MediaNews Sees Bad Timing on Newspapers, Not Bad Bets
By RICHARD PÉREZ-PEÑA
Published: December 14, 2008
SAN JOSE — Dean Singleton expanded his newspaper empire at the worst possible time, in the worst part of the country he could have chosen, and he has been paying the price ever since in plummeting advertising and shrinking papers. Yet somehow, even in today’s adverse climate, he professes optimism.
In 2006 and 2007, as prices for newspapers were peaking, Mr. Singleton’s company, the MediaNews Group, bought this city’s daily, The Mercury News, and more than 30 smaller San Francisco Bay Area papers. He gambled his company on California just as the bottom was about to fall out for newspapers, especially here.
“In retrospect, the timing was not good,” said Mr. Singleton, the head of and a major shareholder in the company, which is privately held. “But in our business, you buy newspapers when they’re for sale.”
The news about his industry seems to get worse by the day. Last week, the Tribune Company filed for bankruptcy protection. And Moody’s Investors Service said that MediaNews was approaching the point where its debt, almost $1 billion, would be nine times its annual earnings before interest, taxes, depreciation and amortization — technically putting the company in default.
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“We do make money, but I couldn’t get into how much,” said Mac Tully, publisher of The Mercury News. “We’re revenue-challenged, no question.” Mr. Singleton said much the same about the company as a whole.
The company does not publicly report financial data, but MediaNews executives acknowledge that its revenues, like the entire industry’s, have fallen sharply. Last summer, the company negotiated new terms with its creditors, and paid down some debts.
“We still have more leverage than we wish we had,” Mr. Singleton said. I don’t know if we bought enough room for the long term or not, but we certainly believe we did.”
At the peak of the dot-com boom, The Mercury News had more than $100 million a year in help-wanted classified ads; this year, executives say, the figure will be around $10 million.
