A recession, which most economists think is likely next year, "could threaten the embattled newspaper industry, whose two highest cost centers — labor and paper distribution — soared in the wake of the pandemic," Sara Fischer reports for Axios Media Trends.
A recession would create "almost a perfect storm for local news," Tim Franklin, senior associate dean at Northwestern University's Medill School of Journalism, told Fischer. He noted that in recessions, advertising is usually gets the first hit, followed by subscriptions.
Matt DeRienzo, editor-in-chief of the Center for Public Integrity, a nonprofit news organization, says a recession could be just as bad for news media as 2008's Great Recession, but for different reasons; he says many more newspapers are now owned by venture-capital firms that prioritize profits without much regard for long-term growth.
James McDonald of Access Global Advisors, a veteran newspaper transaction adviser, told Fischer, "I think the recession will be very damaging to smaller, under-capitalized papers and have similar consequences for groups carrying too much debt. Unlike the pandemic, there won’t be rescue funds flowing to prop up their balance sheets."
Alden drops Lee takeover bid: "The economic outlook for newspapers is giving pause to private equity investors that are typically eager to eat big chains," Fischer writes. "Alden Global Capital has abandoned its bid for Lee Enterprises, at least for now, in part due to rising interest rates and a tougher market to finance deals, sources told Axios. Alden quietly sold part of its stake in Lee in April, shortly after a Delaware judge upheld Lee's rejection of Alden's two board director nominees in February. . . . Alden's $24 bid, which was once challenged by Lee's management as too low, now looks attractive compared to Lee's current share price of $18."
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