The decision to skip a $9 million quarterly payment on its $432 million debt allows the newspaper to conserve cash while attempting to restructure, said company Chairman Christopher Harte.You may want to put this strategy to use in your own life! What it really means is that, like many newspapers, the Star-Tribune has more debt than it can handle right now. Its creditors will either renegotiate payment terms, or the paper could be headed for bankruptcy. Because the chances of getting a fat new line of credit in the current economy: not so good. And the chances of being able to sell off the paper? Also not so good. The newspaper industry is running out of Greater Fools. [ST via Romenesko]
The Minneapolis Star-Tribune is in severe financial distress, of course, because it is a newspaper. It was sold (at a loss) by McClatchy in 2006 to a private equity firm, and has reliably lost value ever since. Though it still "makes money" in the strictest sense of the term! The paper has already laid off 100 newsroom people and put its headquarters up for sale, but now the company has hit on a new strategy for saving money: not paying the bills! The paper announced that it won't be paying creditors this quarter.