Tragic saga continues for Arizona newspapers

New Year’s resolutions are tough to follow. People lose motivation – unless that motivation is survival.

On New Year’s Day, more news about Lee Enterprises hit the blogosphere. The Iowa-based company owns a chain of Arizona newspapers that includes the Arizona Daily Star and the Arizona Daily Sun in Tucson and Flagstaff, respectively, and it appears that things have gotten worse for Lee since my last blogpost here.

The company’s stock price has been below a buck since Thanksgiving and hovering at 41 cents a share when this story came out. If Lee doesn’t get that above $1 by April, the company risks being delisted from the New York Stock Exchange (arguably not the only company to be facing that financial slap during these times). It’s market capitalization – the market value of the company based in part upon the market price of its outstanding shares – has sunk to such a level that it threatens to accelerate that delisting action from the NYSE.

In his short story about this for the St. Louis Post-Dispatch (Lee’s flagship newspaper), journalist Tim Logan points out that:

The company is talking with lenders to restructure $306 million in debt that is due in April. It does not have the cash to both pay off that debt and meet its operating costs in 2009.

Translation: Something’s gotta give. Either the chain that covers two-thirds of Arizona’s regional news declares Chapter 11 bankruptcy to restructure its debts, or it reduces operating costs (i.e., layoffs), or it does both. This surely affects Lee’s credit rating, so borrowing money to get out from under debt – using a Visa to pay off the MasterCard – is not really an option. The credit freeze isn’t thawing fast enough to help Lee, which must notify the stock exchange of its plan by Friday.

How’s that for a company-wide New Year’s resolution?

No matter what route Lee chooses, there’s no doubt readers will have a decidedly different coverage of real issues from these two Arizona newspapers. It’s a shame, but maybe this could be a wake-up call for Lee to reform what works and what doesn’t. Executives would do well to listen closely to staff ideas from the bottom up at both papers and embrace them.

Penny for your thoughts. What can Lee do? Any predictions for the Star or the Sun?