Bankruptcy, Layoffs and Likely Sale – the “fate” of A Pulitzer Prize-winning Newspaper

One of West Virginia’s oldest newspapers, the Charleston Gazette-Mail announced on Monday, January 29, 2018, that a Chapter 11 Bankruptcy filing “is imminent”. The actual filing of bankruptcy pleadings has not been confirmed. Informed sources say the plan was to file the requisite Chapter 11 bankruptcy paperwork on Tuesday, January, 30th.If a Chapter 11 filing is commenced, West Virginia’s largest newspaper could be sold coming out of bankruptcy or otherwise liquidated.

Charleston Gazette-Mail to File for Bankruptcy

The report of the pending bankruptcy filing included news that the parent company of the newspaper, Charleston Newspapers, issued a “WARN” notice to all newspaper employees on Monday, January 29th. Such notices are issued pursuant to The Worker Adjustment and Retraining Notification Act of 1988 (the “WARN Act”). The act was passed in August 1988 and became effective in February, 1989. The WARN Act operates to protect employees, their families and communities by requiring most employers with 100 or more employees to provide sixty (60) calendar days advance notice to employees of the closing of operations in a business, or of mass layoffs.

According to a Gazette-Mail press release, the newspaper presently has a roster of 209 employees including journalists, production and distribution workers, and administrative staff. On the list of employees who received the WARN Act notification is Journalist Eric Eyre. Eyre won a prestigious Pulitzer Prize in April, 2017, for his investigative reporting on West Virginia’s opioid crisis.

Gazette-Mail Publisher Susan Chilton Shumate, said in a letter to the paper’s employees: “The Gazette-Mail has been my family’s passion for the last century… To follow in the footsteps of Ned Chilton, my father, and Betty Chilton, my mother, as publisher of the of this paper has been a tremendous honor for me and my family. At the end of this process, we will be letting go of that passion.”

Chilton Shumate’s husband is Trip Shumate, the President and Chief Financial Officer of Charleston Newspapers, the parent company of the Charleston Gazette-Mail and the entity that plans to file a Chapter 11 bankruptcy petition.

The last line of Chilton Shumate’s letter to the paper’s employees “might be”, according to one commentator,“…an early signal that the Chapter 11 reorganization plan may include the sale of the Gazette-Mail to new ownership interests.” According to recent reports, the newspaper said buyers are actively being sought. Other reports emerging in the past several days reveal that, at present, the highest bidder appears to be a West Virginia newspaper conglomerate, the Wheeling, West Virginia-based Ogden Newspapers. Ogden Newspapers reportedly owns over forty (40) newspapers across the nation, with an unknown number of those in the state of West Virginia. Ogden has newspapers in Wheeling, Elkins, Martinsburg, Weirton and Parkersburg, West Virginia.

Ogden Newspapers was started as a family business by the Nutting family of West Virginia. Robert Nutting, a fourth-generation family member, is the President and CEO of the newspaper enterprise. The Nutting family are also the current owners of the Pittsburg Pirates major league baseball team and the Seven Springs Mountain Resort, an all-season resort, located in Pennsylvania.

In a statement released on January 29th, Robert Nutting said:“We’re extremely proud to be the prospective publisher of the Charleston Gazette-Mail. We have a high level of respect for the newspaper’s proud heritage and realize it has served for many years as an extremely important institution in the state of West Virginia. We firmly believe in the importance of community-based journalism, and we look forward to the opportunity to work with the excellent team of journalists and professionals at the Gazette-Mail”.

If the sale is completed, as speculation would have it, Ogden Newspapers will then own West Virginia’s largest (Charleston Gazette-Mail) and oldest (Wheeling’s Intelligencer) newspapers

Trip Shumate, identified previously as the President and Chief Financial Officer of Charleston Newspapers, the parent company of the Gazette-Mail, echoed concern that the jobs of current Gazette-Mail employees may be in jeopardy due to the pending Chapter 11 action. Shumate said: “Our hope is that Wheeling Newspapers will hire all of our employees. Once free from the liabilities that have been holding our operations back, we hope that they will be able to maintain the high level of journalism our customers and this community have come to expect.”

The news of the prospective Chapter 11 filing and possible sale of the Gazette-Mail was received with alarm and cautious optimism by some in the Charleston area. Charleston Mayor Danny Jones reacted by saying, “It’s an incredible era that’s ending in Charleston. I hope that we have a stable newspaper in the area. We’ve heard about it for a long time. To me, it’s very sad. I think Charleston will end up having a viable newspaper. I think it’s like so many other things that are going on in this era, this is just another transition we are going through. Hopefully it will work out.

