It's the Credit Markets, Stupid

Jen: Yet another newspaper company -- yet another private one I may add  -- Freedom Communications said it was in possible violation of its debt covenants. Freedom joins the list along with Philadelphia Media Holdings and the Star Tribune operated by Avista Capital, which are also having trouble with their leverage.

As if the newspaper industry didn't have enough on its hands to deal with, now there's this. The tightening (or is it more of a strangle?) of the credit markets are causing more havoc than the industry can handle. Even blue chips like Gannett are batting down the hatches drawing on its credit facility, presumably while it's still able before the credit markets completely choke.

I don't know but it looks like the wheels are about to come off this cart Fitz.

Fitz: I wish I were a stronger man, but I can't resist the cliched Tolstoy reference to every family being unhappy in their own way. Because that's at the root of Freedom's debt dilemma today. Recall that in 2003, some restive descendants of Orange County Register founder R.C. Hoiles tried to force an auction of Freedom back in 2003 -- and got a $1.83 billion bid from a joint partnership of Dean Singleton's MediaNews Group and Gannett. That was a pricey 14 times cash flow offer, incidentally, and you've gotta think leveraged-up-to-here MediaNews now thinks it dodged a bullet.

A group of fourth-generation family members derailed the auction by making their own $1.72 billion deal with outside private investors. Money, family, Orange County -- a sun-tanned Tolstoy could have a field day.