So the Star Tribune has decided to stiff some of its creditors. Neal St. Anthony reports that while Avista Capital Partners, the firm that owns the Strib, was able to pay their first-tier lenders, they decided to stiff the second-tier lenders.
Star Tribune honcho Chris Harte:
"If we can restructure this debt, we still have a very viable [business]," Harte said.
Big if, doncha think? Based on St. Anthony's article, the boys at 425 Portland owe $400M to their first-tier lenders and $96M to the lenders they stiffed. Does anyone see half a billion of equity in the Star Tribune, either now or at any time in the future? I sure don't.
The bottom line is this: newspapers have competitors that they didn't even envision a decade ago and these competitors are destroying the newspaper business model. Even 5 years ago, the Star Tribune used to publish multi-section real estate listings in the Sunday paper, multiple sections of classified ads for everything imaginable and cars, cars and more cars. The advertising revenue that the Strib once claimed now goes to Craigslist and Google and CarSoup and any number of other competitors. The real estate agents don't need the Strib any more, either. And if you want news, you can get it anywhere you want on the Internet. Mostly for free, too.
The Star Tribune has never been big on economic theory - they have a decent, generally rational business section but their editorial board hasn't much cared to understand markets. Unfortunately, the market understands the newspaper business quite well right now. Perhaps as the bien pensants of Portland Avenue prepare for a world without their sinecure, they might want to learn something about the subject. Topic A: creative destruction.
Cross-posted at True North
1 comment:
i'm currently house shopping, and havent looked at a newspaper even once.
unlike the first time, where it was my sole source of info.
i'll miss the daily paper when its gone, but that is progress, isnt it?
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