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By David Brauer | Published Mon, Mar 9 2009 10:30 pm
Bankruptcy filings are a boon to reporters because they disgorge information private companies otherwise keep hidden. But like Lucy snatching away the football, some of the juiciest stuff is blacked out when the documents are released.
That was the case last week, when the Star Tribune's pressmen claimed management ineptitude should limit proposed labor cuts. A prime example: the cost of defending ex-Strib publisher Par Ridder, who in 2007 took a hard drive's worth of financial data from his former employer, the Pioneer Press.
The Strib settled with PiPress owner Media News Group after a long courtroom battle. How much did the Minneapolis paper spend? The pressmen, who have access to company financials, cited a dollar figure — which of course was blacked out.
But being a censor is like defending against terrorists: you can't be right once, you have to be right all the time. And sure enough, in a passel of documents management filed Monday, there was the pressmen's figure, clear as day: $11.5 million.
That's a huge number. The Strib that year was a $300 million company that posted a $59 million operating profit. The lawyers' eight figures could've forestalled buyouts, funded badly needed investments, or reduced the paper's crushing debt.
However, the filing, by Strib Chief Financial Officer David Montgomery, challenges the notion that all $11.5 million went for Par:
... The Star Tribune's legal fees in 2007 were not entirely from litigation against St. Paul Pioneer Press, but are representative of other legal matters, including the Company's defense of a class action lawsuit regarding circulation that arose before Avista purchased the paper. Both matters are covered by separate confidentiality provisions preventing the Company from disclosing its costs.
Now, litigation isn't cheap, but the circ suit in question was related to a 2005 complaint settled for $15,000 in ad rebates plus $40,000 in legal fees. If that's Montgomery's best shot at diluting ParGate, you're still talking a very big number for the Case of the Purloining Publisher. Up to now, the only hard figure we've had is the $3.8 million 2007 gain MediaNews reported from the Strib litigation.
The bottom line is we still don't know exactly how much the Strib spent on ParGate. What we do know is that a $300 million company forked out $11.5 million in legal fees a year before it became a $200 million company and stopped making debt payments.
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