FYI on USA Today Staffer Change

Jen: Alexandra Nicholson who was working in USA Today's communications and pr department is changing duties and is heading over to digital marketing as manager, social media strategist.

No Champagne In Davenport As Lee Swings To $879 Million ’08 Loss On Billion-Plus Goodwill Write-Off

Fitz: The Lee Watch is over – ending late in the afternoon of New Year’s Eve as everyone was headed home but us watchdogs at Fitz & Jen.

The news from the Davenport, Iowa-based community newspaper publisher’s long-delayed 10K annual report for 2008 is as bad as Wall Street figured.

Lee Enterprises Inc.’s bottom line for 2008: Net loss of $879 million, or $19.83 per diluted share. In 2007, Lee recorded a profit of $1.77 per diluted share.

Lee’s operating loss for the year was $1.049 billion, chiefly on huge non-cash impairment charges totalling more than $1.175 billion

Here’s how the impairment charges break down, in an excerpt from Lee’s 10K filing with the SEC:

As a result, in 2008 the Company recorded pretax, non-cash charges to reduce the carrying value of goodwill by $908,977,000. The Company also recorded pretax, non-cash charges of $13,027,000 and $143,785,000 to reduce the carrying value of nonamortized and amortizable intangible assets, respectively. $104,478,000 of additional pretax charges were recorded as a reduction in the carrying value of the Company’s investment in TNI (Tucson Newspapers Inc., the joint operating agency for the two Tucson, Ariz. dailies).  The Company also recorded additional, pretax non-cash charges of $5,019,000 to reduce the carrying value of property and equipment. The Company recorded $281,564,000 of income tax benefit related to these charges.

Lee’s annual report also warns that its cash flow in  2009 will not be sufficient to pay off the $142.5 million in so-called Pulitzer Notes that come due in April. It is in talks with lenders to handle the impending default possibilities, Lee said.

The 10K indicates that Lee’s cash flow is trending in  the wrong direction. In 2008, Lee had operating cash flow margin 20.1%, down from 24.2 in 2007 and 24.8% in 2006.

After Three Decades On The Big Board, Lee Enterprises Told To Shape Up Or Ship Out

Fitz: Lee Enterprises Inc. was first listed on the New York Stock Exchange (NYSE) in 1978. On the last day of 2008, the Davenport, Iowa-based community newspaper publisher disclosed the Big Board has warned it could be delisted.

Lee stock has fallen below $1 a share in recent weeks, and by Tuesday had closed below that minimum listing requirement for 30 consecutive trading days.

NYSE Regulation Inc., the Big Board’s enforcer, also notified Lee in a letter Tuesday that it “nearing non-compliance with its market capitalization standard, which requires a 30-trading-day average of $25 million,” Lee said in an announcement late in the afternoon of New Year’s Eve.

Lee (NYSE: LEE) closed Wednesday at 41 cents a share, up 2 cents, or 5.13%. It had an indicated market cap of $18.48 million.

Lee said it intends to notify the exchange within the required period of 10 business days of its plans to return to compliance.

Lee can stay listed for a six-month “cure period” while it gets its share price above the minimum price. The company noted, though, that it could be delisted sooner if it falls below other standards, such as the market cap.

Lee’s stock stock symbol will be assigned a “.BC” indicator to denote the company is below compliance with listing standards.

In 2008, three newspaper publishers were delisted from the NYSE, GateHouse Media Inc., Sun-Times Media Group, and Journal Register Co. All were kicked off the Big Board within a few weeks of their first notification of non-compliance, and all now trade on Over-The-Counter markets.  Another newspaper company, American Community Newspapers, was delisted by the Amex stock exchange in 2008.

Fitz & Jen Aloud: Check Out Our Latest Podcast

What do you say about a year like 2008. Without, that is, resorting to the number one Top Ten Business Quotes of the Year. Mark Fitzgerald and Jennifer Saba keep it clean as they look back on the most important developments of the year  on their latest edition of the newspaper industry's only strictly business-oriented podcast, "Fitz & Jen Give You The Business." They can't avoid one four letter word, though: Debt.

Listen here now.

Hoy No Circula: New York Spanish-Language Daily Shuttered

Fitz: Hoy New York survived one of the most notorious circulation frauds in American newspaper history, but it couldn’t survive the famous economic “headwinds” of 2008. Ten months after the big Spanish-language publisher ImpreMedia bought the five-day tabloid from Tribune Co., it was suddenly shut down Tuesday.

ImpreMedia’s purchase of Hoy was a natural -- the tabloid with its extravagant lies about its circulation had undercut its own seven-day daily El Diario La Prensa for years. Keeping Hoy going after its purchase seemed, um, counter-intuitive. The company made the usual noises about how the two dailies reached different audiences and that Hoy, being free, somehow complimented the paid El Diario, blah, blah, blah.

It’s a rather inglorious end to a newspaper that many in the industry -- not least us at E&P -- hailed as not only a great success story, but a model for ethnic newspapers everywhere. We didn’t know that Louis Sito, who graced our print cover once and was quoted as a supposed expert by yours truly on numerous occasions, was fraudulently inflating the circulation of Hoy. At the time, its straight-up growth made sense given the rise of the Hispanic demographic. When the editors at El Diario said something was fishy, it seemed like a sour grapes complaint.

