Comedy Gold At The Observer-Dispatch

Andrew Donovan, son of Observer-Dispatch publisher Donna Donovan and staff reporter for the paper, escaped a DWI arrest this summer with a slap on the wrist. That makes the latest OD editorial against the evils of driving drunk a particularly ironic vein of comedy gold:

But where drunk driving arrests occur isn’t as much a concern as that they occur at all. Commendable work has been done through the years by law enforcers, educators, social agencies and even victims themselves to drive home the drunk driving message. And while these efforts have certainly resulted in lowering the numbers, the problem persists.

Get-tough prevention is a must.

Friday Forum Funnies: Andy "Demolition Derby" Donovan Edition

Today's Observer-Dispatch Friday Forum question is "Should we lower the drinking age?" Sadly, publisher Donna Donovan failed to pose the question to the one person many of us wanted to hear from, her son Andrew:



I keed, I keed! Despite Andy's drunken antics we all love him. Well, except for the poor guy he almost killed driving drunk. I don't think he's feelin' da luv.

This Is Why We Need A Lower Drinking Age

I don't think I've ever seen WKTV post an update to one of their online stories before today. Oddly enough, the story they chose to exercise this new editorial discretion with was on Andrew Donovan's DWI arrest:

**UPDATE (August 2008): Donovan appeared in New Hartford Town Court, where he pleaded down to a Driving While Ability Impaired charge, according to a court clerk. He paid a $500 fine and $80 surcharge, and all other charges were dropped, which were "to the satisfaction of the court" according to the court clerk.

So an underage drunk goes careening through the streets of Utica, narrowly avoids injuring a guy when he crashes into his car and rips the door off, and then drives off to New Hartford before he gets arrested. And the penalty? A check for $580.

If that's all we're going to do to punish DWI there's no reason not to drop the drinking age.

Update: A kind emailer suggests that we have Google to thank for the revision. The Andrew Donovan involved in the drunken hit and run incident unfortunately shares a name with the totally innocent guy that happens to work at WKTV, so anyone Googling for either of them will probably come across the story. Understandably, the Andrew Donovan that isn't an underage drunk doesn't want to be confused with the one that is.

Update: Another kind emailer has the temerity to suggest that young Andrew received preferential treatment because of Donna Donovan's position as publisher of the Observer-Dispatch. I'm shocked, simply shocked, at the mere suggestion of such an idea.

The Observer-Dispatch Deathwatch

Shares of Gatehouse Media, the Observer-Dispatch's corporate parent, reached a high of 75 cents earlier this week, but they've since slipped back down to 57 cents. You can keep track of the continuing saga at Google Finance.

As to the O-D itself, the departure of award-winning reporter Renee Gamela for the campaign of Richard Hanna doesn't bode well. She was a bright spot in the paper's line-up, consistently producing well written and researched pieces that transcended the OD's normally shallow work. There are still some solid reporters in the paper's stable, but at this point I don't think anyone is setting their expectations very high. On the bright side, they haven't fallen to the pathetic level of WKTV, where they don't even bother to re-write press releases before passing them off as stories

Update: A kind emailer suggest we're going to be seeing some more departures from the OD's lineup of talent, such as it is, in the near future.

Update: A story at Editor & Publisher includes this observation:

Morningstar repeated its judgment that the GateHouse Media Inc. (NYSE: GHS) is essentially worthless, assigning it a fair value of zero. Monday morning it was trading at 69 cents, down 2 cents, or 2.82%.

The Observer-Dispatch Deathwatch

As the threshold for permanent delisting approaches Gatehouse Media stock is still stuck at less than a buck.

The Observer-Dispatch Deathwatch

While Gatehouse Media's own newspapers have been notably reticent to discuss it's decline the Wall Street Journal isn't quite so shy:

GateHouse Media Inc., a chain of newspapers about 40%-owned by Fortress Investment Group, said it will suspend its dividend and raise more funds from Fortress to avoid running afoul of its lenders.

GateHouse Friday reported a second-quarter operating loss of $429.7 million, stemming from a charge of $443.1 million to write down the company's market value.

