Former Sun-Times city editor: Fears of bankruptcy surround GateHouse, media companies

In the latest post on his blog, Reflections of a Newsosaur, former Chicago Sun-Times City Editor Alan D. Mutter expresses concerns that bankruptcy may be in the offing for some media companies, including GateHouse Media, owner of The Carthage Press and Neosho Daily News:

Bankruptcy court may be the next stop for some of the most precariously financed newspaper publishers.

As awful as the prospect sounds, it actually could be a good thing for the newspapers, because a Chapter 11 bankruptcy filing enables a struggling company to restructure its debt, streamline its business and potentially put itself on a sounder footing for the future.

Not all Chapter 11 filings are successful. In some cases they lead to the eventual liquidation of the business through Chapter 7 or some other means.

And any bankruptcy action almost certainly would wipe out the equity of such investors as the owners of Philadelphia Media Holdings, the Minneapolis Star Tribune and Sam Zell and his fellow employees at Tribune Co. Fears of imminent bankruptcy already have driven public companies like GateHouse to 33 cents a share and Journal Register Co. to 1 cent, so neither has much further to go.