Martin Langeveld explains why struggling business partner MediaNews Group is unlikely to provide an easy solution to Gannett's dilemma, by simply abandoning the GCI-controlled joint operating agency that publishes Detroit's two newspapers."Gannett might wish that MediaNews would similarly fold their tent and leave Detroit, but that won't happen,'' he writes today in a post, citing this U.S. Securities and Exchange Commission document filed by MediaNewsGroup. "Under the terms of the Detroit JOA, MediaNews is 'reimbursed for its news and editorial costs associated with publishing The Detroit News,' and if the JOA is profitable, it also receives a 'fixed preferred distribution' set at $4 million for 2008 and 2009, and declining in later years."
He continues: "In other words, MediaNews is guaranteed not to lose money in Detroit. Assuming the JOA is currently in the red, they're forgoing the fixed preferred distribution, but their newsroom expenses are fully covered. (By contrast, in Denver, E.W. Scripps had to fund news operations out of the meager JOA proceeds, so it was operating at a loss.)"
[Image: today's News, Newseum]
Yes, but as Scripps showed in Albuquerque and in Birmingham, if the price is right, the minority newspaper will withdraw early and before the JOA is slated to expire. The price is the annuity that lasts as long as the JOA was to have lasted had the printing been continued. So would Billy Dean be happy with a $6 million annuity, versus a $4 million guaranteed payment? Hhumm...I bet he would think more than a New York second on that deal.
ReplyDeleteLOL, you are forgeting something. That money won't come after 5 years in Detroit per the arrangement. In a few years MediaNews is on there own. They would probably gladly accept a buyout from their deal from Gannett say $12.5 million. That makes everybody happy because it frees The Freep and give Singleton much needed CASH!
ReplyDeleteIt is not Project Griffin, or Grifon, but Project Gryphon, named after the animal in Alice the Wonderland. I would have thought a newspaper group would have got this one right.
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