March 10, 2010 11:34 PM UTC

CS Gazette's Publisher Follows Denver Post's Into Chapter 11

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• by: ohwilleke

The Chapter 11 bankruptcy plan of the company that owns the Colorado Springs Gazette has been approved by a Delaware bankruptcy judge.

The holding company that owns the Denver Post and Boulder Daily Camera as well as other smaller Colorado newpspapers also recently went through a Chapter 11 bankruptcy.

The Rocky Mountain News, of course, ceased operations about a year ago.

This changes the people who call the shots at the institutions responsible for most of the newspaper based state house reporting in Colorado.

The former shareholders of these companies have lost their shares.  At the Post, Singleton and his chief deputy control the company, with equity owners of the reorganized company having only a non-controlling interest and under regulatory pressure to swiftly divest.  

While former debt holders at the Post have true ownership rather than mere debt now, their minority status and more importantly, the fact that the publisher of the Post doesn’t have to negotiate with creditors any more, actually reduces the influence that the banks that are its lenders could have on its decision making process.

It will take more research to determine who now controls the Colorado Springs Gazette.  The indirect influence of banks on the paper arising from its need to negotiate a favorable deal with creditors it can’t afford to pay as debts come due will now be gone.  But, I haven’t yet seen any reports describing who sort of equity structure or control rules will be present in the post-Chapter 11 company.

UPDATE: A story at Editor and Publisher says that a group of banks with secured loans led by JP Morgan will get most of the shares of the new company, and that  East Valley Tribune in Arizona and several other Phoenix-area publications will be sold to the publisher of the Telluride (Colo.) Daily Planet.