So where's the Strib bailout?

Apparently the Minneapolis Star-Tribune failed to call Operator #5 at Treasury yesterday and didn’t get the fabulous bailout package that comes complete with the ShamWow towels.  Instead, they had to declare bankruptcy and force creditors and labor into negotiations in order to rescue the failing newspaper.  Falling revenues has left Avista, which purchased the Strib in 2007, with little choice:

The Star Tribune, saddled with high debt and a sharp decline in print advertising, filed a Chapter 11 bankruptcy petition Thursday night.

Minnesota’s largest newspaper will try to use bankruptcy to restructure its debt and lower its labor costs.

Chris Harte, the paper’s publisher, said the filing would have no impact on home delivery, advertising, newsgathering or any other aspects of the paper’s operations. …

Like most newspapers, the Star Tribune has experienced a sharp decline in print advertising. Its earnings before interest, taxes and debt payments were about $26 million in 2008, down from about $59 million in 2007 and $115 million in 2004.

The irony here is a little delicious.  It’s hard to imagine an editorial board as much in love with government intervention than the Strib’s.  Unfortunately, government intervention into the housing market busted the economy, and their advertising dried up.

Looks like Avista has done a bang-up job in running this newspaper.  The unions agree (via Mitch):

In response to the filing, the guild representing the paper’s newsroom employees issued a statement in which it criticized Avista for its management of the paper in the wake of a series of concessions by the union.

“It’s unfortunate that a New York-based private equity company has put the Twin Cities largest source of news and information at risk,” said Graydon Royce, co-chair of the Star Tribune unit of the guild.

They will be hearing from Avista during Chapter 11.  Normally that would mean renegotiating union contracts, but the guild has a point here in that they’ve already given concessions to management to help pull the Strib out of its spiral.  Clearly the labor cost isn’t the primary driver of this collapse, and it would take a hell of a lot of concessions to make up for $89 million in lost revenues.

This reflects what has happened to the entire newspaper industry.  Although the Strib’s numbers may be extreme — an 80% loss of revenue is on the outer edge of the industry standard for the last two-year period — the Strib itself is a leading broadsheet in the US.  Their Sunday edition ranks tenth in the nation for circulation, and the daily is 15th.  It’s no small-town publication dying on the vine.

Avista needs to take the paper in a new direction.  They have lost the faith of advertisers, and it’s not hard to see why.  They’ve managed to rid themselves of most of their best assets, with the exception of James Lileks, while keeping the worst of their lineup: Nick Coleman, Lori Sturdevant, and the entire editorial board.  The reporting work they do is fine, but the editorial direction is somewhat to the left of Lenin most days, and it’s become a joke.  Who wants to advertise in such a newspaper?  Apparently, a lot fewer people than ever before.