There is no Santa Claus, Virginia

In the fits of wishful thinking we hear about the fate of newspapers, one of the most common is that papers will go private and be taken off that mean and nasty stock market. But there are no white knights. Read this story about Avista Partners, buyer of the Minneapolis Star Tribune, trying to dump the goose before it’s cooked.

But observers said the effort by lenders to sell their debt could shift the strategic landscape for the highly leveraged Star Tribune. In the first place, it could be a sign that those lenders no longer believe the Star Tribune will be profitable enough to service their debt, despite all the cuts that have taken place at the newspaper in recent months.

Investors seem to share those doubts, bidding only 53 cents on the dollar this month for shares of the senior portions of that debt.

Observers also said that despite Lazard’s attempt to find a buyer locally, the likeliest candidates to buy the debt are distressed-debt hedge funds, whose traditional focus on returns could trigger demands for even faster cost-cutting at the newspaper.

The debt taken on in going private will kill some newspapers living under it. Journalism has to survive on the marketplace from sustainable enterprises and those enterprises must reinvent themselves. Or this will happen:


: SEE ALSO: Alan Mutter on the Strib. He also reports that Journal Register it technically defaulting.