The impairment charge reflects the steep drop in the stock price, from $18 a share at its initial public offering less than two years ago to 64 cents at 4 p.m. Friday in New York Stock Exchange composite trading; the stock fell five cents, or 7.3%, from Thursday.

As always, you can follow the stock's ups and downs at Google Finance.

The Observer-Dispatch Deathwatch: Climbing Out Of The Pit?

On the Gatehouse Media front, there's good news and there's bad news. The stock is still trading at less than a buck, but it's been slowly climbing up from the disastrous 40 cent level. Google Finance has the details.

On the other hand, the bad news is pretty bad:

GateHouse, based in Fairport, N.Y., posted an operating loss of $429.7 million, or $7.77 a share, during the second quarter, compared with a loss of $1.96 million, or 5 cents a share, in the second quarter of 2007.

But revenues, the company said, grew by 16.5 percent over the prior year to $184.1 million, which it said outperformed other newspaper companies.

GateHouse recorded a second quarter non-cash impairment charge of $443.1 million in the quarter, which decreased the earnings by $7.50 a share. The impairment was largely from the precipitous drop in the company’s stock value; in the second quarter alone it fell from about $6 a share at the start of the period to below 50 cents a share a week ago.

Ironically, I believe this article is the first time a Gatehouse-owned paper has reported on the company's financial misfortunes.

The Observer-Dispatch Deathwatch: The Final Meltdown

Shares of the Observer-Dispatch's parent company Gatehouse Media soared today. Well, if you can call hitting 52 cents a share "soaring" with a straight face.

Sadly, at this point Gatehouse could probably double it's market cap by converting each share of stock into a tin of Altoid breath mints. Heck, even a Bubblicious Bubble Gum Party Pack goes for $2.74.

The Observer-Dispatch Deathwatch: The Final Meltdown

Gatehouse Media, the corporate parent of the Observer-Dispatch, saw it's stock plunge to a record low of 44 cents at today's market close.

I guess investors didn't hear what they wanted to hear during this morning's conference call.

Update: Except, of course, that the Gatehouse conference call isn't until August 8th. My smugness, it fogs the brain!

The Observer-Dispatch Deathwatch

Gatehouse Media closed at a feeble 63 cents today, and it's fallen even further in after hours trading. As always, you can follow the action at Google Finance

In addition, the company will be holding a conference call before the market opens tomorrow morning. CNNMoney has the details:

GateHouse Media, Inc. (NYSE: GHS) announced today that it plans to release its second quarter 2008 financial results before the market opens on Friday, August 8, 2008. The Company has scheduled a conference call to discuss the financial results on Friday, August 8, 2008, at 10:00 a.m. Eastern Time. The conference call can be accessed by dialing (877) 545-1409 (from within the U.S.) or (719) 325-4910 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the "GateHouse Media Second Quarter Earnings Call."

A webcast of the conference call will be available to the public on a listen-only basis at www.gatehousemedia.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for three months following the call.

Still not a peep from any of the local Gatehouse newspapers, which strikes me as being particularly ironic. Traditional print newspapers are dying exactly because people can find content online that they can't get in their local paper.

The Observer-Dispatch Deathwatch

The battle for the future of Gatehouse Media continues, but the situation is looking increasingly grim:

GateHouse Media is likely to default under its credit agreement unless it can negotiate an amendment to its covenants or get a cash injection from its largest stakeholder, says Fortress Investment Group, Moody's Investor Service, in a report downgrading the community newspaper publisher's credit and probability of default ratings.

Moody's downgraded GateHouse's Corporate Family rating to Caa1 from B2. Under Moody's definition, the new rating signifies a "substantial risk" of default.

Moody's also downgraded its Probability of Default rating to Caa2 from B3.

"The downgrade reflects Moody's heightened concern that GateHouse could face a near-term default under the financial covenants of its loan agreement, absent an amendment or another equity cure from its largest owner, Fortress Investment Group LLC," Moody's Senior Analyst John Page wrote.

Still not a peep from the Observer-Dispatch, or any of the other Gatehouse-owned papers in the area, about the dire straits of their corporate parent.

