Hit by a Blockbuster: Dish Network Turning Off the Lights at One-Time Video Store Giant

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The 300 remaining Blockbuster Video stores and DVD-by-mail distribution centers are being shuttered by owner Dish Network, the New York Times reported yesterday.

This blog has chronicled the demise of the one-time video chain behemoth from its peak of more than 9,000 retail stores nationwide to its filing for Chapter 11 bankruptcy (see "TUOL" posts 3/14/11 & 9/23/10) partly out of nostalgia, and partly out of fear that we may have forgotten to return a VHS kiddie tape we rented two decades ago.

Blockbuster's undoing was the rise of Netflix, Dish officials conceded. Dish will continue to operate the Blockbuster @ Home streaming video service for satellite tv subscribers as well as Blockbuster on Demand, an iTunes Store rival.

Dish Network bought Blockbuster out of bankruptcy in 2011, at which time the chain still boasted 1,700 stores.  The brick & mortar Blockbuster stores won't vanish entirely, the Times article reported, because roughly 50 stores across the nation are owned by third-party franchisees.

Penthouse Magazine Goes Bust?; Parent Co. Files Chapter 11 Bankruptcy

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UPDATE: Pounding the (Dead)Beat: Sun-Times Lags in Paying Tribune Printing Bill

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As a former Chicago denizen, "TUOL" thought the 10-year agreement under which the tabloid Chicago Sun-Times agreed to be published by the rival broadsheet Chicago Tribune (see "TUOL" post 7/20/11) was the most unlikely and worst financial decision since Oscar Madison and Felix Unger decided to share an apartment.

Now, according to a Tribune article about a story originally uncovered by blogger Robert Feder (the Sun-Times former tv beat reporter for nearly three decades), the two papers are squabbling over the Sun-Times' alleged foot-dragging in paying its printing tab. 

A Tribune spokesperson said the rival dailies (they even competed to see which would be the first to enter Chapter 11 bankruptcy--both did, but the Trib took longer to emerge) are "working to resolve a disagreement." Reportedly, the Tribune has resorted to pressuring the Sun-Times and socking it with late fees because the tabloid has supposedly been tardy in meeting monthly payments on the approximately $70 million annual payment to the Tribune (the figure includes distribution deal payment money).

The 10-year printing pact contains a two-year cancellation clause. The Sun-Times hoped to realize a $10 million savings when it outsourced printing to the Tribune and shuttered its South Ashland Ave. printing facility.

Rusty GateHouse Media Headed Toward Pre-Packaged Bankruptcy Filing?

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Debt-ridden Fairport, N.Y.-based newspaper chain GateHouse Media Inc., which owns newspapers and shoppers in 21 states and boasts a workforce of more than 4,000, is considering filing a pre-packaged bankruptcy in response to a looming $1.2 billion debt, the Wall St. Journal reported this week.

GateHouse, which is owned by Fortress Investment Group LLC, includes in its stable of more than 300 small daily and weekly papers the (Quincy, Mass.) Patriot Ledger, Norwich (Conn.) Bulletin and Utica (N.Y.) Observer-Dispatch. The chain has enlisted Houlihan Lokey investment bank and a law firm specializing in restructuring to achieve its goal of eliminating the crushing debt, the Journal article noted.

GateHouse was delisted from the New York Stock Exchange in 2008 because of its shaky financial picture, which includes a $30 million drop in sales last year compared to 2011 figures. Fortress, a prominent creditor, bought GateHouse in 2005 for more than $500 million.

Reader's Digest: Humor In Solvency

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To pare its debt by $465 million, the owner of the venerable Reader's Digest magazine has filed for Chapter  11 bankruptcy for the second time in the past five years, Bloomberg News reported.

In re RDA Holding Co., Inc. (Docket No. 13-22233), filed in the United States Bankruptcy Court for the Southern District of New York, revealed the company that publishes the 91-year old Reader's Digest ("RD") claims both assets and liabilities of more than $1 billion. A victim of declining ad revenues and shifting public taste toward electronic news media outlets, RD last filed for bankruptcy protection in 2009 (See "TUOL" post 8/17/09).

