Never too big to fail

by Dennis Herrick

The following six conglomerates all ran into severe financial difficulties in recent years, some going bankrupt and others barely surviving.

(1) Community Newspaper Holdings Inc. Established by venture capital in 1997, CNHI bought more than a hundred small and mid-sized dailies, weeklies and shoppers in just two years. By 2003 CNHI adopted a new business strategy that included selling all its dailies under 10,000 circulation. By the start of the 2008 recession, CNHI had rebounded to 137 publications (mostly small dailies and large weeklies that had been family-owned) and four television stations. Its unusual financing through Retire¬ment Systems of Alabama has kept it out of bankruptcy.

(2) Canada’s largest media power used to be Conrad Black. His Hollinger International Inc. empire became strapped for cash because of huge debt obligations for acquisitions, selling 77 dailies and 302 community papers in Canada and the U.S. in late 2000. Black kept the Chicago Sun-Times, the Jerusalem Post and the London Telegraph. Then personal scandal inter¬vened. Black was convicted of criminal fraud in 2007. Although the appeals court overturned two of three mail fraud counts, he was tossed out of the company he’d founded, which renamed itself Sun-Times Media.

(3) Clear Channel Communications Inc. saw its sales jump in a decade from $74 million to $8.4 billion by 2002. That 100-fold increase in gross revenue was made possible by buying about 1,200 radio stations, 19 television stations and 770,000 billboards across America, as well as becoming the nation’s largest live-concert promotions firm. All of that was done in only six years, after the deregulation brought on by the Telecommuni¬cations Act of 1996. When the 2001 recession hit, however, Clear Channel was burdened by $9 billion of debt with suddenly diminished revenue. Clear Channel was sold to two private investment firms in 2006, and in turn to two other investment firms in 2008, which sold all of Clear Channel’s television stations. In early 2010 the company announced it was facing bankruptcy because of its “crippling debt.” It still owned 900 radio stations as of 2011.

(4) Thomson Newspapers, now Thomson Corporation, had been one of the largest newspaper chains in the United States and Canada. But in 2000, Thomson sold its 130 U.S. and Canadian daily and weekly newspapers to other chains after deciding to re-focus on its other communication properties.

(5) In 2003, the family owners of Freedom Communications Inc. decided to put their 28 dailies, 37 weeklies and 8 TV stations across the country on the market. Freedom survived that crisis, but the recession and difficult economy since 2008 led to a bankruptcy filing in 2009, from which it emerged in 2010 under the ownership of three equity investment firms.

(6) In 2002, French media giant Vivendi Universal SA began selling several of its properties to reduce debt after firing Jean-Marie Messier, who had almost bankrupted Vivendi in an acquisition spree that had swallowed several American and European media rivals. Naturally, the prospective buyers for Vivendi were other media conglomerates.