Kent Carper, President of the Kanawha County Commission, said on Monday (January 29th):

“I join Mayor Danny Jones in recognizing that this is truly the end of an era, and I also urge the new owners to provide the current employees with an opportunity for employment, said Carper. “We cannot quantify the benefit that the Charleston Gazette, the Daily-Mail, and recently the Charleston Gazette-Mail (*) provided to the Kanawha Valley and its people. During times of war, times of tragedy, and times of great joy, our local paper always brought to the public true professional journalism. Today is a sad day.”

Given the sentiments and statements of Trip Shumate, Mayor Jones, and Commission President Carper, the possible loss of jobs in Charleston and the unknown “cost” of such losses in economic and other terms should mass layoffs come to pass, is of clear concern at this juncture.

If, as rumored and expected, the Charleston Gazette-Mail does file for bankruptcy under Chapter 11, it will be following in the footsteps of other corporations of renown. Toy’s R’ Us filed for Chapter 11 protection in 2017; K-Mart, United Airlines, General Motors, and Lehman Brothers, to name a few others, went through reorganization bankruptcy in earlier years.

[(*) The Charleston Gazette and the Daily-Mail combined their separate business, advertising, circulation and production departments in 1958; the newsrooms of the two entities were combined in 2015, resulting in combined operations under the banner of the Charleston Gazette-Mail.]

The Gazette-Mail, while fortunate to have been the recipient of a Pulitzer Prize in 2017, has not been free of controversy in recent months. Last month, the parent of the Gazette-Mail, Charleston Newspapers, had a federal judge uphold a $3.8 million arbitrator’s award against it in favor of the paper’s former owners, MediaNews Group. The award that was upheld was the result of a dispute over profits from Charleston Newspapers sale of the Daily Mail. The bases for the arbitrator’s award were profits from that sale, including its internet addresses, and certain other fees and costs.

More recently, the managing editor of the Gazette-Mail, Greg Moore, got into a well-publicized public tiff with West Virginia’s Attorney General, Patrick Morrisey, a Republican – worth the telling on these pages, the length notwithstanding…

The spat apparently began when Morrisey, on Monday, January 29th, tweeted: “The arc of the moral universe is long, but it bends toward justice”, quoting the late Reverend Doctor Martin Luther King from a speech that King gave during the historic Selma Civil Rights march in 1965.

In response to Morrisey in a tweet of his own, Moore first repeated the line used by Morrisey, then wrote: “If @MorriseyWV had been around at the time, he would have been trying to put MLK in jail and keep him there”.

From there, the situation escalated when Morrisey immediately responded, “Moore has no business being a managing editor of a newspaper”, followed by a statement sent out by his Senate campaign (the incumbent attorney general is an announced 2018 candidate for the United States Senate seat currently held by Democrat Senator Joe Manchin) saying: “This is a stunning example of the bias and hatred of the liberal media, and it has no place in journalism. It is also a childish, ad hominem attack that isn’t based in policy or real-world evidence.”

While Greg Moore later deleted his own tweet, that, apparently, was not the end of it for Morrisey – he continued with other statements later in the day – and in a lengthy statement said:

“The Charleston Gazette-Mail is wildly out-of-touch with the vast majority of West Virginia citizens. If the editors and reporters at the Gazette-Mail would spend half the amount of time talking to hardworking West Virginians as they do foaming at the mouth in their ivory tower, they might discover there are good people who don’t subscribe to their San Francisco manifesto”. Even that was, seemingly, not enough even given the silence of Greg Moore because Morrisey continued: “It’s clear that the Gazette-Mail and other liberal media outlets go after true conservatives who fight for conservative values. I am proudly pro-life and pro-gun, and will do everything in my power to tear down the administrative state which restricts our freedoms. Sadly, the Gazette-Mail has gone after me for years because I won’t back down from my conservative values”.

That was how it stood a few days ago. This surely will not go away quickly. As for having anything to do with the pending bankruptcy and speculated sale of the Gazette-Mail, this is of no consequence.

Depending upon the filing (unconfirmed as of this writing) of a voluntary Petition under Chapter 11 of the United States Bankruptcy Code, the owners and other equity stakeholders of The Charleston Gazette-Mail will be subject to the provisions of the bankruptcy code. A sale of the business to Ogden Newspapers or other successful bidder as rumored, would trigger other provisions of the code requiring court approval of the sale.

