UPDATE 2-Journal Register is bankrupt again, eyes quick sale

Wed Sep 5, 2012 5:26pm EDT

* Newspaper publisher files second bankruptcy in 4 years

* Quick sale planned, Alden affiliate makes initial bid

* Falling ad revenue, high pension obligations blamed

By Jennifer Saba and Jonathan Stempel

Sept 5 (Reuters) - Journal Register Co, publisher of Connecticut's New Haven Register and more than 140 other publications in 10 U.S. states, on Wednesday filed for bankruptcy protection for the second time in less than four years, and is pursuing a quick sale.

The Chapter 11 filing comes as newspapers across the country struggle to make a transition from print to digital products. It is a difficult challenge since print still pulls in the majority of revenue and yet is significantly more costly to produce.

Journal Register said print advertising has dropped 19 percent since 2009 and that it represents more than half of total revenue.

Additionally the New York-based company is saddled with too much debt stemming in part from pensions. A retirement plan trust with a $3.2 million pension-related claim is the company's second-largest unsecured creditor, trailing only the State of Connecticut, according to the bankruptcy petition.

Journal Register said it has seen a 52 percent increase since 2009 in lease, tax, trade and pension obligations. It employs 2,357 people.

"The whole legacy cost issue remains a big deal," said Rick Edmonds, a business analyst at the Poynter Institute.

"The pension liability is coming up big. It's another manifestation of taking on fairly generous retirement packages in better times and now (newspapers) are on the hook."

Journal Register is being watched closely watched by publishers. John Paton, chief executive of Digital First Media, which operates Journal Register, is aggressively pushing the company into the digital era by investing in technology and arming its journalists with devices like digital cameras.

"The transition was always going to be difficult; these are longer term liabilities we are talking about," said Paton in an interview with Reuters. "It's possible or I wouldn't be doing it."

Journal Register has been owned since June 2011 by Alden Global Capital LLC, which invests in a variety of media companies. It bought the company from lenders that had owned it since its August 2009 emergence from bankruptcy.

In a blog post about the Chapter 11 filing, Paton wrote the company plans to sell itself within 90 days at auction, and that Alden affiliate 21st CMH Acquisition Co has provided an initial "stalking horse" bid.

William Higginson, Journal Register's executive vice president of operations, in a court filing said the bankruptcy will reduce the company's debt burden, and leave it "better able to compete and to weather the current stresses in the industry."

Higginson also said Journal Register's main lenders, including Wells Fargo & Co, agreed to the sale process.

Journal Register has $235 million of assets and $268.6 million of liabilities, according to a filing with the U.S. bankruptcy court in New York.

It joins Hostess Brands Inc, the maker of Twinkies cakes, and family-style restaurant operator Buffets Inc among companies to this year make a return trip to Chapter 11.

Among Journal Register's other publications are the Middletown Press in Connecticut and the Oakland Press in Michigan. The company also operates 237 websites, 38 smartphone and digital applications and 190 mobile sites.

The case is In re Journal Register Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-13774.

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