The Minneapolis Star Tribune, reeling under a heavy debt load and plummeting advertising sales, is on the brink of bankruptcy, The Post has learned.
One of the nation’s top dailies, “The Strib,” as it is known to readers in the Twin Cities, recently hired the Wall Street powerhouse Blackstone Group to restructure its balance sheet after failing to meet its debt obligations, according to people familiar with the company.
The broadsheet is unlikely to shutter its doors, but its creditors, including the banking giant Credit Suisse Group, figure to eventually end up controlling the paper. Down the road, the creditor group could then sell it after dramatically cutting costs.
The private-equity firm Avista Capital Partners, run by former Credit Suisse deal maker Tom Dean, purchased the Star Tribune from the McClatchy Co. in 2006 for $530 million. The New York firm, which put up $100 million of its own money and borrowed the rest, stands to lose its entire investment, sources said.
After Avista bought the company, the firm’s partner, OhSang Kwon, was quoted in the paper as saying that Minneapolis-St. Paul was a “good market” and that “this is a good time to be buying newspapers.”
That sentiment turned out to be too optimistic, as newspapers nationwide continue to lose readers and advertising dollars continue to migrate online.
Last week, the paper reported that its weekday circulation dropped 6.74 percent, to 321,984, in the six-month period that ended March 31.
Billionaire real-estate mogul Sam Zell, who bought the Tribune Co. last year, was recently forced to put Long Island’s Newsday, one of its more valuable assets, up for sale in order to meet debt obligations.
And the Philadelphia Inquirer and The Philadelphia Daily News, that city’s two largest dailies, could meet the same fate as the Star Tribune, according to restructuring experts.
Local marketing executive Brian Tierney led their purchase two years ago from the collapsing Knight-Ridder chain. Tierney and partner Bruce Toll borrowed heavily to buy the papers and Philly.com for $515 million.
The combined company, known as Philadelphia Media Holdings, of which Tierney is the CEO, maintains that it has not missed any debt payments and is not close to bankruptcy.
But weekday circulation at the Inquirer fell 5.1 percent, to 334,150, in the same six-month period, and the company was forced to cut 80 jobs in March.
Tierney had warned the company’s unions in March that he would have to reduce costs by 10 percent or face trouble meeting debt obligations.