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Post-bankruptcy: Did a Star Tribune-Pioneer Press merger just get easier?

The U.S. Justice Department’s recent actions in Arkansas may smooth the way for a Strib-PiPress merger, if the two ownerships don’t want to buy out each other.
By David Brauer

The U.S. Justice Department’s recent actions in Arkansas may smooth the way for a Strib-PiPress merger, if the two ownerships don’t want to buy out each other.

As I’ve written previously, people have forecast a one-newspaper town at least since the Star Tribune moved into St. Paul in the mid-’80s. So prognostications should be choked down with a cube of salt, even amid the current crisis.

Still, a clue about how it might go down can be found in Arkansas, where earlier this month, the U.S. Justice Department all but waved a merger through.

In newspapering’s fat years, the feds had an interest in maintaining separate editorial voices. The Newspaper Preservation Act of 1970 encouraged so-called “joint operating agreements,” where business operations merged but dueling newsrooms remained.

Publishers could buy and close papers — and did — but in stalemate situations, a JOAs was the way to cut costs. According to the law, Justice Department fisking was required to assure that at least one paper was “in probable danger of financial failure.”

These days, that’s not a high bar; many analysts say the JOA hurdle is all but dead. I agree, and the Arkansas case is the clearest signpost I’ve seen.

Two companies, WEHCO Media and Stephens Media, have been beating each other to a pulp in the northwest part of the state.
According to Editor & Publisher’s Mark Fitzgerald, they agreed to merge several papers, with Stephens doing local news and WEHCO handling regional news and business operations.

The Justice Department’s only requirement: Stephens must try to sell its papers. With takers unlikely, the combo goes through.

Locally, this removes a lot of uncertainty should
the Strib and PiPress want to merge (though the Arkansas folks aren’t sure how much time Justice wants to elapse).

While I’m sure the Strib’s creditors would love to sell, so far PiPress’ debt-saddled owners MediaNews Group haven’t bought. (The scuttlebutt is that MediaNews CEO Dean Singleton would drive an excruciating bargain.)

Bankruptcy obviously stopped any deal — though in Chapter 11 the Strib redid several Teamsters contracts that makes it easier to take over joint printing, perhaps as soon as next year. These “operating efficiencies” (which already include some joint delivery) could be as far as the ownerships go. But if they want to go further — and neither wants to fork over badly needed cash — a merger is now that much easier.

Of course, any analogy has its break-downs. Paradoxically, the Strib may not be considered “failing” once reorganization is approved — especially with outgoing CEO Chris Harte proclaiming the paper’s newfound health. The PiPress might be sicker, though MediaNews and publisher Guy Gilmore have gone out of their way to deny that.

Time may solve this particular problem, if (when?) the newspapering economy continues to tank. Could you see the PiPress covering St. Paul and the east metro (“local”) with the Strib doing everywhere else (“regional”)?

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As I’ve also noted before, I could even see two titles (under one owner) surviving, given geographic loyalties. It would be a sad day for journalists, readers and competition, but now, such a future is that much easier to imagine.