Update: Thanks to Peoria Pundit for the link. They're facing much the same situation we are, with the collapse of Gatehouse likely to produce a major shift in the local media landscape.

The Observer-Dispatch Deathwatch

Things aren't looking very bright for Gatehouse Media, the corporate parent of the Utica Observer-Dispatch, Herkimer Telegram, Little Falls Times, and the various area Pennysaver papers. Earlier today their stock fell even further, dropping to a record low of 56 cents. Most of that plunge can be credited to the news from Moody's that the company has a good chance of defaulting on it's loans:

Moody's Investors Service said it downgraded GateHouse Media Operating, Inc.'s corporate family rating to 'Caa1' from 'B2' with a negative outlook citing concerns over near-term liquidity and the likelihood that the company will face a default under its credit agreement, absent an amendment or equity cure.

Moody's (nyse: MCO - news - people ) also said it cut the United States-based publisher's probability of default rating to 'Caa2' from 'B3' and other debt ratings to 'Caa1' from 'B2'.

Several emailers have suggested there may already be some talks underway about the disposition of Gatehouse's local assets. One of the most horrifying scenarios is that a group of investors affiliated with the Arcuri gang may be looking to finally stem the tide of bad press, while another emailer says the Matt family may be part of another buyout effort. Keep in mind that both options were sent to me by anonymous sources, so a little skepticism is probably in order.

As always, you can get the latest stock price from Google Finance.

The Observer-Dispatch Deathwatch

It would appear the final meltdown of Gatehouse Media is finally underway. While I'm writing this their stock has fallen to a new low of 73 cents, setting the company on a seemingly inexorable journey to the pink sheets.

On the bright side, several kind emailers have pointed out that the liquidation of the company's assets could actually bode well for the area. More than a few employees think the sale of the OD could result in the departure of at least one questionable member of upper management, something they seem to look forward to with considerable relish.

Update: At market close Gatehouse Media had fallen to an unbelievable 66 cents a share. Google Finance has the details.

Update: Editor and Publisher has more on Gatehouse and it's cratering stock:

On another brutal day for the newspaper sector Monday, shares of four chains hit all-time lows, led by a 21% plunge in GateHouse Media Inc. shares to 66 cents a share.

Also hitting new lows were The McClatchy Co., Lee Enterprises, and Sun-Times Media Group.

There was no particular news to explain the sell-off in GateHouse, whose stock has been cratering in the past three weeks. GateHouse (NYSE: GHS) closed at 66 cents, down 18 cents, or 21.43. Floor trading in GateHouse has been suspended, and the stock faces the risk of being de-listed from the Big Board.

Is this the start of the final death spiral?

Update: Analysts seem to think Gatehouse is on it's last legs:

Shares of community newspaper publisher, Gatehouse Media, Inc. (NYSE: GHS), plunged Monday following an across the board ratings cut by Moody's who cited doubts about its ability to service debt.

Gatehouse Media shares lost over 21% of their already low value Monday, dropping to a new 52-week low of $0.66 cents that put the New York-listed community newspaper publisher on a path towards delisting from the Exchange. But somehow shares managed to rally in the aftermarket, rising 24 cents, or 36.3%, to trade at 90 cents, six cents over the day's high.

The dismal news coming out of Moody's Investor Service really came as no surprise, but in reading into the rating agency's comments on Gatehouse Media's debt, the analyst covering the Company had to bite his lip to keep him from commenting about the dividend Gatehouse paid out in the last quarter. At the time, Wachovia Capital Markets analyst John Janedis cut his rating on Gatehouse to "Market Perform" from "Outperform". Janedis issued his rating cut appropriately on Fridy the 13th, perhaps unknowingly signaling an end to the Company.

Read the whole story.

Now is probably an appropriate time to start speculating about who will be buying up Gatehouse's local papers. More importantly, is it likely we'll see a major change in editorial oversight when the buyout happens?

The Observer-Dispatch Deathwatch

After climbing above the $1 mark on Wednesday the stock price of Gatehouse Media, the OD's corporate parent, has once again fallen below a dollar. You can track the stock for yourself at Google Finance.

