Stop the Presses? Star Trib Readers Hope Not

The Minneapolis paper, reflecting the woes of the business, reneges on a $9 million payment to give itself some cash.
Sarah JohnsonOctober 1, 2008

The Star Tribune won’t be paying its senior creditors their latest quarterly payment of $9 million as way to conserve cash, the Minneapolis newspaper wrote in an article today.

The 141-year-old newspaper’s chairman, Christopher Harte, told the article’s reporter that the company is negotiating with its lenders and “looking at an incredibly wide range of options but nothing’s imminent.” The skipped payment to pay down its $432 million debt won’t likely affect the company’s relationships with vendors or advertisers, Harte said.

Filing for bankruptcy is included in those options, the newspaper article acknowledged. A spokesman for the Star Tribune, now owned by private equity, did not immediately return’s request to comment further.

It isn’t the first time this year that the newspaper has reneged on its agreements with lenders. The paper defaulted after its accountants gave it an unqualified opinion earlier this year, and it later stopped payments due to investors who had financed about $96 million of its sale to Avista Capital Partners, according to the Star Tribune. The private-equity firm bought the paper for $530 million from McClatchy Co. in 2006. McClatchy had acquired the paper eight years earlier.

The shaky fate of the Star Tribune has become a familiar story in the newspaper business, still reliant on revenue from print advertising as it struggles to develop more revenue-generating business models on the Web. For example, earlier this week, the New York Sun folded after less than seven years in business, citing its inability to raise capital — particularly during the past month — as the reason why.

In addition, The Star-Ledger, a New Jersey paper, has faced the threat of being sold or closed down by its parent company, Newhouse family-controlled Advance Publications, unless its union employees agree to several conditions, including buyouts.