Coming Soon? The No-Newspaper City

Fitz: The 1970s ushered in the era of the one-newspaper city as afternoon papers withered and died in a numbing succession through every downturn well into the 1980s.

Now, as we enter the end of the 21st century’s first decade, we could see the era of the no-newspaper city, according to Fitch Ratings.

As E&P reports on its Web site, the Chicago-based ratings service is out with a gloomy prediction about the near future of media and entertainment – and it sees newspapers as the medium least like to weather a global recession that’s going to turn “severe” in 2009 with an advertising climate even more harsh than the industry’s painful experience during 2001-02.

"Fitch believes more newspapers and newspaper groups will default, be shut down and be liquidated in 2009 and several cities could go without a daily print newspaper by 2010," the Chicago-based credit ratings firm said in a report on the outlook for U.S. media and entertainment.

On a conference call with bond and credit analysts Monday morning, Fitch’s Mike Simonton elaborated on the liquidation prediction.

It’s true, he said, that banks and other lenders want to see newspapers and newspaper chains continue as going concerns. And by now you don’t need to be an industry analyst to understand that now, and probably not in 2009 either, is not going to try to sell a newspaper. (Even as he was speaking, AP was reporting that Landmark Communications was giving up trying to sell its flagship Virginian-Pilot.)

But he concluded, neither are creditors going to tolerate forever newspapers that don’t break even on a EBITDA (earnings before interest, taxes, depreciation and amortization) basis. “It’s a matter of what that breaking point is,” Simonton said.

And when the breaking point arrives. Fitch thinks it could be pretty soon.

Hard to blame the agency for its pessimism. Among the newspaper companies it covers are several most reeling from debt, including Journal Register, which is in a period of forbearance by its lenders, and the junk-rated Lee Enterprises, Tribune Co., and The McClatchy Co.