GateHouse Media, Inc., the company that owns the Peoria Journal Star, is in a heap of trouble, reports Editor & Publisher. The newspaper industry journal reports that Morningstar, a provider of independent investment research, has “reduced its fair value estimate for GateHouse shares to zero from $3 in its report in May.” Why?
“Because of the company’s exposure to a challenging advertising environment, a debt-heavy balance sheet, and declining cash flows, we think the equity shares could be worthless,” stock analyst Tom Corbett wrote. […]
Morningstar also said GateHouse is close to violating one or more of the covenants on its huge deb. “Should that happen, its debt could become due immediately, resulting in a possible liquidation scenario,” Corbett wrote.
Shares of GateHouse had been up to $19 per share in the last year, according to E&P. Today, it dropped below a dollar briefly and is at $1.02 as of about 3 p.m. This does not bode well for Peoria’s only daily newspaper.
UPDATE: The Boston Herald has a story on GateHouse’s woes. They say that the analyst’s report cited above caused the stock to drop to 98 cents at one point. GateHouse stock closed at $1.04 Tuesday.
Speaking of media empires crumbling, The Peoria Pundit is down again.
Yes, I’ve alerted Billy of the problem, although he probably was already aware. I was going to link to his post on GateHouse, since he’s been doing the majority of coverage on it, but couldn’t get to his site.
We could make this into a contest…
The Peoria Pundit goes down more than… (fill in the blank):
I’ll leave that one alone.
You’ve got a sick mind Diane. How about the Peoria Pundit goes down more than: the value of the US dollar.
Peoria Pundit is being moved to a new host. Sorry for the lack of warning, but then I wasn’t given a warning either.
Re: GateHouse.
I have no respect for the organization. It’s business plan along is evidence of it’s sleaziness.
Who I DO have respect and sympathy for are the hardworking and dedicated employees of the Peoria Journal Star, Peoria Times Observer and other newspapers that would bought by GateHouse for the express purpose of gutting personnel and consolidation of resources.
Yes, I very often criticize the PJS. And I don’t regret it. But at heart, I know that they at least THINK they are doing good. GateHouse is an organization run by greedy money changers.
Liquidation? I hope not. Liquidation doesn’t mean that entire newspapers will be sold whole. It means that the presses, desks, computers, etc. can be sold off piece by piece.
The corporate bean counters at GateHouse are one reason why I no longer expect to make a living at the profession I gave 20 years of my life to. They are driving every single newspaper I had any interest in working for right into the ground.
I hope the hedge fund people who dreamed up this business plan, with NO regard for what it would do to the quality of the newspapers they purchased, or for the future of decent, in-depth local news coverage at a time when it’s more needed than ever before, pay for what they have done somehow. I can’t quite bring myself to wish they’d rot in hell but I’ll settle for a few hundred years in purgatory.
Diane! behave yourself 🙂 haha (good one though)
Go back to “Original Peoria Pundit” and read the posts from February and March 2007 when Gatehouse bought the Journal Star… they now seem eerily prophetic. Well, actually there was nothing eerie about them. It didn’t take psychic abilities to foresee that Gatehouse would eventually implode. The only question was when.
Did you mean this post?
Or this one:
Yep, Billy, that’s exactly what I was referring to. I assume Reed and his cronies are still going to get their “sweet parachutes” while everyone else who works for them watches their job (and pension plan, if any) go down in flames.