A new year, but no letup in pressure on the beleaguered Seattle Times Co. Times CEO Frank Blethen and Pennsylvania publisher Richard Connor, who heads of the investment group seeking to buy the Times'ê Blethen Maine newspaper chain, recently announced they pushed back the 'êdeadline'ê to complete the deal to the end of January. In a memo Monday, Dec. 29, to Blethen Maine staffers, they blamed the delay on the holidays and bad weather, but the underlying message was that Connor'ês group, which includes former Defense Secretary William Cohen and Robert Baldacci, brother of Maine Gov. John Baldacci, haven'êt lined up enough solid financial backing.
Connor told Crosscut in an interview two weeks ago that three Maine banks and an out-of-state private investor had expressed interest in backing his group, Maine Media Investment, but hadn'êt made any definitive commitments.
Meanwhile, the Times Co. said that Charles Cochrane, a senior vice president who is chief executive of the Blethen Maine chain, is retiring on Jan. 1 and will be replaced by Robert Bickler, who has been president and general manager of the Portland Press Herald for the last five years. Cochrane, who has worked for the Times Co. for 33 years, will continue to head the Times Co.'s effort to sell the Maine newspapers.
Missing the December deadline set by the Times Co. may also convey another message for the struggling Seattle-based company. The Times, which owes at least $91 million to a consortium of banks, was pressing to complete the sale for a tax loss to offset the slug of cash it expected from selling five acres of prime real estate in South Lake Union. The (sort of) good news for the Times is that if Connor'ês group does buy Blethen Maine in January the Times will be able to match the loss from the sale against its 2009 income from the real estate.
The bad news for the Times Co. comes in several flavors. With every passing day, Blethen Maine — which includes three Maine dailies, including the Portland Press Herald, the state'ês largest paper, a website, and real estate — loses value. When the sale of the chain was announced last spring, Blethen told the Press Herald he hoped to get $100 million. But the market for newspapers has dropped sharply since then. Hard-pressed media companies have recently put far more attractive papers on the block, including dailies in Miami, Denver and Austin, Tex., and nobody is buying. Connor'ês group, Maine Media Investment, has been the only serious prospect for the Blethen Maine chain, which the Times Co. borrowed $230 million to buy a decade ago. These days, according to knowledgable people in Maine, the chain'ês value may lie solely in its real estate, which is assessed at $28 million.
Another message buried in the latest Times announcement is that there may not be any taxable gain for the Times Co. to offset a Blethen Maine loss. The Times has been trying to sell its South Lake Union real estate since August and has been relying on the proceeds of that sale, along with cash from the Blethen Maine sale, to pay down its debt. According to Steven Wood, the realtor handling the sale, the company had a buyer for the South Lake Union property in October and planned to announce in December that the deal would be finalized by the end of 2008. No announcement has been made and Wood told Crosscut two weeks ago he had nothing new to report.
With both the Blethen Maine and South Lake Union deals on hold, January could be the toughest month yet for both the Times Co. and its employees. Company officials have told some staffers to expect yet another layoff announcement soon at the Seattle Times because of an impending debt payment. Last month, the company ordered some 500 of its non-union employees at the Seattle Times to take an unpaid week off to cut expenses, then froze their pension contributions. Times'ê finances are apparently so tight that the company declined to pay $250,000 in severance promised to some of the 150 union workers laid off in December, prompting threats of more legal action.
In Maine, the Times begins arbitration Jan. 13 to determine whether it can amend its four-year contract with the Portland Newspaper Guild, which represents about 350 Blethen Maine workers. The Maine chain'ês revenues have dropped so precipitously that Blethen Maine officials have said they may have to borrow from their Seattle corporate parent to cover the legal costs of the arbitration. Blethen Maine officials warned last July that continuation of the contract as it now stands will drive off any other prospective buyers and could lead to a shutdown of the Maine papers.
