The New York Times recently reported “In a magazine article seven years ago, the chief executive of the Journal Register Company, the publicly traded newspaper company, bragged about being such a skinflint that he checked the odometers in reporters’ vehicles to verify expense reports.”
It may be coincidence, but the article states that the company is facing the possibility of bankruptcy.
Folks, 2 things: First, if the best use of a CEO’s time is to check odometers to verify expense reports, then you are in sad need of a new CEO. Yes, I’ve done lots of “deep dives” as Jack Welch likes to call them, where a top-level executive goes to the front line of the organization and gets “the feel of the road” by a brief immersion into the details of an issue, but this is the equivalent of a paper clip audit: meaningless and mean spirited.
The second thing is a company culture issue, an issue of messages and communication. The CEO is being interviewed for publication and this is what he chooses to talk about? Brag about? The lack of trust he has in his employees? This is how you build esprit de corps? This is how he motivates? If ever there was a fantastic example of majoring in minor things, this is it!
Why do people, even smart, well-intentioned people, sometimes major in minor things?
Well, the minor things are often right in front of us, easier to understand, easier to deal with, easier to control. (Of course, that’s also usually what makes them minor.) Dealing with them successfully can give us a sense of accomplishment and completion that can be calming and confidence building. Which in turn can be useful if that positive momentum is used to turn around and tackle the major issues. Many a team leader has used minor victories as a stepping stone to major victories. Alas, many also use minor victories as an excuse to continue to ignore major issues. Of course, if you have no major issues or if you legitimately believe that a major victory can be accomplished by breaking down a major issue into myriad small ones and tackling them one by one, go for it. I’m all for flexibility, adaptability, and out-of-the-cubicle thinking/action.
A classic example of majoring in minor things is choosing to spend your energy re-arranging the deck chairs while the Titanic sinks. Where in your life today are you majoring in minor things?
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“Newspaper Chain Hires Adviser as It Weighs Restructuring”
By Tim Arango
New York Times
April 5, 2008
In a magazine article seven years ago, the chief executive of the Journal Register Company, the publicly traded newspaper company, bragged about being such a skinflint that he checked the odometers in reporters’ vehicles to verify expense reports.
Even such penny-pinching was not enough to keep the company from facing a sprawling debt situation now and the possibility of being delisted from the New York Stock Exchange.
In response, Journal Register, whose flagship paper is The New Haven Register, has hired the investment bank Lazard as an adviser as it weighs a restructuring, according to executives briefed on the matter.
If the company were to seek bankruptcy protection, as analysts said was possible, it would be a first in recent memory for a publicly traded newspaper company, John Morton, a longtime newspaper analyst, said. “That will just add to the gloom and doom that has settled over the industry,” he said.
A spokesman for the company declined to comment.
This development comes amid a broad upheaval for the newspaper industry as readers and advertisers continue to shift to the Internet, and it raises the prospect of a public newspaper company’s being owned by its creditors — in the case of Journal Register a consortium of banks that includes JPMorgan Chase and Deutsche Bank.
Journal Register’s troubles are more related to its debt load — about $625 million at the end of 2007 — than secular changes in the business.
Four years ago, the company paid $415 million for several Michigan dailies, whose fortunes declined as automobile manufacturers in Detroit cut their advertising budgets.
“When the whole automotive market collapsed, their newspapers did as well,” Mr. Morton said. “And they took on a lot of debt. This was strictly a market-driven collapse.”
While the company struggles to make its debt payments, its operating performance has declined. Journal Register reported earnings before interest, taxes, depreciation and amortization of $90 million last year, a figure that is expected to slip to $70 million in 2008, according to Wachovia Capital Markets.
“This is the year that maybe those companies that are highly leveraged can’t make their debt payments, and Journal Register could be the first,” said Rick Edmonds, a media business analyst at the Poynter Institute.
On March 31, Journal Register was notified by the New York Stock Exchange that its share price had fallen too low and that the stock was at risk of delisting. From that day it had 10 business days to notify the stock exchange of a plan to bolster its share price or face being delisted.
Journal Register owns 22 daily newspapers and 310 nondailies, mostly clustered in to six areas: Greater Philadelphia, Michigan, Connecticut, Greater Cleveland and the mid-Hudson region of New York. The company, based in Yardley, Pa., went public in 1997, and was once owned by the New York investment firm E. M. Warburg Pincus & Company. The company’s shares closed unchanged Friday at 52 cents.
“Who would have thought that a relatively substantial public newspaper company would be at risk of bankruptcy?” Mr. Edmonds said. “People are going to see this and say, who’s next?”
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