GateHouse Media Inc., which owns the State Journal-Register and
other Illinois newspapers, last week announced a second-quarter income loss
of $429.6 million on revenues of $184 million in the same three-month
period.
The huge loss reflected a $443.1 million
“impairment charge” — a reduction of the value of the
company’s assets, reflecting the weakened state of the newspaper
industry.
Without the one-time charge, the company would have
reported operating income of $13.4 million for the three-month period ended
June 30, compared with operating income of $18.5 million in the same period
a year earlier.
Mike Reed, GateHouse’s chief executive officer,
said in a conference call Friday that the company is struggling with weak
classified advertising sales, a reduction in demand for commercial printing
services, and higher costs for transportation and employee health care.
GateHouse also announced that it was suspending
quarterly dividend payments, which Reed said would enable the Fairport,
N.Y.-based company to address its debts and increase liquidity.
“We believe this is a prudent strategy given
the challenging and uncertain times we are in today,” Reed said.
Failure to meet expectations has become the hallmark
of GateHouse’s brief existence, at least as a publicly traded
security. After hitting a low of 40 cents per share last week, GateHouse
stock had rebounded to around 75 cents as of press time on Wednesday.
Reed addressed GateHouse’s poor stock
performance, which he attributed largely to a widespread belief that
newspapers are “out of favor” and the perception that
GateHouse, which reports liabilities of $1.4 billion, is
“overleveraged and possibly in danger of default.” He dismissed
the latter contention by pointing out that GateHouse’s long-term debt
is not due until 2014.
GateHouse’s properties, meanwhile, seem
reluctant to report on the woes of their parent company.
Just two of the company’s Illinois papers, the Galesburg Register-Mail and Peoria Journal Star, carried
any news from last week’s earnings call.
Contact R.L. Nave at rnave@illinoistimes.com.
This article appears in Aug 7-13, 2008.