Update: Friday's close was 84 cents. Ouch.

The Observer-Dispatch Deathwatch

Google Finance has Gatehouse Media, the O-D's corporate parent, trading at just 95 cents as of 12:20 EDT.

Update: How likely is it that Gatehouse will be forced to liquidate it's assets, including the Utica "Observer-Dispatch, Herkimer "Telegram", Little Falls "Times", and the various local Pennysaver publications? One of the major investors in the company, holding 40% of the available shares, is Fortress Investment Group. According to this story, which has an interactive organization chart that takes forever to load, Fortress has seen it's own shares go into the tank over the last year because of bad investments in the mortgage industry.

These are tough times for Fortress, one of the few publicly traded hedge fund and investment management firms.

Since that earnings announcement, Fortress abandoned its effort to buy Penn National Gaming, the value of its new mortgage-backed securities fund is down 30 percent, and the stock of one its major investments — GateHouse Media — “could be worthless,” according to one analyst. Fortress owns about 40 percent of GateHouse.

The price of Fortress Investment Group’s own stock continues to fall. It closed at just over $10 last week, down from $31 when the company went public in early 2007.

It's possible that their desire for a quick influx of cash could help push the liquidation process along.

Update: The O-D still hasn't reported on the free-fall of Gatehouse Media stock.

From The Inside

Here's what the meltdown of Gatehouse Media, the Observer-Dispatch's parent company, looks like from the inside:

What’s scary to me is that I don’t know what this means for my paper and my job. If the company goes into debt, it could face liquidation. I can’t honestly believe there won’t be local town papers, but that could be the future. I’d hope a private company would pick up some of the papers but Boston suburbs might be doomed to only have the Boston Globe for news. And with the way the Globe is doing, who knows how long that will be going for.

All I know is that no local papers mean residents won’t get news about where they live in as in-depth of a manner as they do now. While some people might not open up the paper, choosing to simply drive over the one in their driveway, many other people do care and read the papers. I hope they’d miss it if that happened.

Here's another look:

GateHouse Media, the corporate parent of my newspaper, just got another ding. The New York Stock Exchange won't let the penny stock trade on the floor any more unless it can stay above $1.10 for an entire day. That's looking unlikely, so it's possible the stock could be delisted.
What a ride it's been -- from a $20 IPO just three years ago to getting thrown out of the NYSE. Sweet.

I imagine the staff at the Observer-Dispatch is feeling much the same. I'm sure the upper management of the paper will survive a liquidation just fine, but I doubt that many of the actual content and production workers will get deals anything close to what they deserve. Even under a buyout scenario, the only option that would allow them to keep their jobs, they're facing yet more uncertainties just over a year since the Gannet/Gatehouse takeover.

Update: Google Finance is reporting that Gatehouse Media closed at 97 cents today, giving it a market cap of $56.4 million dollars. The company has over a billion dollars in debt.

Storming The Gatehouse

The increasingly dire Gatehouse Media situation isn't just bad news, no pun intended, for the Mohawk Valley. If the company does go under it's going to have a huge impact at newspapers across the nation, as this blogger in Peoria points out:

GateHouse also announced today that they’re shuttering two Massachusetts weekly newspapers: The Taunton Call and The Avon Messenger. In both cases, GateHouse also owns a daily paper in the same market. And in both cases, GateHouse uses the same boilerplate to explain its decision to mothball the weekly:

…we have continued to analyze the best possible way to provide you with the most comprehensive local news in [Taunton/Avon]. We believe that mission will be accomplished by focusing our energies on our daily publication and through the most dynamic local Web sites possible.

If that’s any indication of their improvement strategy, look out Peoria Times-Observer.

Make no mistake, I'm not celebrating the potential demise of the Observer-Dispatch. Losing the only daily paper left would be a huge blow to the city of Utica, despite everyone's grumbling about the questionable value of the paper's content. On the other hand, if Gatehouse actually defaults on it's billion dollar debt I'm hard-pressed to imagine anyone that would buy the O-D in today's media environment. Even if a buyer can be found it's likely the new owners would be forced to make significant manpower cuts just to keep the paper afloat.

