Sanford Scandal Won’t Save ‘La Socialista’

Last week, La Socialista brought in extra employees to sell ads for its “Mark Sanford spectacular” – the special edition of its newspaper released last Thursday that included several racy email exchanges between South Carolina’s governor and his Argentine lover.

And why not? Like we said at the time, that’s just good capitalist common sense at work – not unlike the kind the paper consistently editorializes against as it relates to state government.

Business was booming for La Socialista last week, too. In fact, sources are telling FITS that the paper’s website may have generated somewhere in the neighborhoods of 17 million hits in the wake of all the international attention.

Amazing.

And yet still not enough …

From Editor & Publisher:

Reaffirming its belief that The McClatchy Co. has “an untenable capital structure” of large debt and shrinking revenue, Fitch Ratings on Friday downgraded the credit rating of the nation’s third-largest chain, and noted pointedly that other debt-encumbered newspaper companies are now iin bankruptcy protection.

The action came hours after McClatchy announced that its offer to exchange $1.15 billion of its approximately $2 billion debt for new and deeply discounted notes with higher interest rates had fallen far short of its goal.

Fitch dropped its “issuer default rating” from C, which indicates an imminent or inevitable default, to RD, indicating a default on some but not all of McClatchy’s debt. In late May when McClatchy announced the debt swap, Fitch and other big credit rating agencies declared that it was a “coerced debt exchange” that punished noteholders by trying to force them to accept less than the full value of their notes.

“Fitch has believed that McClatchy has an untenable capital structure relative to the prospects for its future cash flow generation,” credit analyst Mike Simonton wrote in the note. “The ratings reflect Fitch’s belief that default is imminent or inevitable. Fitch notes that more than five newspaper groups have filed for bankruptcy protection in the past six-months.”

Ouch.

A newspaper breaks perhaps the biggest story in its history and it still isn’t going to be enough to keep it from going under.

Sheesh … ain’t corporate ownership a bitch?

Comments