Journal Register Co., a sister company of Salt Lake Tribune owner MediaNews Group, on Wednesday filed for bankruptcy protection for a second time in three years amid a drop in print advertising revenue, which represents more than half its revenue.
Digital First Media, which manages Journal Register and MediaNews, said day-to-day operations will continue normally as it works to auction the Yardley, Pa.-based chain of 18 newspapers and other media properties in the next 90 days.
Journal Register is owned by New York hedge fund Alden Global Capital, which also has a large stake in MediaNews. Digital First already has a signed "stalking horse" bid from 21st CMH Acquisition Co., an affiliate of investment funds managed by Alden.
In a"stalking horse" scenario, a bankrupt company selects an interested buyer to submit a bid in order to avoid lower bids.
The Chapter 11 filing in U.S. Bankruptcy Court for the Southern District of New York comes three years after Journal Register emerged from a prior bankruptcy restructuring. The company exited that bankruptcy with $225 million in debt and with a cost structure that included leases, defined benefit pensions and other financial obligations that it said were unsustainable and threatened its efforts to move from print to digital products.
"The Journal Register Co. has made solid progress in its digital transformation in the last two years, more than doubling its digital audience with 235 percent digital revenue growth from 2009 to 2011," CEO John Paton said in a statement.
"But that transformation is threatened by a decline in print advertising revenue the company's largest revenue source and legacy costs incurred when Journal Register's total revenues were nearly twice the size it is today," Paton said.