Is The Observer-Dispatch About To Go Under?

Psssst...have you heard? The OD is about to go under.

Editor and Publisher, a publishing industry website, is among the sources quoting analysts that the stock of the Observer-Dispatch's parent company, Gatehouse Media, is effectively worthless:

As GateHouse Media Inc. stock sank more than 20% in early trading Tuesday -- briefly touching $1 a share -- Morningstar released a trenchant report declaring shares of the acquisitive community newspaper publisher "could be worthless."

"Because of the company's exposure to a challenging advertising environment, a debt-heavy balance sheet, and declining cash flows, we think the equity shares could be worthless," stock analyst Tom Corbett wrote.

Morningstar reduced its fair value estimate for GateHouse shares to zero from $3 in its report in May.

Morningstar also said GateHouse is close to violating one or more of the covenants on its huge debt. "Should that happen, its debt could become due immediately, resulting in a possible liquidation scenario," Corbett wrote.

After the O-D's editorializing against online content last month I find a delicious irony in the fact they aren't covering their own financial collapse. Instead, you have to rely on...tada...internet websites.

Update: Gotta give props where they're due- I was pointed towards this story by a former local blogger. Sadly, like so many others, he's in the process of leaving the area and moving out of state.

Update: A kind emailer points out that Gatehouse Media shares have dipped under $1 this week. That means they're facing a possible delisting from the New York Stock Exchange.

Update: You can track the stock collapse for yourself at Google Finance.

Update: An emailer claiming to be an employee of the OD says Liberty Plaza is not a happy place to be these days. Not suprisingly, the Boilergasm was a huge drain on a lot of content employees and the drive for sales revenue is relentless. There also appears to be some tension in upper management over the direction of the paper. Take that for what it's worth.

Update: Boom! That's the sound of Gatehouse Media shares hitting bottom. Editor and Publisher is now reporting that the New York Stock Exchange has halted trading in the company:

NYSE Regulation spokesman Scott Peterson said trading of GateHouse (NYSE: GHS) was put under an "operational trading halt" on Tuesday morning. To return to floor trading, a stock must trade above $1.10 a share for an entire trading day.

If the stock continues to close below $1 a share on average over a consecutive 30 trading day period, it is notified that it could be de-listed unless it is able to bring its share price above $1 within six months.

GateHouse shares, which in the past 52 weeks have traded as high as $19.00, have been driven down steeply in recent months as Wall Street began to doubt the Fairport, N.Y.-based publisher's strategy of funding aggressive expansion with big debt while paying out a substantial dividend.

Update: A kind emailer points out that if Gatehouse goes under it's not just bad news for the Observer-Dispatch- the company also runs the "Evening Telegram" in Herkimer and the Little Falls "Times". One of my first jobs was at the Telegram, so I hope the paper is able to get through this and survive.

O-D Sez: No Anonymity For You!

Many predicted it would happen, and today it came to pass. The Observer-Dispatch website is once again requiring registration for anyone wishing to comment on stories.

Over the last few years the O-D has gone through no less than four different comment/forum systems. Up until their purchase by Gatehouse the management's obsession with being able to track each commenter, including a registration process that required name, address, phone number, and at one point an actual interview, had driven off any real public feedback to stories or articles.

That started to change when they finally embraced what nearly every other newspaper website in the world had already accepted- commenters drive traffic. People love to post their thoughts on stories, and they'll keep coming back to see both their own and other's comments. That adds up to a heck of a lot of eyeballs, and all those eyeballs help pump up ad revenue.

Unfortunately, that built-in audience is also an irresistible attraction to the ever-present trolls of the online world.

I'm just speculating, but I have a feeling the O-D's online editors simply didn't have the manpower, or motivation, to keep the trolls under control by enforcing their own moderation policies. I think the new policy, or more accurately the return of the old policy, will once again strangle the public conversation that open commenting encourages.

It also misses much of the point of what "interactive" really means.