It’s not clear how enthusiastically ImpreMedia ever embraced Hoy. I’m not in New York City all that often, but I can say that I never once came across an actual copy, though I saw the occasional empty, and usually vandalized, newsbox.

NYT Co. Needs to Cut 40% of Editorial, Suggests Blodget

Jen: The New York Times Co. just can't catch a break. The company filed a shelf regulation with the SEC making sure it can secure debt and raise equity. They are reportedly shopping around their stake in the Boston Red Sox. They are planning a sale-leaseback of its HQ. They are cutting costs where they can and being prudent about it and yet, the company keeps getting punched in the gut.

Over at Silicon Alley Insider, Henry Blodget suggests the company is now taking the necessary steps it needed to take earlier but that it's not far enough. He drops this:

In our opinion, this plan will need to involve a major restructuring, including a reduction in the size of the company's editorial operation by at least 40% (and, eventually, more, as the print business wanes).  Based on NYTCo's response to the crisis to date, however, we suspect management will continue to hope for a miracle.

Blodget is talking about the editorial operations of the company but should such a move occur, the flagship would be most in danger. A drastic cut in editorial will severely blunt the competitive edge the NYT has over most of the country's newspapers, and, to use borrow the word of analysts, "dilute" the brand. Let's hope management is hoping for a miracle because slashing the newsroom would be a disaster.

Lee 10-K Watch

Jen: So, Dec. 30 has come and gone and still no 10-K filing from Lee. Fitz, I bet this puppy drops at 11 p.m tonight.

Fitz: Lee's waiting for Dick Clark to sign off on the impairment calculation. But Jen, as many of us discover, procrastination has its rewards: Lee stock (NYSE, still: LEE) is up a penny in early trading Wednesday to 40 cents a share.

Knight Foundation Outlook

Jen: The John S. and James L. Knight Foundation is a valuable resource particularly in these challenging times. The foundation itself is not immune to the downturn but President Alberto Ibarguen said in a video address that while income is down, the "foundation remains quite strong" and they "foresee no liquidity issues." They are watching things carefully though and that includes reducing expenses, keeping salaries flat, and not hiring for open positions.  Watch the address below.

Knight Foundation President Alberto Ibargüen Addresses Economic Outlook from Knight Foundation on Vimeo.

Wednesday Morning Links

The year of print: Seeking Alpha looks back at 2008 and dares to peek at 2009.

Howard Owens asks how many reporters have made the effort to become wired.

Boondoggles gone wild! Mark Potts questions why so many newspapers are spending money to send their reporters and photographers to cover the Presidential inauguration. He writes about the cost: "it's just sad, because it shows that a lot of newsrooms still don't have their priorities straight."

McClatchy extends the closing date until June 30, 2009 for the sale of its Miami land reports the AP.

The NYT runs an opinion piece of the state of Connecticut and New Jersey papers.

Swift Newspapers is cutting publications and jobs in Colorado (via The Daily Sentinel, Grand Junction).

After The Bell Tuesday: New Year Cheer On Eve Of Eve

Fitz:  Geez, you’d think it was newspapers getting that extra billion from Uncle Sam, the way the sector boomed along with the Dow. The broader market was cheered by news that the government was extending $1 billion more to foundering General Motors and taking a stake in its GMAC financing business.

By all rights, newspaper stocks should have been depressed by what Paul Harvey would call the rest of the story: New reports that prices of single-family home plummeted a record 18% in October -- and that consumer confidence also plunged to an all-time low.

Instead, newspaper stocks rose across the board, with even the penny stocks gaining. Only Tribune Co.’s 2029 debentures (TRBCQ.PK) fell on the day, shaving 55 cents, or 20%, off the open to $2.20 on very light volume, typical of the sector Tuesday.

Among the notable gainers were the young spin-offs Wall Street has slapped down virtually since their launch. A.H. Belo (NYSE: AHC) closed at $2.16, up 37 cents, or 20.67%. E.W. Scripps (NYSE: SSP) gained 17.3%, rising 30 cents a share to $2.03.

Lee Enterprises (NYSE: LEE) was up on the session as investors wondered when it would disclose the size of an impairment charge for its delayed 10K annual report. LEE closed at 39 cents, up 3 cents, or 8.33%.

Another one-time big player that now seems headed for the Pink Sheets, The McClatchy Co.  (NYSE: MNI) was also up modestly, gaining 4 cents, a 5.4% increase, to 78 cents a share.

One more session Wednesday, and newspapers can say goodbye to the year that brought the collapse of newspaper stocks.

 

Lee to File 10-K Today

Jen: We've been fielding some emails from eagle-eyed readers concerning Lee Enterprises' latest 10-K. The company's fiscal year ended on September 28 and its annual report was due by December 15. Lee notified the Securities and Exchange Commission that it needed to postpone the filing until December 29.

December 29 has come and gone and there is still no 10-K. Lee's VP of Communications Dan Hayes said there were some technical glitches but that the annual report should be in at some point today.