American Prospect: Boston Herald Prospects Dim

Since last month’s announcement that Digital First Media had won the Boston Herald auction bakeoff, there’s been a steady drumbeat of prebituaries for the shaky local tabloid.

The Boston Globe’s Jon Chesto and Andy Rosen predicted a rolling thunder of staff reductions, while Nieman Journalism Lab director Joshua Benton said flat-out “to be owned by Digital First is to be gutted.”

Now comes this piece (tip o’ the pixel to MASSterList) in The American Prospect by Hildy Zenger, which is the pen name (Hildy for Hildy Johnson, Zenger for John Peter Zenger) of “a writer who works for a newspaper owned by a private equity firm”).

Hello Digital First, Goodbye Boston Herald

Just before Robert Kuttner and I filed our American Prospect article on the rape of the newspaper industry by private equity predators in December (“Saving the Free Press from Private Equity”), the prime nemesis of our story, GateHouse Media, bid $4.5 million to buy the 171-year-old Boston Herald, which declared bankruptcy the same day. The deal was conditioned on voiding union contracts and deep-sixing legacy pension, health, and other obligations. “Major layoffs in the newspaper’s 120-person newsroom are a certainty,” we wrote, in the context of GateHouse’s dismal record of gutting editorial staffs at its 770 daily and weekly newspapers.

But GateHouse was then elbowed aside by Digital First Media, whose $11.9 million bid won the February 13 bankruptcy auction in Boston, indicating that the DFM bean-counters have calculated a more profitable but probably even bloodier endgame for the venerable Herald, whose days are now surely numbered, according to industry observers.

The estimable newspaper analyst Ken Doctor “predicted that DFM would get its money out of the deal within three years at most, then declare bankruptcy and sell off the emaciated remains of the business for whatever they can get for it.”

So now the Herald’s plight has gone national. Not a good sign, people. Not a good sign at all.

Also . . .

From our newly minted Hexit Watch™

The inevitable exodus from Fargo Street has mostly proceeded under the radar, but here’s a significant departure: Former Deputy Managing Editor for News and Multimedia Zuri Berry has hied himself to Charlotte, NC. From his Twitter feed:

Best of luck in the Tar Heel State, Zuri.

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Digital First’s Boston Herald Rx: Apply Internally

When last we met, the sadreading staff noted two ominous takes on the future of the Boston Herald under the new ownership of Digital First Media.

First, the Boston Globe’s Jon Chesto and Andy Rosen made this prediction: “[I]ndustry experts and former employees said that if [Digital First] sticks to the playbook it uses at many of its other newspapers around the country, the Herald should brace for more cost-cutting beyond the 60 or so positions that are expected to be eliminated when the sale closes later this spring.”

On the Globe’s op-ed page, Nieman Journalism Lab director Joshua Benton was even more bleak, citing the dismal track record of Digital First’s parent company, Alden Global Capital.

Alden’s methods fall under the rubric of what some call vulture capitalism: Buy up papers, sell off whatever assets you can (like their offices downtown), and cut costs to the bone. The end game is to be sold off, or just shut down. To be owned by Digital First is to be gutted.

Ouch.

Especially considering this full-page ad in today’s edition of the shaky local tabloid.

Despite its best efforts, that ad looks an awful lot like ave atque vale. Because who knows how many of those “wonderful people” will be around a month from now.

From Greg Ryan at the Boston Business Journal:

Herald’s new owner to begin making job offers next week

The soon-to-be owner of the Boston Herald will start making job offers to current Herald employees next week, according to a letter sent to workers on Thursday, with the newspaper’s staff expected to be cut by more than 25 percent from its levels at the end of 2017.

Denver-based Digital First Media won a bankruptcy auction on Feb. 13 to acquire the Herald’s parent company from Pat Purcell for just under $12 million, beating out GateHouse Media and Florida private equity firm Revolution Capital Group.

Digital First has committed to offering jobs to 175 current Herald staffers . . .  Employees have been interviewing to keep their jobs since last week.

But here’s the kicker: “At this point, it is not known whether those employees who are hired will receive their current salary.” Never mind sick time, vacation time, and healthcare plans, all of which are still undetermined.

And pensions? From all the evidence, that’s another ave atque vale.

Double ouch.

Globe: New Herald Owner Is a Double Whammy

Today’s Boston Globe has a two-fisted reaction to the result of this week’s Boston Herald bake sale (which, by the way, was rubber-stamped by a Delaware bankruptcy court this morning).

Begin with the piece by Jon Chesto and Andy Rosen in the Globe’s Business section.

Digital First’s playbook suggests more cuts at Herald

Solid profit targets and shareholder returns called key

Digital First Media hasn’t yet made its vision for the Boston Herald public, as it goes before a bankruptcy judge Friday for approval of its $12 million purchase of the struggling tabloid.

But industry experts and former employees said that if the company sticks to the playbook it uses at many of its other newspapers around the country, the Herald should brace for more cost-cutting beyond the 60 or so positions that are expected to be eliminated when the sale closes later this spring.

If that was a jab, Joshua Benton’s op-ed is the haymaker. The Nieman Journalism Lab director went smashmouth on Digital First Media, “the nom de pillage of what used to be known as the Journal Register Co. and MediaNews Group.” Digital First is owned by the hedge fund Alden Capitol Group, which gets a good beatdown by Benton.

Alden’s methods fall under the rubric of what some call vulture capitalism: Buy up papers, sell off whatever assets you can (like their offices downtown), and cut costs to the bone. The end game is to be sold off, or just shut down. To be owned by Digital First is to be gutted.

Read the piece all the way to this end: “[S]hort of setting the place on fire, being bought by Digital First is about the worst outcome possible. It’s less the Herald being saved than the Herald being stripped for parts.”

The death watch begins . . . now.