Financial difficulties and other factors, which have been substantiated by recent reports, have led West Virginia’s largest newspaper to contemplate the sale of its operations in Chapter 11 Bankruptcy. A likely Chapter 11 reorganization plan may include an outright sale of the company to outside interests. This likely fate of a news organization that has been under Chilton family ownership and control since 1912, is not “new news” in the field of newspaper publishing. In some quarters there are those who have posed the question, “WHO KILLED THE Newspaper?”, as was asked on a cover of the business magazine, The Economist, in 2006.

According to the Pew Research Center’s Journalism & Media Fact Sheet (June 2017), the American newspaper industry has been in decline since around the turn of the last century. In the industry, a newspaper’s “subscriber base” or “circulation”, along with advertising and related revenue, is the “name of the game” by which the financial fortunes of any given newspaper rise or fall.

According to one report in December, 2017, since the beginning of 2009, the nation has seen not a few major metropolitan daily newspapers either closed or operations drastically reduced – for example, consisting only of internet operations -when they were unable to make a sale. Included in the numbers are a few former heavy hitters in the industry, such as the Rocky Mountain News in Colorado and Arizona’s oldest daily newspaper, the Tucson Citizen- both closed and shuttered for good; in the category of “drastically reduced operations” can be found the Seattle Post-Intelligencer (once managed by the son-in-law and daughter of four-term President Franklin D. Roosevelt), the Detroit News and Detroit’s other major daily, the Detroit Free Press. All three of the aforementioned papers became more internet-centric in their operations over a short period of time.

The list of large newspaper companies that have filed for bankruptcy in the past 10 years include:

• Philadelphia Newspapers, LLC
• The Tribune Company
• Freedom Communications
• The Minneapolis Star Tribune
• The Sun-Times Media Group
• The Journal Register Company

Circulation, as already noted, plays a significant role in the rising and declining fortunes of print journalism and traditional newspaper enterprises. In 2016, the last year for which complete compiled circulation totals are currently available, newspaper circulation in the United States stood at around 35 million subscribers for daily editions and around 38 million subscribers for Sunday editions.That data includes both print and digital circulation figures. The Pew Research Center noted that in 2016, weekday print circulation alone declined by 10% and Sunday circulation declined by 9%. The downward trends in circulation have been extant and continuing since around the time of the financial collapse in 2008. Technological innovation, the rise (and domination?) of the internet, cultural changes in the way consumers seek out and take in their information, the aging of the “baby boomers” and the advent of Millennials – all have contributed to major shifts in the industry that have led to the decline in circulation that most reports on the subject support.

According to a recent report by Los Angeles Times’ contributor Jonathan Jones, the publishing industry in the United States alone is a $59 billion industry. In the same report, Jones goes on to say, “according to the Newspaper Association of America (NAA) and the United States Department of Labor, the industry employs somewhere in the range of 356,000” media professionals, journalists, and the like. In short, the United States’ newspaper industry is quite large and economically important to the nation.

As big a factor that declining circulation has been to the dismal fate, in general, of newspapers over the past eight to ten years, the precipitous drop in advertising revenues over the same period has been a heavier blow to the industry. Recent commentary in The Atlantic magazine stated:

For the last 15 years, the decline in print newspapers has been that
sort of story that, ironically, many newspapers have trouble following.
It is not breaking news, nor a violent explosion, but rather a decade-
long structural shift without heroes or obvious villains. Between 2000
and 2015, print newspaper advertising revenue fell from about $60
billion to about $20 billion…

According to journalism professor Philip Meyer, in his book, The Vanishing Newspaper, “… the (newspaper) industry peaked early in the 1920s when the average household read 1.3 newspapers a day. By 2001, almost one out of every two households no longer read a newspaper…”

The precipitous fall in advertising revenue is not just occurring with a few newspapers and publishers, but rather, it has occurred pretty much across the board affecting major news outlets and small-town operators alike. As of late 2016, sources show that print ad revenues were on a downward trend – McClatchy: down by 17 percent; Gannett: down by 15 percent; New York Times: down 19 percent (in just one recent quarter!). On the other hand, in the same period the online social media platform Facebook reported that its digital advertising revenue rose by an astonishing 59 percent.

Is it inescapable that the newspaper industry is dying in the face of the rapid rise of the internet and the social media phenomena that has spawned such powerhouse players as Google, Yahoo, Facebook, and Twitter as the “major leagues” and other platforms such as Instagram, Snapchat, LinkedIn, and others, more or less, as the “minor leagues”? Put another way, are those platforms mentioned above the real cause of the apparent “death of the American newspaper industry” – or at least its slow and steady decline toward collapse – as some have suggested?

