Daily News Parent Puts Subsidiary in Chapter 11

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Digital First Media, parent of the Los Angeles Daily News, announced Wednesday that it has put one of its East Coast subsidiaries, Journal Register Co., into Chapter 11 bankruptcy.

Journal Register, based in Yardley, Pa. has 10 smaller newspapers on the East Coast and Midwest, including the Daily Local News in West Chester, Pa. The Journal Register previously emerged from bankruptcy in 2009 with $225 million in debt.

With the second bankruptcy, Digital First is hoping to further reduce the subsidiary’s costs for leases, pensions and other expenses associated with its newspapers as print advertising continues to shrink, according to an announcement and an internal memo that was leaked. The bankruptcy is not expected to affect operations in Los Angeles, the company said.

Elements of the bankruptcy have been pre-arranged. There is a stalking-horse bid in place from 21st CMH Acquisition Co., an affiliate of funds managed by the New York private equity firm Alden Global Capital LLC, which already has a stake in the Journal Register. As the stalking-horse bidder, Alden Global will have an inside track on acquiring the Journal Register’s assets.

Digital First operates MediaNews Group of Denver, owner of the Los Angeles Newspaper Group, which includes the Los Angeles Daily News and Daily Breeze. MediaNews Group itself emerged from bankruptcy in 2010.

The latest bankruptcy proceeding comes as Digital First transitions MediaNews and Journal Register papers into primarily digital products, a process that Digital First said Wednesday would continue despite the bankruptcy filing.

Digital First expects the auction and sale to take about 90 days. The case is being heard in U.S. Bankruptcy Court in Manhattan.

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