Bankruptcy ahead?

Bankruptcy is imminent.

That's the word from Michael Roberts, longtime MediaNews watcher for the alt-weekly Denver Westword.

Unfortunately much or Roberts' evidence - a subscriber-only report with anonymous sources - can't be easily verified, so it's hard to determine the accuracy of these dire predictions. But the numbers Roberts cites are downright horrifying if they're correct.

According to numbers pulled from Debtwire, and culled from a filing with the Securities and Exchange Commission, Roberts calculates MediaNews' debt obligation at $1.28 billion. Spread out over six loans ranging from $100 million to $350 million, these obligations establish a constant set of hurdles for the company to negotiate. The first of which, a $235 million "revolving" loan, is due December of this year.

MediaNews has disputed the accuracy of the story. In response to the Debtwire report, the company released a statement saying the plans were not a bankruptcy, but merely a restructuring of their debt and organization. But while the statement calls Bankwire's report "inaccurate in almost all respects," they don't dispute the fundamentals of the story, only the details.

MediaNews acknowledges that the proposed restructuring will trade debt for equity, but claims such a move will not affect control of the company. They also state that these plans are in no way a bankruptcy procedure. But with an unknown amount of company equity in the hands of lenders, the question is whether MediaNews' executive control will be an extension of their authority, or a matter of agreement between the company and lenders who simply have no interest or experience in managing a newspaper empire.

The difference of course, is that a subordinate leadership organization is responsible for implementing policy, not setting it.

An independent executive team, freed from the burden of meeting an impossible payment schedule, could develop a long term plan for viability and profitability. But a financial institution intent of recouping or minimizing their losses may not offer the same opportunities, if short-term profits are on the table. There's been enough of that already, this industry doesn't need any more.