging" because of a "soft economy"? Anyone know the next chapter?

 

Any sort of full-fledged JRC/MediaNews merger could really have an impact around Detroit and southern New England. I'm also wondering if it'd be subject to a DoJ review.

 

Chapter 11. That can't be a promising prospect.

 

What a fantastic Ponzi scheme. Acquire, acquire, acquire, acquire...while collecting a hefty salary and bonuses. When you can't borrow another dime or buy another paper, Oh well, sucks to be you. I got mine....

 

I don't understand why anyone would buy a newspaper at this point in time.

 

This takes a little understanding of business and bankruptcy protection.

These companies really aren't buying these papers. These companies are assuming debt ... for the most part. There are some corporate operating benefits, some mentioned above. Those benefits -- largely -- will have to do with taxes and federal/state exemptions, initially.

So these "buying" companies are doing more "assuming" than buying, then when a creditor comes calling for a balloon payment or repayment, the company assuming the debt files -- or threatens to file -- for bankruptcy protection.

The "assuming" company will renegotiate the debt at this time for a more manageable interest, enough for them to make a buck or two over the interest and operating costs. The creditors will then file huge losses on their tax returns (guess who flips that bill?) and the operating company will renegotiate with labor for reduction of benefits (medical, wage, vacation). Guess who gets fucked there?

It's the Corporate American Way.

 

Yeah, I'm sure the DOJ will go out of their way to stop the burgeoning monopoly that will singlehandedly dominate the universe if left unchecked.

 

I said I was wondering, didn't say DoJ would. Given some of the other cases where they've stepped in during recent years, it wouldn't surprise me but it's far from a certainty.