Nearly $4 million in buildings and land come with $5 million bankruptcy sale
By Julie Reynolds
After a federal judge gave Alden Global Capital the go-ahead to buy the Reading Eagle for $5 million, fears of becoming a near-news desert are growing in the once-robust textile region of eastern Pennsylvania.
“I’ve heard a lot of people complaining, but I don’t think they see a way forward,” said Jon Bekken, professor of communications at Albright College in Reading. He said residents are concerned about cuts in coverage in a town where newspapers are still popular and the Eagle has maintained relatively hefty staffing levels and page counts, despite declining profits. The paper has a reporter or stringer in every township in the county, he said, “and Digital First is not going to continue that.”
Bekken is the author of “News Deserts: Addressing the Communication Needs of the Emerging Hispanic Majority in Reading, Pennsylvania,” and is an ardent observer of the local news scene.
The company issued a notice with state labor regulators of impending mass layoffs, and those who lose their jobs won’t receive severance pay. Pennsylvania Attorney General Josh Shapiro tweeted: “It’s disconcerting to hear of an impending mass layoff w/ one of PA’s most storied news outlets, The Reading Eagle.”
It’s disconcerting to hear of an impending mass layoff w/ one of PA’s most storied news outlets, The Reading Eagle.
The integrity of our independent news organizations serves the strength of our democracy. Never before has their work been more important:https://t.co/JRzB24ElyP
— AG Josh Shapiro (@PAAttorneyGen) May 22, 2019
The bankrupt paper is set to be acquired by the Alden-owned newspaper chain, Digital First Media, recently re-branded as MediaNews Group, or MNG.
Even as it lays off news workers and cuts resources at record-setting rates, Alden continues to use Digital First monies to invest in other businesses, including shares of Gannett Co. as well as money-losing stakes in Payless Shoes and the Fred’s Pharmacy chain.
The Eagle reported that State Sen. Judy Schwank was concerned about the paper’s new owners.
“She has family in Denver, Colo., and has seen in her trips there the changes at the MediaNews Group-owned Denver Post,” the paper reported.
“I want to be optimistic, but I have firsthand knowledge,” Schwank told the Eagle.
Bekken said he was surprised Alden is likely to shut down the Eagle’s printing plant as well as a local radio station, WEEU, also owned by the Eagle.
A local businessman has offered to buy the station, but there’s no indication whether Alden is interested in selling. Court documents show Alden wants the station’s real estate assets but not its FCC license.
Bekken said employees at the paper’s printing plant told him they believe it, too, will be shuttered once the sale goes through. The closing date is expected to be July 31.
The purchase includes a substantial amount of real estate, though Bekken cautions that Reading is not a thriving market.
“It’s a lot of real estate, but it’s not very liquid,” he said. “Reading downtown real estate is not valuable at this moment. It could change — and if it changes, Digital First makes a killing.”
The sale includes four parcels, which include the Eagle’s main building in downtown Reading, the radio station site, and two other lots. All together, the county assessor’s office values the properties at around $3.8 million. Typically, market rates are often much higher than assessed values, but as Bekken says, selling the parcels might take awhile due to Reading’s slow economy.
Instead, he believes Alden is buying the Eagle in hopes of extracting double-digit profits through extreme cost-cutting, just as it’s done with hundreds of other Digital First papers.
“I think they’re planning to slash and make their money that way,” Bekken said. “That’s what they do.”
Real estate included in Reading Eagle sale:
(Eagle building) 345 Penn Street, Reading, assessed value $3,114,700
315 Washington Street, Reading, assessed value $69,500
(Radio Station Site) Motel Drive, Upper Bern Township, assessed value $215,300
34 North 4th Street, Reading, assessed value $445,800
Total assessed value = $3,845,300
The Eagle has a circulation of 37,000 on weekdays and a staff of more than 30 reporters (out of more than 200 total employees), which along with pressmen and other staff leaves Alden with plenty of room for cutting. “They’ll lay off all the press people,” Bekken said. Fewer reporters will likely each take on the work “three or four” others used to do, he said. “There’s a lot of money to be squeezed out.”
Despite the fact that the Eagle has lost money since the recession a decade ago, “it should have been possible for people with vision to find a way to save it,” Bekken said. “The economy here is depressed, but I thought this paper could survive. Circulation was holding on. It had a robust page count although it won’t have a robust page count now.”