NEW YORK, Jan 15 (Reuters) – The Minneapolis Star Tribune, the 15th-largest daily U.S. paper based on circulation, filed for bankruptcy on Thursday, one of the biggest U.S. newspapers yet to financially flame out under a heavy debt load and a punishing decline in advertising revenue.
The paper, which McClatchy Co (MNI.N) sold to private equity company Avista Capital Partners for $530 million less than two years ago, filed for Chapter 11 bankruptcy protection after missing payments to lenders, it reported on its website.
Diana Postemsky, a spokeswoman employed by Kekst & Co, the public relations firm that represents Avista and the Star Tribune, did not return a telephone call seeking comment.
In its filing, the newspaper listed assets of $493.2 million and liabilities of $661.1 million. It hopes to use bankruptcy to restructure its debt and lower its labor costs.
The news came on the same day that The Boston Globe, owned by the New York Times (NYT.N), said it would cut 12 percent of its newsroom staff, and a day after USA Today publisher Gannett Co Inc (GCI.N) said it would force staff to take a 1-week furlough.
For Avista, the December 2006 deal proved to be done at just the wrong time, as advertising woes worsened and more people left the paper behind, seeking free news on the Web.
At the time, Avista’s chief dealmaker on buying the Star Tribune, OhSang Kwon, and his partner James Finkelstein told Reuters they did not plan layoffs as part of the deal to take the newspaper private. They also said the most important aspects of the paper were its people and content.
Months later, the paper said it would offer buyouts, and later said it would lay off staff. The paper also cut costs in other ways. Eventually, some unions representing employees at the paper did not agree to cutbacks. Shortly after, the Star Tribune filed for bankruptcy.
The Star Tribune has said it will continue to publish. It also is profitable, though 2008 earnings before interest, taxes and debt payments were about $26 million — down from $115 million in 2004, it reported.
Other publishers face more trouble.
EW Scripps Co (SSP.N) could shut the Rocky Mountain News in Denver if it does not find a buyer soon, and Hearst Corp has said it might close the Seattle Post-Intelligencer if it does not find a buyer in the next two months.
By Robert MacMillan (Editing by Ian Geoghegan)