Blogger: Why MediaNews won’t bolt from Detroit

Martin Langeveld explains why struggling business partner MediaNews Group is unlikely to provide an easy solution to Gannett’s dilemma, by simply abandoning the GCI-controlled joint operating agency that publishes Detroit’s two newspapers.

“Gannett might wish that MediaNews would similarly fold their tent and leave Detroit, but that won’t happen,” he writes today in a post, citing this U.S. Securities and Exchange Commission document filed by MediaNewsGroup. “Under the terms of the Detroit JOA, MediaNews is ‘reimbursed for its news and editorial costs associated with publishing The Detroit News,’ and if the JOA is profitable, it also receives a ‘fixed preferred distribution’ set at $4 million for 2008 and 2009, and declining in later years.”

He continues: “In other words, MediaNews is guaranteed not to lose money in Detroit. Assuming the JOA is currently in the red, they’re forgoing the fixed preferred distribution, but their newsroom expenses are fully covered. (By contrast, in Denver, E.W. Scripps had to fund news operations out of the meager JOA proceeds, so it was operating at a loss.)”

[Image: today’s News, Newseum]

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