Posted on 05/07/2008 5:39:10 AM PDT by abb
The owner of the Star Tribune has informed investors that it has written down the value of its $100 million investment in the newspaper by 75 percent to reflect deteriorating conditions since the purchase in March 2007.
"In the past year, the newspaper industry has suffered greater than expected declines in circulation and advertising revenue, particularly in print classified advertising," the memo from New York's Avista Capital Partners said. "The outlook in the near to medium term remains uncertain."
The write-down, taken at the end of 2007, reflects the estimated loss of value and is consistent with the falling stock prices of publicly held newspaper companies such as McClatchy and the New York Times. Avista's public accountants required the private equity firm to write down or "mark to market" the estimated value of the Star Tribune.
The memo denied a recent report in the New York Post that the Star Tribune may file for bankruptcy.
"The Star Tribune currently has sufficient liquidity and is up to date on all its debt payment obligations," said the memo, distributed by Avista.
The bankruptcy speculation followed the revelation that the Star Tribune has hired Wall Street's Blackstone Group, the financial advisory and restructuring firm, to analyze its balance sheet and business options.
Avista paid $530 million to acquire the Star Tribune in early 2007 from McClatchy Newspapers. McClatchy paid $1.2 billion for the newspaper in 1998, before Internet publications and advertising competitors started to cut into newspapers' circulation and advertising revenue.
The value of Avista's Star Tribune-related debt also reflects a serious erosion in the value of the company over the past year.
snip
(Excerpt) Read more at startribune.com ...
ping
That’s right, Trib, blame the internet for your money woes. Cling to that belief.
Much more.
http://www.minnpost.com/davidbrauer/2008/05/07/1760/amid_bankruptcy_talk_strib_ponders_cuts_the_newsroom_actually_likes
Amid bankruptcy talk, Strib ponders cuts the newsroom actually likes
http://articles.citypages.com/2008-05-07/news/follow-the-money-star-tribune-s-debt-selling-at-less-than-60-cents-on-the-dollar/
The newspaper’s lien value has plummeted over the past year, showing flagging investor confidence
Follow the Money: Star Tribune’s debt selling at less than 60 cents on the dollar
http://msp.blogs.com/brianlambert/2008/05/the-paper-of-ou.html
The Strib: A Flipper’s Nightmare Come True
Looks pretty grim for Pravda, write down 75% ($750M) sure makes New York’s Avista Capital Partners credible as they said “The outlook in the near to medium term remains uncertain.....but the memo denied a recent report in the NY Post that the Star Tribune may file for bankruptcy” The financial wizards, Avista Cap, are in total denial...the end is near!
This is interesting because I thought the real estate owned by the Trib was worth $100 mil.
“Worth” is sometimes a nebulous term and can change quickly. McClatchy ten years ago thought the Strib was ‘worth’ $1.2 billion.
Oops...
New York’s Avista Capital Partners has taken its share owners on a very expensive Enron ride.
” The owner of the Star Tribune has informed investors that it has written down the value of its $100 million investment in the newspaper by 75 percent to reflect deteriorating conditions since the purchase in March 2007.”
One wonders, “When we will be reading about share holders of this company and other investment shells and mutual funds suing those who burnt up their money?”.
It would be very interesting to see where and how those who control Avista donate their political $’s.
“Worth” is sometimes a nebulous term and can change quickly
Newspapers and other broadcast media have always had a very high ‘goodwill’ component compared to book value. Book value being tangible assets like property, plant and equipment - stuff that can be turned into cash money. Perhaps the downtown real estate can sell for $100 million. But that’s the only tangible asset they have to sell. Printing presses are basically worth scrap metal prices now.
The value of newspapers has always been in their ability to deliver ‘eyeballs’ to advertisers. They manufacture nothing. They are a distribution system.
And now that ‘eyeballs’ are not looking at newspapers or television - the eyeballs have migrated to the internet - their value to advertisers is rapidly decreasing.
Thanks Milhous.
Liz could you check these guys out and see if they are political contributors and to whom.
I have an appointment with a new Fly Rod.
Thanks
FWIW Avista’s site enumerates these partners:
Thompson Dean
James Finkelstein
Larry Pickering
David Burgstahler
Robert Cabes
David Durkin
OhSang Kwon
75 percent
Will do.....but I want some of the catch for my dinner (grin).
Wonder where all of the negative so called finacial experts are when b$ like this happens?
I understand what you’re asking now. I think Avista isn’t the only entity that owns part of the Strib. It looks like they put up $100 million themselves, maybe. I can’t recall who was in the deal with them, or if they borrowed money from banks or what.
I’ve got to be gone for most of the day. When I get back, I’ll dig up the particulars of the transaction from last year.
Be sure and locate the “hub” someplace that everyone will want to use. Babbitt, MN comes to mind.
WELCOME TO FREE REPUBLIC’S MINNESOTA PING LIST!
