24/7 Wall St.

Now that results for the first half of the year are out, 24/7 Wall St. is revisiting its feature on companies that management cannot fix. These firms have lost the ability to be turned around no matter who runs them. They become candidates for sale or liquidation, but the odds that they can do much with their current share prices are very low.

All of the publicly traded newspaper chains are in bad shape, but none approaches the Journal Register (JRC). The company has long term debt of over $650 million, most of it from paying for acquisitions. In the last quarter, the company had revenue of $121 million, down from $132 million in the June quarter last year.

To make matters worse, interest payments on the debt run about $10 million a quarter. The company had operating income of $22 million in the last quarter, so the coverage is getting mighty thin.

For some reason, JRC still pays a dividend, which is odd. The company can’t afford it. In the five weeks ending August 5, revenue was $41.5 million, a decrease of 7.7 percent, as compared to $44.9 million for the five weeks ended July 30, 2006. Online revenue for the period was $1.8 million, so there is no chance that this can be of any significant help as print revenue falls. For this period, national advertising fell 26% and classified dropped almost 11%.

What can JRC do? Almost nothing. It has a market cap of $117 million. With its debt, the cost of buying the company would be above $770 million. No sane investor would pay that for a company with an annual operating income run-rate that is below $90 million and falling fast.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.