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Can the Star Tribune survive?

Experts agree the Star Tribune has a shot at surviving bankruptcy.  But the long-term outlook is grim — and the ramifications for the community are huge.
Related: Local Star Tribune creditor has confronted unions by Sharon Schmickle

In 1992, when the Star Tribune celebrated its 125th anniversary of publishing a newspaper in Minneapolis, employees were given a grand coffee-table book.

It showed front pages reporting the impeachment of President Andrew Johnson in 1868 through the San Francisco earthquake in 1906 to that glorious day in 1991 when the Minnesota Twins won baseball’s World Series.

Sadly, a future edition of the book might include Friday’s front page featuring the headline “Star Tribune files for Chapter 11.”

Bankruptcy will not frame the final story on the newspaper that has delivered history’s first draft to generations of Minnesotans, Chris Harte, the current publisher vowed on Friday.

“We are proud of the tradition of journalistic excellence that the Star Tribune has established over more than 140 years, and we plan to continue building on this cherished legacy far into the future,” Harte said in a full-page letter to readers.

Experts agree the Star Tribune has a shot at surviving bankruptcy. 

“I suspect that they will try to do business for quite a while,” said Gregory Duhl, who teaches bankruptcy law at William Mitchell College of Law in St. Paul. “A lot of companies emerge from Chapter 11.”

Readers as spectators
Readers who follow the process closely, though, will find themselves mere spectators. And not with box seats. The case was filed in Manhattan. What happens there will have nothing to do with the newspaper’s role in our Midwestern civic life and our shared history.

That’s a disturbing disconnect for me — and, I’m guessing, for a good many Twin Citians. I can tell you first hand that people in this community felt like they owned the newspaper. I was a reporter there for 26 years. Not a week went by without some reader assuming the role of my boss — taking me to task when I stumbled or sending me an atta-girl note when I did well.

I loved the praise and the criticism alike because readers were telling me that they were engaged with my stories and the newspaper. Profitable as they are, I’m guessing that Walmart and McDonald’s never achieve any relationship with their customers as close to the love-hate bonds that connect the Star Tribune to the community.

It’s our newspaper, generations of Twin Citians have thought. But, of course, it isn’t in a strictly business sense. Currently, it belongs to Avista Capital Partners, a New York based private equity group. When this bankruptcy is over, what’s left may belong to the creditors.

All about the creditors
The court room drama that will play out the Star Tribune’s fate is all about those creditors, not those of us who are loyal readers and stern critics. Journalism and the community’s interest in keeping a strong local newspaper have no roles in this play.

“They are not even on the list of the issues that will come up,” said Edward Adams, a University of Minnesota law professor who specializes in bankruptcy.

“What this is about is how to pay the creditors,” he said. “Their interests are the driving force.”

After a flurry of housekeeping work — ensuring that money is available to pay the light bills, employees, ink suppliers, etc. — a key step in the give and take of bankruptcy will be to negotiate a plan for restructuring in a way that could make the newspaper a sound business that is capable of paying its debts. The Star Tribune will propose its plan. The secured lenders will respond. The various sets of plans will come together eventually. Or not.

“The creditors may suggest an alternative plan or they may say that this business is no longer feasible, and it’s better to liquidate it,” Adams said.

“If they make a compelling case that these guys don’t get it, that this business is never going to work … the court could, in theory, say the Star Tribune hasn’t found a plan that is feasible, and we are going to go to a liquidation,” he said.

The problem that drove the Star Tribune to this sorry point is the debt the current owners assumed when they bought the newspaper in 2007 for $530 million. The Avista-led buyers borrowed all but $100 million.

The elephant in the courtroom
But the proverbial elephant in the court room also will be the fact that the business model of newspapers is collapsing nationwide.

“That’s a big issue in this case,” Adams said.

As the bankruptcy judge weighs arguments over the potential viability of the Star Tribune, the sad reality is that newspapers all around the country are fighting for their lives because advertising is not only moving online but also severing its longstanding ties to news content.

