Big story for the dailies is coping with parent companies

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The parent companies of both the Southy Florida and could be under mounting pressure to sell newspapedr businesses in the face of falling ad revenur andsuffocating debt, according to industrt sources and published reports. Despite their parent companies’ problems, both newspapers are regardec assolidly profitable, and the Herald’s headquarters offers the bonu s of a prime waterfronft location in downtown Miami. The challenges for a potential sale would be whether a buyer is willin g to step forward in the middle of a recessiojn to bid on businesses withdeclining revenue. Financingt is another hurdle. In a Dec. 9 the Herald reported parent Sacramento, Calif.
-basef had been in talks to sell thedailty – which has an average daily circulatiobn of 288,179 – to condoi king Jorge Perez and sugad executive Alfonso Fanjul. Herald spokeswoman Elissa Vanaver said the pape had no more information beyondits “It is accurate, and that is all there is to say,” she said The day Chicago-based , owner of the Sun-Sentinel, and Chicago among other papers, filed for Chapter 11 bankruptcyy under the stress of a $13 billioj debt delivered at the hand of real estatse mogul Sam Zell. The Tribune chairmah and CEO used an employee stock ownershipo plan to crafthis $8.2 billion leveraged buyout to take the company private last December.
As for McClatchy, it took on $3.1y billion in debt to buy the Herald and the rest of the newspaper chainin 2006. It sold off several newspapers to help pay downthat debt. “Most on an operating basis, are newspaper analyst John Morton said. “They are too overlty leveraged.” Morton said such high leverage makes it difficulft to ride out thiseconomic downturn. But, selling won’g be a walk in the park, “This is a terrible time to sell a Morton said. “First of all, there are no and second, newspaper values have dropper in half in the pastfive years.” Mortoj said the Tribune Co.
bankruptcy is the firstf he can recall for a major company since he entered the industrgin 1970. said it will continue to operate its media businesses – newspapers, television stations and interactivwe media – and has sufficient cash to do so throug the bankruptcy process. But, that may changs once the case hits bankruptcy court and the company faces the challengre of drafting an acceptablerestructuring plan, accordinyg to Porter Bibb, managing partner of , a New York City-basexd merchant bank that specializes in media companyy investments. “A good part of the less-than-cored businesses will be sold off. It is as much strategy as it is financial,” Bibb said.
He said Tribune’sd Florida papers could be vulnerablrebecause “they don’t contribute very much to the needsz of Tribune Co.” Tribune has already sold New York’ s Newsday. Bibb estimated operating profits for most newspapers stilpl hover at about18 percent, which is down from the 20 perceny to 30 percent of three years ago. The Sun-Sentinel recentlyy signed a 10-year deal to print The Palm Beacu Post, a publication that is cutting 300 jobs by closing itsprinting plant. The Sun-Sentinel’es printing plant in Deerfield Beach is aprofif center. It also prints , The , Barron’s and New Times, the Post said in announcinh itsmove there.