The upside to “bankruptcy” for U.S. newspapers


The first time I took a European to a baseball game was the first time I was asked: “Wouldn’t it be more efficient to run directly to third base?”

I’m having similar luck recently explaining U.S. bankruptcy rules. In many countries worldwide, bankruptcy means liquidation. In the United States, there are degrees of bankruptcy. One such bankruptcy protection is Chapter 11, which allows a company to restructure its debts and operations in the hope of avoiding liquidation.

What U.S. publishers Tribune Company, Philadelphia Media Holdings, the Star Tribune, and Journal-Register Company are doing is restructuring debt. Their operations are hardly “normal” in this recession, but they are scalable and manageable. It is the debt that is onerous and threatening.

The CEO of a major U.S. newspaper told me recently he expected “every major U.S. newspaper company” to go through Chapter 11 bankruptcy protection in the next 12 months.

Another CEO likened what newspapers are going through to what airlines went through in the 1970s through their various Chapter 11 bankruptcy filings. It’s awkward, but the airlines continued to operate, people kept flying, and the companies emerged from bankruptcy protection stronger.

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