No one knows at this point whether any newspaper has a chance to win the fight, said Tom Rosenstiel, director of Pew Research Center’s Project for Excellence in Journalism.

The stakes for our nation’s civic life are immense. In the Upper Midwest, no other news organization has a journalistic staff as large as the Star Tribune’s. That remains true even though Avista has slashed the newsroom staff by 25 percent since it bought the newspaper in 2007.

Of course, we have lively or thoughtful radio and regular television news. But even those newsrooms often rely on the Star Tribune’s reporters and photographers to stir up the stories as they poke around government offices and hold politicians accountable.   

“In any community the news organization with by far the largest number of boots on the ground is the newspaper,” Rosenstiel said. “Local television news which has the largest audience has just a handful of reporters. The numbers of stories that are on a local newscast are a fraction of the number of stories covered in a local newspaper.”

News radio? “Local news radio is almost a vanished breed,” he said. And public radio is substantially national with some local augmentation.

“But it’s nothing that would be comparable in scale to what you get from a local newspaper,” he said. “Most of what people know about their community comes from the newspapers.”

I know from conversations around town that many people believe newspapers are losing their audience. Further, they trust that some other form of journalism will replace the printed news report.

They are wrong on both counts.

Rosenstiel is one of the nation’s top experts on the state of news organizations. So I asked him to explain why.

First, the audience for many newspapers actually is growing if you combine their web sites and print editions, he said. And most newspapers are making a profit this year, although it’s down sharply. Their problem is that print editions generate most of the revenue, and that part of the business is shrinking as advertising moves elsewhere. Advertising in online news sites is not picking up the slack. 

Second, there is no alternative on the horizon right now that could replace journalism as we’ve known it and pay reporters to gather news.

If this were a matter of the audience moving to another news source and that source was financially viable, then this would be simply a transition from — say, newspapers to television. But that’s not the case. This is a shift of the news audience from platforms that were commercially viable — radio, newspapers and television — to a platform that is not commercially viable.

Experiments with non-profit alternatives like MinnPost can supplement coverage in specific areas like investigative reporting, public affairs or the arts. But so far they are not “replacements for a big city metro with a full complement of reporters that are covering the waterfront,” he said.

“The crisis in journalism is not from reporters shifting from one medium to another,” he said. “It’s reporters disappearing period.”

In other words, the urgent question for news junkies in Minnesota and around the nation is, not so much whether we will have our news printed on paper or online. It is whether we have any substantial news gathering organizations at all.

“Are newspapers, as they move to the Internet, entering a tunnel in which the darkness represents the transition from the print economic model to some unknown Internet model?” he asked hypothetically. “Or are they entering a cave in which there is no exit, no sunlight on the other end?”

No one knows the answer at this point.

But so far, newspaper owners have not shown anywhere near the level of innovation that gave rise to online profits at Google and other successful Internet companies.

“I don’t see the news industry being very creative,” he said. “I see small experiments. But I also see an enormous amount of defeatism and an enormous amount of conventionalism. I see the newspaper industry basically trying to work within [shrinking] advertising and manage costs.”

No obituary
This article is by no means an obituary on the Star Tribune. I’m a newspaper addict. And I love my local paper. So I’m rooting for the Star Tribune to win this fight and just maybe help its industry punch through the darkness of this transition to the Internet.

On the first floor of the Star Tribune’s building at 425 Portland there is a gallery of historic stories the newspaper has delivered to our doorsteps over 14 decades. Framed copies of front pages line a hallway, reporting natural disasters, wars and many of life’s victories too.

Never once in 26 years did I walk that hall without getting a little catch in my throat over the historic sweep of journalism as we’ve known it in this community and this nation.

As a reporter, I’m supposed to be a tough-minded realist. But I still wrestle with the reality that this bankruptcy is merely a business matter — no different from the liquidation of Circuit City or the reorganization of Northwest Airlines.

Sharon Schmickle reports on foreign affairs, science and other topics. She can be reached at sschmickle [at] minnpost [dot] com.