Another two bite the dust

In the past week alone, two more newspaper companies announced they will seek court-ordered protection from their creditors due to probems in meeting their debt payments. Last Wednesday Morris Publishing of Augusta, Georgia, which operates 13 dailies including The Augusta Chronicle, Savannah Morning News and Florida Times-Union of Jacksonville, said it intends to file Chapter 11 bankruptcy. The company, which also publishes more than 60 non-daily newspapers and magazines, has been struggling under debt of $415 million mostly accumulated from its acquisition of newspapers in the 1990s, according to The Associated Press.

With advertising revenues shrinking, the company has been unable to pay $19.4 million in interest on unsecured bond debt of $278.5 million that was due . . . last year. Morris Publishing says it will ask a bankruptcy judge to approve a bond exchange that would trade the company's existing unsecured debt for $100 million in new bonds — erasing $178.5 million owed to creditors.

Then on Friday, the holding company that operates MediaNews Group, the country's second-largest newspaper chain, said that it plans to seek bankruptcy protection. The publisher of dozens of major dailies, including the Denver Post and San Jose Mercury News, will ask for court approval of an agreement with its lenders to hand most of the company to creditors, led by the Bank of America, with the company's existing shareholders being wiped out. The arrangement will help reduce the company's debt from about $930 million to $165 million. According to the Wall Street Journal, sources familiar with the transaction said the company has been valued at only about $200 million.

Hearst Corp., the owner of magazines and newspapers, has at least $400 million in equity and debt tied to MediaNews, and the investment will be wiped out by the bankruptcy filing, according to people familiar with the matter.

According to the Journal, the operations of MediaNews newspapers should be unaffected, as the company remains current on its payments to suppliers, as all but one of the newspapers is profitable.