The magazine, which was founded by DeWitt and Lila Wallace, was acquired in 2007 by the Ripplewood Holdings LLC private equity firm for $1.6 billion, according to the Bloomberg News article.  Under a proposed restructuring backed by Wells Fargo & Co., senior notes totaling $465 million would be converted to equity, thereby reducing RDA Holding Co.'s debt by 80 percent and allowing it to emerge from insolvency with $100 million in debt.

RD's Web site boasts that its readership worldwide exceeds 25 million.

Old News: Journal Register Co. Re-Enters Bankruptcy

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Despite a promising shift to digital news, nagging debt and a near 20 percent decline in print advertising over the past two years has again pushed the Journal Register Co. this week to file for Chapter 11 bankruptcy protection, according to stories in The New Haven Register and NiemanLab.org.

The Yardley, Pennsylvania-based Journal Register Co., owner of the New Haven Journal Register and the Media News chain, emerged from Chapter 11 bankruptcy in 2009 six months after declaring insolvency. For now, the company maintains its latest filing to seek reorganization and protection from creditors will not result in any staff reductions.

The Journal Register Co. is managed by Digital First Media, whose CEO John Paton has succeeded in a relatively short time period in boosting significantly the Journal Register's online readership and digital revenues. According to news accounts, the company expects to exit bankruptcy in 90 days and publication will continue uninterrupted.

The Alden Global Capital hedge fund, which owns the Journal Register Co., is likely to remain in charge of the company once the dust has settled, and may even acquire Digital First Media in the bargain, according to reports.

Tribune Co. Bankruptcy Ordeal Ends: Whither Chicago Trib & LA Times?

(Image credit: Getty Images via @daylife)It took three-and-a-half years and generated roughly $400 million in attorneys' fees, but Delaware U.S. Bankruptcy Judge Kevin J. Carey last Friday signed off on the restructuring agreement that will enable the Tribune Co. to emerge from Chapter 11 insolvency (In re Tribune Co., Case No. 08-bk-13141), according to an article in the Hollywood Reporter.

The Tribune Co., which last year unloaded the NL Central Division cellar-dwelling Chicago Cubs (see "TUOL" posts 11/1/11, 3/29/10), is expected to divest itself of ownership of its newspaper division, which includes The Chicago Tribune, Baltimore Sun and Los Angeles Times. The Chicago-based media conglomerate's holdings, valued at an estimated $7 billion, include 23 television stations, such as WPIX in New York City and WGN in Chicago, nine dailies and several magazines.

Billionaire entrepreneur Sam Zell used a $13 billion leveraged buyout to acquire the Tribune Co., which entered bankruptcy in 2008. Senior creditors are the new owners, among them, Oaktree Capital Mgt., Angelo, Gordon & Co., and JP Morgan Chase & Co. (which in recent weeks has shown us how easy it is to lose $5.8 billion). The new dream team will need the FCC's blessings to transfer ownership of the entity's radio and television licenses.

Freedom Communications Courting Suitors

Image via WikipediaToday is the self-imposed deadline for Irvine, Calif.-based Freedom Communications, owner of eight tv stations and 100 newspapers, including flagship Orange County Register, to receive bids for the sale of all or part of its newspaper holdings, according to accounts in The Los Angeles Times and the Poynter.org Web site.

One needs a scorecard to sort through the possible buyers of Freedom, which emerged from Chapter 11 bankruptcy in 2009 (see "TUOL" post 11/19/10). Halifax Media Holdings purportedly is eying Freedom's Florida and California publications, which include The (Panama City) News Herald and The Huntington Beach Wave, while Philadelphia-based Versa Capital Management, LLC has expressed interest in Freedom's holdings in the Midwest, which include The Alton (Ill.) Telegraph, according to the Poynter.org post.

Meanwhile, the Los Angeles Times claims potential purchasers include Times parent Tribune Co., MediaNewsGroup, Inc., and a couple of Los Angeles-based private equity firms, Platinum Equity and Gores Group.

Freedom is mum on negotiations for an ownership change. Investment groups Alden Global Capital, Luxor Capital Group and Angelo, Gordon & Co. have been at the helm since Freedom threw off the shackles of bankruptcy.

Judge Irked Over Chi-Trib Ch. 11 Plans; Threatens to Name Bankruptcy Trustee

Image via WikipediaIn his 126-page decision yesterday in  In re Tribune Co. (Case No. 08-bk-13141), a frustrated U.S. Bankruptcy Court for the District of Delaware Judge Kevin J. Carey threatened to place the Tribune Co in bankruptcy and appoint a Trustee, according to a report by Bloomberg News.

