Allan Mutter: McClatchy, Lee, Tribune, GateHouse Media, and Journal Register are prime candidates for draconian cuts

Allan Mutter, who understands newspaper balance sheets better than anybody, says McClatchy and other newspapers that borrowed heavily to finance new acquisitions are prime candidates for draconian cuts:

The steep plunge in profits suggests that the industry may have to be more aggressive at cutting expenses in the future, if it intends to either halt or reverse the earnings collapse.

The need would be seem to be particularly acute for the companies that borrowed heavily in recent years to finance acquisitions. Because GateHouse Media, Journal Register, Lee Enterprises, McClatchy and Tribune Co. are committed to steadily increasing interest payments to satisfy their debts, they would appear to be candidates for some of the most draconian expense cutting.

But they are not alone. Heavy cutting may lie ahead, as well, for three companies that suffered not just earnings declines in the third period but outright losses.

They are A.H. Belo, whose operating loss of $12.8 million represented a 189.9% drop in earnings from the same quarter in 2007; the newspaper division of the Washington Post Co., which lost $10.6 million for a 220.6% drop from the prior year, and the Sun-Times Media Group, which lost $7.8 million, representing a 1523.5% decline from the prior
year.

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