93 MEMBERS AND GROWING...!
FREEPMAIL ME IF YOU WANT ON OR OFF THIS LIST!
I just returned from a 10 day visit to my son’s family in Eden Prairie....
The Star Tribune is the “newspaper” delivered to their home....
Judging from the Leftist, Kumbaya and utterly naive refusal of the “newspaper”,their columnists or letter writers to the Editor to recognize this Nation’s long toothed enemies and risk -— this paper is LONG OVERDUE to be buried with a stake through its Leftist elitist heart..
It amazes me that Minnesota - in spite of the over abundance of Leftists - can produce so many fine citizens, business leaders and Military Service folks...
They must have all immigrated to Minnesota — Recently.
CEO/Chief Executive Officers - Political Campaign Contributions (1999 to Present)
Dean, Thompson New York, NY 10022
Avista Capital Partners/CEO
$5,000 07/18/2006 SOLUTIONS AMERICA PAC
NATIONAL REPUBLICAN CONGRESSIONAL COMMITTEE/
SOURCE
http://209.85.173.104/search?q=cache:XiSkRASgMzQJ:www.campaignmoney.com/ceo.asp%3Fpg%3D221
Link is a huge resource.
There are alot of conservatives in Minnesota. You just have to get away from the tall buildings.
Why in the world would your son subscribe to the Red Star and Sickle? I cancelled way back during Clinton’s impeachment. Their coverage disgusted me and I vowed not one more dime to that filthy rag.
Here’s some stuff from back when the deal was made.
http://www.startribune.com/business/11222936.html
Dec. 26, 2006: Private group buys Star Tribune
http://www.nytimes.com/2007/05/14/business/media/14carr.html?ref=business
Many Cuts and Crises at a Paper
http://www.freerepublic.com/focus/f-news/1758683/posts
(Minneapolis) Star Tribune being sold
http://www.startribune.com/535/story/899047.html ^ | 12/26/06
Posted on Tuesday, December 26, 2006 4:13:09 PM by MplsSteve
The story talks about the purchace price of $530 million but also their $100 million investment. Very confusing.
High leverage works fine when things go good. Their $100 million investment can pay off handsomely.
Of course, the reverse is true when things don't work, as has happened here. They've written off 3/4 of their investment and are dangerously close to being under water.
The business will soon be valued for less than what is owed on it.
Compare this to buying a house in a rising market vs. buying one in a declining market. Same thing.
As for the $100 million of downtown property - or whatever it's value, the issue isn't what it is worth so much as who has claim to it when the music stops. I'll wager the banks that lent money on the purchase have that property as collateral, just as the loan company has the deed to your house until the mortgage is paid off.
Assume the thing shutters tomorrow. Avista's $100 million is gone forever. The banks are on the hook for the rest of the deal, so they seize the real property and sell it. They get $100 million for it and take a $300 million write down on the bad loan.
Lawsuits fly like a Minnesota blizzard. Another dinosaur disappears beneath the tar pits.
I'm having entirely too much fun...
More here:
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003799873
Avista Wrote-Down 75% of Investment in ‘Star Trib’
By E&P Staff
Published: May 07, 2008 11:37 AM ET
NEW YORK Avista Capital Partners, the owner of the Star Tribune in Minneapolis, wrote down 75% of its $100 million investment because of the deterioration in circulation and advertising revenue at the paper.
Avista purchased the Star Tribune for $530 million from the McClatchy Co. in December 2006.
Avista took the write-down at the end of 2007. In a memo, Avista Partners wrote: “In the past year, the newspaper industry has suffered greater than expected declines in circulation and advertising revenue, particularly in print classified advertising. The outlook in the near to medium term remains uncertain.”
The Star Tribune’s Neal St. Anthony reports that Avista borrowed $340 million to finance the purchase of the paper. Avista said that the Star Tribune’s revenue dropped roughly $75 million between 2005 and 2007.
On Sunday, the New York Post reported that Avista had retained the services of the Blackstone Group to restructure its balance sheet.
Avista denied the Star Tribune is close to bankruptcy.
Several newspaper companies have been taking goodwill impairment charges over the past year, including McClatchy, which took a total write-down of $2.7 billion).
Goodwill is generally calculated by subtracting the worth of tangible assets of a business from the fair market value of the company. Goodwill consists of those intangible assets that would include a newspaper’s brand and perceived strength in the market, something that must be evaluated at least annually to see if it has lost value.
Thanks.
A few months ago, I thought I read that this group was big time rat donors. Maybe that was Chelsie’s hedge fund employer.
The ONLY reason the paper has lasted this long is the type face and layout has been better than the Pioneer Press, and folks like newspapers, at least so they have cheap paper for stuff to drip on, I get old stuff from folks and think thats what the “STAR” is good for. They have been trying to give the paper away for years, and most of us just say no.
Well, Rush could hire one of the AV seven to clean the EIB restrooms, that would save one job.
Probably all Dems-—this one could be the exception.
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