What we learned about the Strib's financial misfortunes today UPDATE x4

We're on Strib Bankruptcy Watch Day 3, and the caffeine is giving me and the story a second wind. Business really picked up yesterday with the publication of Jeff Shaw's web-exclusive news story revealing that the Strib's debt was trading below 60 cents on the dollar. Ouch.

As MinnPost's David Brauer describes it:

After Shaw's story broke, Strib parent Avista Capital Partners finally handed one of their reporters some inside dope; Neal St. Anthony disclosed that Avista was "forced" to write off $75 million of their $100 million investment. St. Anthony amplified Shaw's info, noting that $96 million in subordinated debt trades for 10 cents on the dollar. Citing cost cuts and unspecified revenue-producing investments, an Avista memo states, "We view 2008 as the year to prove a recovery is possible." So far, so bad.

You can read the Strib story about it here. You can read the New York Post's story about it here.

How have readers been taking the news? There's only four comments on the Strib story so far. This one is the most brutal:

They dug their own grave My company spent hundreds of thousands annually on advertising. They literally threw our money out the door with an amazingly arrogant and irrantional attitude. When negotiating a contract that was worth 6 figures, they basically told us to pound sand. We withdrew our advertising completely, and found that our sales actually INCREASED when our dollars were directed to other media. This newspaper is irrelevant to sales. Thus, they are destined for a liquidation. They have only themselves to blame.

posted by wanninger on May. 6, 08 at 11:12 PM | 21 of 25 people liked this comment.

Keep in mind, we also learned that the Strib has been censoring negative comments on its website.

UPDATE 1: David Brauer has the goods on what it might mean to how the paper looks in the near future. The short version: They're trimming some of the extraneous sections and bulking up arts and entertainment coverage.

Call us gloomy guses, but we think it's going to take a lot more painful cuts than this for the Strib to rightsize it's way out of this crisis.

UPDATE 2: Brauer's got a sweet scoop on ramped up efforts to sell the Strib's downtown land. Money quote:

The Strib put it back on the market in January, and now, according to a company memo, the tire-kicking has begun in earnest. Facilities tours began Tuesday, and employees were alerted today that "there will be others over the next few weeks as interested parties come forward."

The memo adds, "We will make every effort to ensure that the tours do not interfere with work operations."

Naw, no way will a roomful of anxious journalists be distracted by strangers measuring the drapes.

To which we can only add: Paging Zygi.

UPDATE 3: Lambert is on point today. Here he tries to figure out the reasoning behind a newspaper company botching the P.R. game so badly:

After a very long year with this crack investment team, we all understand that that "communications thing" really isn't their game. But you would have thought the paper's current publisher, Chris Harte, a.k.a. Avista's "newspaper guy," would have understood that "hiring" heavyweights such as Blackstone might be news, and, therefore, maybe it would probably be a good idea to get ahead of the curve and do the fancy dance, reassuring skeptics that this is simply good, old-fashioned, contingency business stuff, nothing urgent, nothing overly serious. It would, I'm saying, be better than, mmmm, letting someone slide a rumor of bankruptcy to a tabloid that then goes ricocheting around the Internet, making you look like a colossal basket case.

Read the whole thing.

UPDATE 4: Top stories on Google News for "Star Tribune":

Avista Wrote-Down 75% of Investment in 'Star Trib'

Editor & Publisher - 4 hours ago By E&P Staff NEW YORK Avista Capital Partners, the owner of the Star Tribune in Minneapolis, wrote down 75% of its $100 ...

Star Tribune owner takes write-down, NC - 7 hours ago Avista Capital Partners, which owns the Minneapolis Star Tribune informed investors that it wrote down a big chunk of its investment in the paper. ...

Star Tribune's owner forced to write off much of its investment Minneapolis Star Tribune, MN - 19 hours ago Avista Capital partners wrote down 75 percent of its $100 million share of the purchase price and said the outlook is still uncertain. By NEAL ST. ...