Judge Carey, who has presided over the nation's second-largest newspaper publisher's bankruptcy proceeding since the Tribune Co. filed a voluntary Chapter 11 bankruptcy in December 2008 (see related "TUOL" posts 3/29/10, 8/24/09), rejected rival re-organization plans submitted by JP Morgan Chase & Co. and  the Aurelius Capital Management LP hedge fund. Judge Carey criticized the former's plan for its over-broad release provisions and attacked the latter plan's treatment of senior lenders and release of non-debtor guarantors, according to the Bloomberg News account.

The multimedia Tribune Co. is valued at roughly $6.75 billion, but has debts exceeding $13 billion, according to court documents. Financier and former Tribune Co. owner Samuel Zelle oversaw the $13 billion leveraged buyout of the company in 2007.

Judge Carey has scheduled a status hearing for November 22.

UPDATE: Unwilling to Protect Our Borders

Image via WikipediaAnn Arbor, Michigan-based Borders Group, Inc. will shutter its remaining 399 Borders book stores nationwide, pink-slipping roughly 11,000 employees, threatening the sales of electronic books, and creating gaping holes of empty space in shopping malls around the country.

Earlier this year, Borders filed for Chapter 11 bankruptcy re-organization in the U.S. Bankruptcy Court for the Southern District of New York (Docket No. 11-10614) (see "TUOL" post 2/16/11). Creditors wouldn't bite on the offered bid from Najafi Cos. to keep the bookstore chain afloat, so at the scheduled court hearing on July 21, the company will seek bankruptcy court approval of liquidation of its assets by Hilco Merchant Resources and Gordon Brothers Retail Partners, according to an article in USA Today and a blog post by Geekosystem.com. The liquidation will put money in vendors' pockets, but shopping malls and  urban store locations that drew browsers, if not buyers, aplenty, will go dark.

It's hard to remember that Borders was once the  leviathan "bad guy" that threatened small, independent bookstores, only to be undone itself by Amazon and WalMart.  The demise of Borders means further isolation in our society as people will order their books online, instead of recommending books to each other over a latte in the Borders' cafe.

Reader's Digest Being Swallowed Up by Buyer?

Image via WikipediaReader's Digest Association ("RDA") is offering itself for sale, in its entirety or piecemeal, and hopes to fetch $1 billion, according to reports in Folio magazine and The Wall St. Journal.

The Pleasantville, N.Y.-based publisher entered a voluntary Chapter 11 bankruptcy in August 2009 (see "TUOL" post 8/17/09), from which it emerged in February 2010. RDA endured a brutal First Quarter in 2011, as revenues sank 21.2 percent to $326 million, Folio reported.

The media company publishes 90 magazines internationally, including Taste of Home, Family Handyman and Every Day With Rachael Ray (a frightening prospect). The Wall St. Journal reports that one of RDA's most prized possessions is Allrecipes.com, for which digital media companies may pony up $100 million to $200 million.  

Reader's Digest, which Lila Bell and DeWitt Wallace founded in 1922, has registered nearly an 8 percent hike in ad pages through August, according to Folio. RDA was acquired for $66 million in 2006.

The intrepid "TUOL" staff's editor will be tracking this story closely as he grew up in a family who subscribed to the uniquely sized Reader's Digest and  has fond childhood memories of the magazine being delivered directly to his father's bathroom door.

Cumulus Citadel Purchase Creates Challenge for Clear Channel

Image via WikipediaThe Wall St. Journal is reporting today that the nation's second largest radio station owner, Cumulus Media, Inc.(CMI), has acquired Citadel Broadcasting Corp., third-largest U.S. radio broadcaster, for a combined $2.5 billion in cash and stocks.

Citadel shareholders will receive either $37 cash per share or 8.525 common stock shares of CMI. Citadel emerged from a December 2009, Chapter 11 bankruptcy proceeding sparked by the lethal combination of debt and plunging ad revenues with principally the same management team headed by CEO Farid Suleman, but ownership comprised of lenders including J.P. Morgan Chase & Co.

The Citadel-Cumulus radio conglomerate is poised to challenge radio Goliath Clear Channel Communications, Inc., which boasts more than 800 radio stations in the U.S.