Financial Downturn Further Weakens Newspaper Publishers

The credit crunch has further weakened newspaper publishers, which already are reeling from a prolonged drop in advertising revenue. Several major chains, including Tribune Co., MediaNews Group Inc. and McClatchy Co., have significant debt loads. As debt conditions sour, interest rates will go up for many papers, and lenders will impose onerous conditions. Some publishers risk default or even a trip into bankruptcy court. The good news is that banks -- many facing their own troubles -- are expected to cut newspaper companies some slack on debt terms. The alternative may be taking over newspapers, something many banks won't stomach. For one thing, newspapers are a tough sell in current conditions.