GateHouse Media, whose venture-capital owners had counted on strong cash flow from the fast-growing group of mostly smaller newspapers, says it will suspend its dividend and seek more money from its plurality owner, Fortress Investment Group. Fortress agreed to buy $11.5 million of preferred stock to keep up the company's heavy debt service.
GateHouse reported yesterday that it lost $429.7 million in the second quarter, "stemming from a charge of $443.1 million to write down the company's market value," report Shira Ovide and Peter Lattman of The Wall Street Journal. "The impairment charge reflects the steep drop in the stock price, from $18 a share at its initial public offering less than two years ago to 64 cents at 4 p.m. Friday."
The Journal notes, "GateHouse has held up better than other publishers. Its papers are mostly in small towns, where advertising has held up better than in large metropolitan areas. GateHouse's revenue declined 4.7 percent in the second quarter, assuming the same properties were owned in the latest quarter and year earlier. Other newspaper chains have been reporting double-digit revenue declines." (Read more) For more on GateHouse and its problems, click here. For a transcript of company executives' conference call about its second-quarter results, from Seeking Alpha, click here.
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