Just about everyone in the United States is familiar with Craigslist. At the same time, probably very few know that craigslist – the lowercase “c” being the common method of writing the name no matter what the context it is used in – is a fairly recent addition to the worldwide web. Craigslist, described one online source as “an American classified advertisements website…”; was founded in 1995 as a local San Francisco Bay Area website and email list .Craigslist’s founder is a nondescript individual named Craig Newmark. No matter the lack of familiarity with its founding and growth amongst the general population, there seems to be little doubt that craigslist is a major powerhouse in the 21st century vis-à-vis online platforms, especially in the area of classified advertising. One big reason for it’s powerhouse reputation is this: craigslist is, for all intents and purposes a service that is provided to millions of users worldwide for FREE – users of the wide-range of services provided by craigslist get it without cost, both up front and on the backend.

That, in a nutshell, is one reason that some have said that Craig Newmark and his craigslist websites are “killers of newspapers” and “the exploders of journalism” (a charge which Newmark has, by the way, characterized as “…a considerable exaggeration”). Whatever or whoever is a “guilty party” in the “demise of newspapers”, industry that is so heavily reliant on advertising revenues to sustain its viability in today’s markets, can hardly afford to face a single website giving away FREE advertising to millions of people (some of whom are current newspaper subscribers and some of whom are now former subscribers). Such a challenge has to be seen as a significant threat to the entire industry.

In a sign of the times, advertisers, readers, and other media users have, in recent years moved away from traditional advertising outlets like newspapers and other forms of print and taken their interest and advertising dollars to digital outlets such as Google, Yahoo, Facebook, and other online/digital platforms. A reliable source notes that in four short years, newspaper advertising revenue in the United States fell by more than $50 billion. In the same period, revenues in the digital advertising realm exploded in growth rates heretofore practically unseen in an emerging industry.

In a recent article in the online news outlet,, titled “Newspapers aren’t assets to be flipped, leveraged, and stripped”,, writer Daniel Gross undertook a fairly comprehensive review of recent newspaper company closures and filings for bankruptcy. What he found and reported on is both interesting and significant.

Gross wrote:

Each time a newspaper company closes of files for bankruptcy –
as Sun-Times Media, the owner of the Chicago Sun-Times and
58 other newspapers, did this week – analysts are quick to
hammer another nail in the coffin of the printed word. Roughly
coinciding as they do with the advent of the Kindle 2, the failures
give ammunition to voices who say newspapers are obsolete.
Now that both of the Second City’s major newspapers are
operating under the umbrella of Chapter 11, and with papers in
Denver and Seattle shutting down, it’s tough to argue with those
who say the industry has useless management, a fundamentally
unviable business model, and not much of a future.

(all emphasis original)

In the above-referenced article, the author goes on to say, “While newspapers have serious problems, the recent failures of several newspaper companies… shouldn’t necessarily lead to visions of the apocalypse. Virtually every newspaper in the country has experienced a sharp drop in advertising and is suffering losses…” Going on to reference, again, the companies noted above, Gross says: “Each company was undone in large measure by really stupid (and in one case criminal) activities by managers”.

Maybe the issue is the rise of digital platforms and their new and different revenue models; maybe the issue is poor management, bad decisions or criminal activity. Whatever the cause, some within the newspaper industry and others on the outside agree on one thing – newspapers and newspapering as an industry has declined sharply since the Twentieth Century turned into the Twenty-first.

Now, we have the fresh example of the emerging situation in West Virginia where the Charleston Gazette-Mail is following in the footsteps of larger, more renowned newspapers that have, in recent years, gone through bankruptcy – some to emerge and continue on; others to be sold to outside interests for a “new” or “fresh start”; and, others that have folded, gone out of business, and “died”.

A February 8th report posted to the online news source stated that Wheeling Newspapers submitted a $10.9 million bid for the Gazette-Mail through the bankruptcy court. The deadline for interested parties to submit bids is twelve noon on Tuesday, March 6th. The online report also said that an auction for the Gazette-Mail is scheduled for Thursday, March 8th and that notice of the successful bidder will be given the same day. The sale is expected to close not later than March 31st.

As of this writing, the final “chapter” of the Gazette-Mail is yet to be written. Some, such as the present ownership of the newspaper and the prospective new publishing company see a sale and “fresh start” as the likely (and desired outcome). Others – including leaders in the local community and governments – “hope” for a positive outcome and continued employment for the newspapers 209 current employees. Outside observers – such as those who read this blog – observe what’s going on in West Virginia and Charleston and try to put the present situation into perspective to see how this case fits (or doesn’t fit) with the trends and historical paths of other newspapers and newspaper companies across the nation in recent years.

Photo credit: The Gazette-Mail