Newspapers aren't assets to be flipped, leveraged, and stripped
Pub Date:
Wed, 04/01/2009
Source:
Note:
...the newspaper companies that have failed wholesale were essentially set up to fail by inexperienced managers who believed piling huge amounts of debt on businesses whose revenues were shrinking even when the economy was growing was a shrewd means of value creation. A similar dynamic is playing out in other industries. Several mattress companies have filed for bankruptcy or are near it. It's not simply because sales are down due to the economy or because mattresses, which rely on an inferior technology, are being displaced by futuristic futons. Rather, as the Wall Street Journal reported (subscription required), the companies are going bust because private-equity types loaded them up with absurd levels of debt at the wrong time.
