What happens when you’re “worthless?”

On Tuesday, I walked into the office, sat down at my desk and then learned my parent company, GateHouse Media, was worthless. Well, its stock was.

Morningstar, a stock analyst company, told Editor and Publisher the company’s equity stock could be valued as “worthless.” In May, Morningstar changed its fair value estimate for Gatehouse shares to 0, down from $3. Sigh, talk about depressing.

In his report, Morningstar analyst Corbett said GateHouse’s concentration in small markets with long-established monopoly papers has not insulated it from a flawed strategy of taking on big debt for acquisitions, and paying out large amounts of free cash flow for higher-than-average dividends.

Got to love the part saying GateHouse has a “flawed strategy of taking on big debt for acquisitions.” Umm, yeah. When overworked, underpaid reporters are getting e-mails the company bought another paper and we’re in a hiring freeze, something seems wrong. (By the way, there is only one reporter per paper at this point).

Then yesterday, GateHouse was kicked off the New York Stock Exchange floor because shares were selling for less than $1.05, reported another Editor and Publisher article. In order to return to the floor, the company’s shares have to be more than $1.10 for an entire day.

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.

4 Comments

Filed under Hmm

4 responses to “What happens when you’re “worthless?”

  1. I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

  2. The temporary suspension is a scary thing indeed. Even scarier is the thought of zero reporters keeping an eye on The Powers, be they municipal, police, state, whatever. Once they know noone’s watching, we’re all in big trouble. Hang in there and good luck.

  3. eszak

    I agree with you that no watchdog will prove dangerous. Yet I have also felt that it’s hard to keep an eye on local Powers when you also rely on them for stories. Any suggestions?

  4. Pingback: GateHouse’s publisher comes to visit « Staff Writer

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