Is the Arizona Daily Star headed for bankruptcy?

Posted by AzBlueMeanie:

Lee Enterprises destruction of a once great local daily newspaper continues. Last week, the Tucson Weekly reported in its Media Watch:

During the severe economic downturn, amid troubling concerns for the print-daily-newspaper model, Lee Enterprises, which owns the Arizona Daily Star, saw its stock value plummet to a low of about 30 cents a share.

But when the market rebounded, so did Lee—in a big way. Last year, the Davenport, Iowa, company enjoyed a stock value well above the $3 mark.

It remained on steady stock footing as recently as mid-April—but by the time mid-May arrived, company stock had plummeted from more than $3 per share to just more than $1. It has since dipped below the dollar threshold, and sat at an uninspiring 85 cents during the July 4 holiday weekend. [Resulting in the New York Stock Exchange putting Lee on the watch list and giving it six months to improve or be delisted.]

Lee—which laid off 23 marketing, information-technology and production employees at its largest newspaper, the St. Louis Post-Dispatch, last week—suffered a reported loss of $1.5 million in the second quarter.

Today the Tucson Weekly reports Layoffs at the Arizona Daily Star | The Range:

The long-standing financial woes of Lee Enterprises trickled down to the Arizona Daily Star, and in a big way. The Star laid off about 20 people Thursday morning, in the process gutting its marketing department and taking a major swath to the news department.

The Weekly has learned the list of layoffs includes Shelley Shelton, Sarah Trotto, Fred Araiza, Angela Pittenger, Dave Skog, Dan Sorenson, Scot Skinner, Jeff Jackson and John Ames.

Lee, based in Davenport, Iowa, has been in the midst of major money woes for the last few years. It is in the process of attempting to realign a massive debt payment due in April of 2012, but has refused numerous options involving junk bond proposals in hopes of a better deal. If the company can’t come to terms, bankruptcy looms as a very real option. Sources involved in Lee negotiations suggested that possibility was on the table as a result of meetings with creditors that have occurred over the course of the last two weeks.

Lee stock has tumbled from near three dollars in March to under a dollar in July. On July 8, the New York Stock Exchange warned Lee that delisting looms if it can’t consistently get its stock price above one dollar in the next six months.

Tucson lost its oldest daily newspaper, the historic Tucson Citizen in May 2009. Should Tucson lose the Arizona Daily Star, it would be without a daily circulation newspaper. I am not so sure that Gannett, which owns The Arizona Republic, would want to step in to fill the void with a "Southern Arizona" version of the Republic, or that it is even capable of doing so. In June, Gannett laid off 700 employees including 30 employees at The Arizona Republic. Layoffs announced at The Arizona Republic.

UPDATE: The Tucson Weekly has updated the number of Star employees to lose their jobs. Update: Star Layoffs | The Range:

At 12 a.m. today, the Arizona Daily Star finally confirmed that the newspaper cut 52 people in all departments — posting a story on its website in its business section.

* * *

Yesterday, The Range confirmed the first round of layoffs included Shelley Shelton, Sarah Trotto, Fred Araiza, Angela Pittenger, Dave Skog, Dan Sorenson, Scot Skinner, Jeff Jackson and John Ames.

The Tucson Sentinel confirmed more staffers: Dave Eubank, Dylan Boswell, Val Vinyard, Greg Bryan, Jill Torrance, Sarah Trotto, Polly Higgins, Jeff Jackson, Natalia Lopera, Alex Dalenberg, Carl Hinton, Andrzej Proczka, Angie Bush, Karen Keller, Peggy Adams, Judy Gudeman, Maris Finley, Diana Fennie, Jim Sabados, Joan Walsh, Lucy Carathers, John McNamara, Rance Naffziger, Joan Stulz, Clyde Richardson, Mike Carpio and John Nicholson.

You have to question this Star headline: Star announces realignment, layoffs. "Realignment" is corporate speak for "circling the drain" these days? (And the Star did not list the names of employees it gave the ax.)