Pioneer Press' parent files for bankruptcy

As expected, the parent company of the St. Paul Pioneer Press filed for bankruptcy Friday with assurances that the plan to significantly restructure its debt would have no day-to-day effect on the St. Paul newspaper or other publications owned by MediaNews Group.

The "pre-packaged" bankruptcy was filed by Affiliated Media Inc., the holding company for MediaNews, in U.S. Bankruptcy Court in Delaware.

The restructuring, which has approval of existing lenders, involves a debt-for-equity swap that "sharply reduces debt, boosts cash flow and offers greater financial flexibility," the company said.

In a news release, MediaNews chairman and CEO William Dean Singleton said, "We expect our plan to proceed through this process swiftly and smoothly."

The filing came the same day that members of the Newspaper Guild union at the Pioneer Press approved new contract concessions in exchange for a pledge of no layoffs over the next year. Guild spokesman Dave Orrick said the agreement was approved "by a significant margin."

Guild members in the paper's newsroom and circulation and advertising departments took a total compensation cut of nearly 10 percent through a combination of a shorter work week, an unpaid furlough of one week, forbearance on a planned 3 percent pay increase and the end of a company match in 401(k) accounts.

"Today's vote shows that the majority of guild members are not only concerned about their fellow employees and the financial health of the paper but also are willing to make sacrifices for the sake of quality journalism as well as service for our readers and clients," Orrick said.

"MediaNews has said that the filing would not affect day-to-day operations, and we plan on holding them to that," he added.

In a memo to employees last week, Singleton boasted that "all but one of our newspapers are profitable." It turns out the one newspaper was the Pioneer Press, according to a guild memo to Pioneer Press members earlier this week.

Pioneer Press editor Thom Fladung referred an inquiry on the impact of the bankruptcy to corporate headquarters in Denver.

MediaNews is the nation's second-largest newspaper publisher in terms of circulation with 54 daily newspapers and more than 100 non-daily newspapers. It also has television and radio outlets in 12 states.

Under terms of the pre-arranged bankruptcy filing, debt would be reduced from $930 million to $165 million. Lenders led by Bank of America would get most of the company's stock, but Singleton and his team would continue to control ownership and the board of directors.

MediaNews joins the ranks of the Chicago Tribune, Philadelphia Inquirer, Star Tribune and several other newspapers that have used bankruptcy proceeding to reduce their debt load. The Star Tribune emerged from bankruptcy last summer with new owners.