Some newspaper companies simply have too much debt now. Journal Register (JRC) is an example. And, The Tribune Company (TRB) may be joining the list.
Accoding to Bloomberg, trading in credit-default swaps put the market’s guess that The Tribune may not be able to pay interest on some of its $13 billion debt at better than 50/50. Based on Bloomberg intelligence: "Tribune swaps prices imply investors consider the company the fourth-riskiest debt issuer among the almost 1,200 worldwide whose credit-default swaps were quoted this week by London-based CMA "
The data indicates the danger of newspaper buy-outs by private equity interests and may be why so few of the large paper chains have been approached in a buy-out crazy market. As cash flow falls, the ability to take on enough to debt cash-out public shareholders disappears.
Two newspaper companies appear to have a particularly high risk. One is Journal Register. The other is McClatchy (MNI).
An industry without private equity interest? How odd.
Douglas A. McIntyre
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