I know it's Friday afternoon and most of you have turned the Internet off, but I'd asked earlier today for knowledgable crowdsourcing on the Strib's reorganization plan. Former business reporter Tony Carideo — now a Chartered Financial Analyst — responded with an epic comment that deserves a higher profile.

To set the scene, I asked this morning if the Strib's estimated valuation of $118 million to $144 million was fair. One method the Strib's consultant used was multiplying the paper's estimated annual earnings (actually EBITDA for you wonks) by 4.5 or 5.5. Here's Carideo's analysis:

In my view, the EBITDA multiple is reasonable, perhaps even generous — especially in light of the fact that the Strib has been totally incapable of identifying new sources of revenue, an amazing feat given the popularity of its web site and an evident brain cramp when it comes to monetizing that usage. (Hint: Micropayments for full story views; higher payments for formatted story views; reasonable reprint fees and services. See eBay, Amazon business models.)

Other reasons for the low multiple:

— Uncertainty EVERYWHERE. Fabulously underfunded pension plan, with a totally schizophrenic equity market and an equally distorted fixed income market, making any sort of discount rate projections relative to future liabilities essentially a roll of the dice.

— Still no clear visibility on an economic recovery, which leads to stronger consumer spending, higher asset valuations (i.e. classifieds) and higher advertising revenue. Witness BBY stock, at $34 a share, 11 times forward earnings, less than a "1" PEG ratio — cheap, cheap, but who's willing to risk their investment reputation on a $2,200 flat screen purchase?

— Not so great cash flow (duh). An 8 percent mortgage, or put another way, 300 basis points over LIBOR with a 5 percent LIBOR floor. So you're telling me that they're already stratospherically above current market rates? One-year LIBOR is at 1.73 percent. Add 3 percentage points, and that results in a 4.73 percent interest rate if you were to use a REAL LIBOR-calibrated rate. Looking at six-month LIBOR rates, it's even worse. Six-month LIBOR, which matches the twice-yearly payments of many corporate bonds, is at 1.16 percent, suggesting a rate of 4.16 percent. So we're setting a "floor" on LIBOR that is (depending on the selected term — one year or six-month) that is fully either 3.84 percentage points over the current six-month rate, or 3.27 percentage points over the one-year rate. Why even use LIBOR? In current market conditions, it's a meaningless calculation. Why not just write into the agreement: "The Star Tribune Company shall pay current debt-holders at a rate defined as 'through the nose.'"

Given the risk, maybe that's fair — but spare us the LIBOR crap. That just gives the bondholders much, much higher upside, and absolutely no benefit to the business for better performance. Interest rates soar, the bondholders get higher payments. So even if the paper starts doing really well, in a higher inflationary environment, they're still penalized.

— Other negatives: No resolution whatsoever on how to protect the paper's intellectual property (editorial content) from the aggregators, the mere existence of the truck drivers. . .outside-the-newsroom, Avista-promulgated, suffocating editorial policies that squelch aggressive reporting and strong editorial positions (lessening a value proposition for readers).

So who wants to pay up for that kind of hairball?

Best solution: Liquidatation (but it's too late for that); start again with a greenfield operation: leased trucks (tons of capacity there — and yes, give the new drivers a GPS to negotiate all those extremely complicated delivery routes the Teamsters were braying about); no unions (and this, from a former union negotiator); keep the staff people who really want to be journalists, and hire some people (remember the concept: "cub reporter"?) willing to cover night city council meetings in Lakeville and Andover — taking on the suburban pubs — then figure out how to package it and make money on it (that nice web site, perhaps?). Oh, and also get rid of any editor who consistently comes to planning meetings without anything resembling a decent story idea; start covering your own bankruptcy story and doing the kind of investigative work, advocated — admirably, I might say, by Nancy Barnes — that bring people back to read the newspaper every day.

Oh, and make your columnists actually express an opinion, especially on state and local politics, rather than write glorified feature stories and personality profiles. But that brings us back to our friends at Avista. Sell the presses; firesale the building and parking lot and rent some of the 25 percent or so vacant space in downtown Minneapolis. In other words, pull every available dollar out of the operation and reset the break-even point for the enterprise. In my view, bankruptcy may not, in the final analysis, solve that particular problem. I really, really hope I'm wrong.

All crazed ravings, and not the least bit realistic, but in my humble opinion that's why someone is only willing to value the business at five times EBITDA. By the way, I'm guessing that there's not much "D" or "A" — depreciation or amortization (both non-cash items) — left; so this is pretty much a hard cash on hard cash valuation, which is actually a positive and may have a positive impact on the low multiple.

Tony Carideo, CFA
Former reporter