TA: With lots of newspapers probably going to go bankrupt this year, any idea how the restructuring process will work? Is there still a viable business model where they can come out of bankruptcy still putting out papers or at least stuff on the Web? You wrote about Lee for instance still having operating margins of 20 percent.

AM: If you’ve got a business that’s got a certain intrinsic value, lenders might be more willing to say let’s just liquidate the business and sell it and not restructure it. But the problem is, all these newspapers, there’s no end for them. If somebody doesn’t buy them, then you’re left trying to peddle a bunch of old presses and these crappy trucks and desks that reporters spit on and everything. There’s nothing there. This is a bad thing and it’s a good thing for newspapers. It’s a bad thing that newspapers don’t have that much intrinsic value. The good thing is the creditors really have to forebear much more. If there was really good stuff there, they could just go sell to some other guy.

TA: So they’ll have to write off more.

AM: What they’d rather do than take the writeoff is just kick the can down the road and hope everything comes out jelly-side up again. I’m not sure that many newspaper companies or individual newspapers will go out of business. The problem is when the newspaper can’t be cashflow positive in the moment.

So far as I know the Star Tribune (which is in bankruptcy protection), for instance, is actually making money on a day-to-day basis. The problem is they borrowed a lot of money in the expectation that sales would go higher and you could use those excess profits to pay down the debt. But the numbers are going the other way. If they didn’t have this debt, they’d be fine, and the same is the case for Lee.

What’s going to happen? The question is can the Star Tribune stay in the black on an operating basis? If they can, they can sort of dance through this until some better day comes. The minute, though, that they fail to be able to operate in the black and they need to ask for new money to make ends meet, I believe any creditor is going to say “No more money. You’re done.”

TA: What does the news landscape look like five years from now in 2014? Want to take a stab at that?

AM: It will be changed immeasurably from what we’re accustomed to. The traditional institutions supporting professional journalism—many, many of those will either be extinct or transformed beyond recognition from those we know today. Many new sources and types of information will emerge and much of this information will be generated by individuals as opposed to people within organizations. Much of it will be unvetted, sort of the mystery meat of information, and there will be this incredible burden on consumers of news information to figure out what to believe, what’s the truth and who said so. It’s going to be awful.

But I think that the reaction to this info Tower of Babel, the reaction will be the rise of people who become information sherpas, who aren’t necessarily doing much original reporting and writing but who help people sort fact from fiction and slant from reality. There probably will be enormous opportunities in those areas both for humans as for algorithms that can do that. Today we have these really, really crude proxies like Digg.

If you accept that we are in the soup, then this is positively the best of times to be a journalist.
The big media companies have a profound and distinct unfair advantage as we enter this age of change. And yet they keep turning their advantages into disadvantages. Any newspaper has more reporters, more feet on the street than anybody else in town. They have more advertising sales people. They have all this power and they have brands to die for. And yet, the industry as a whole has done almost nothing right about taking advantages of its strengths, the ubiquity, ability to put out this unique product on people’s doorsteps, and the original sin of giving away the content for free.

And I’ll tell you something, there have been (thousands of) people in the newspaper industry who have lost their jobs in the last twelve months, there have been zero newspaper CEO’s who have lost their jobs in the last twelve months.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.