Denver daily is put up for sale
By Bill Richards
December 04, 2008
E.W. Scripps Co.’s announcement today that it is putting Denver’s Rocky Mountain News on the block adds to the growing pile of newspapers on the market — a heap that includes the Seattle Times Co.’s three-paper Blethen Maine chain. Rich Boehne, Scripps president and CEO, said the Rocky, as it is known around Denver, lost $11 million through the end of September, “leaving us no choice but to seek an exit.”
Scripps’ decision to try to sell its Denver property, Colorado's oldest daily, offers some uncomfortable parallels with the Times Co.’s own financial woes. The 149-year-old Rocky’s circulation of about 210,000 is just a bit higher than the Seattle Times 198,741 and both flagship papers are part of joint operating agreements (JOAs) in their home towns. In Seattle, the Times and Post-Intelligencer split their profit 60-40, with the Times Co. handling non-news chores for both papers.
In Denver, the Rocky shares profits 50-50 with the Denver Post, which is owned by MediaNews. They jointly publish and distribute the papers. Very likely, the announcement in Denver is just part of a ritual dance by which the Rocky is sold to its "competitor," and then shut down. That is the view of Alan Mutter, the Newsosaur blogger on the business.
Both Scripps and the Times also share another problem: both are laboring under heavy debt loads and losing money. According to the Rocky, Scripps has laid off 400 jobs throughout its newspaper division, and the Denver JOA owes about $130 million it borrowed to cover consolidation costs. The Times Co. borrowed $230 million a decade ago to buy the Blethen Maine chain and, according to outside estimates, still owes around $100 million on that debt, plus $24 million it had to borrow last year to extricate itself from an unsuccessful three-year effort to end the Seattle JOA and close down The P-I. The Times Co., which is privately owned by the Seattle-area Blethen family and the McClatchy Co., doesn’t publicly disclose its finances, but according to McClatchy’s public securities filings the Times Co.’s value has fallen sharply in the last two years.
There is one other parallel with Scripps that could be troublesome for the Times Co. Both have set nearly overlapping deadlines for selling their properties. Scripps said it wants to unload the Rocky by next month or it will “examine its other options,” which include shutting the paper down. Times Co. officials have told people involved in their Maine negotiations that the deal to sell Blethen Maine to a local investment group, Maine Media Investment, must be completed by Dec. 27. They have threatened to shut the Portland Press Herald and Maine Sunday Telegram, the Kennebec Journal in Augusta, and the Morning Sentinel in Waterville if the sale does not go through.
A breakdown in the sale negotiations in Maine could by especially costly for the Times Co. Times officials have told people in Maine that the company is hoping to use the loss from the Blethen Maine sale—which could amount to as much as $200 million—to offset any taxable gain from the Times’ sale of five acres of land in the South Lake Union area. The Times Co. put the South Lake Union parcels up for sale in July to try to bolster its financial position.
Meanwhile, Maine Media Investment is still scrambling to find a financial backer. The investment group, which includes former Maine Sen. William Cohen, Pennsylvania newspaper publisher Richard Connor, and Robert Baldacci, whose bother John is Maine’s governor, has not said whether it will put any of its investors’ own money into buying the Blethen Maine papers.