Yesterday, John Paton announced that Journal Register Company is filing for bankruptcy for the second time in three years. That’s something of a surprise to people who’ve read his announcements of soaring digital revenues and profits credulously.

JRC’s (latest) bankruptcy declaration is not good news to an already demoralized news business. But it’s an occasion to rethink old assumptions about digital news that may have resonated a few years ago but are now outdated.

Here’s what we know, and it’s not a lot: JRC has filed for protection under Chapter 11 of the bankruptcy code, placing it under court supervision while it reorganizes and seeks to shed liabilities (as it happens, the leading creditor, according to JRC’s bankruptcy filing, is the state of Connecticut, which it owes $4.3 million). Along with the bankruptcy, Paton announced that JRC owner Alden proposes to sell the bankrupt firm to a fund also owned by Alden. Essentially, Alden is putting JRC into bankruptcy and then planning to buy back the company with as few of its pesky pensions, bondholders, and leases as it can.

Paton blames this on “legacy costs” and there’s certainly a great deal of truth to that. But it’s worth noting that those legacy costs were slashed by some two-thirds just three years ago in bankruptcy court. They can spin it all they want, but Paton’s digital bonanza hasn’t been quite what he’s implied, and it hasn’t been enough to stave off bankruptcy.

The reason we don’t know more about the numbers is that JRC, as a closely held company, releases financial information only selectively—in sharp contrast to its “open journalism” philosophy.

Paton, for instance, has repeatedly said digital revenues at JRC were up some large percentage since he took over. He does so again in his bankruptcy note:

From 2009 through 2011, digital revenue grew 235% and digital audience more than doubled at Journal Register Company. So far this year, digital revenue is up 32.5%. Expenses by year’s end will be down more than 9.7% compared to 2009.

Yes, but from what to what? Those are big numbers all right, but 235 percent of not much is still not that much, and its worth noting that JRC’s digital revenues were far below industry average when Paton took over. It’s much easier to grow fast off a low base, and Paton has used the company’s privately held status to cherry pick positive numbers without having to paint a full picture—one that definitely didn’t include an imminent bankruptcy.

Paton does disclose the percentage increase in digital costs over the same period: 151 percent, but he offers no base numbers on which to gauge the ultimate dollar amount, so we can’t compare it to digital revenue increases. But if those numbers come off comparable bases, and I think it’s fair to assume they do, that digital sales growth is mostly eaten up by higher costs, leaving little left over to make up for the loss of print revenue.

Paton also writes that “Defined Benefit Pension underfunding liabilities have grown 52% since 2009.” At first glance you might think that’s because of recession and financial crisis impacts on investments. But the stock market is up sharply since the end of 2009, when JRC reorganized the first time, or from any point during that year. So that’s one more mystery, though it’s worth nothing that the company’s employee pension fund is the number two creditor in the case, with a $3.2 million claim. And again, those underfunding liabilities are up 52 percent from what? A dollar? A million? A hundred million? We’re not told. (The lawyers in the bankruptcy filing put it differently, writing that “The Debtors have substantial lease, tax, trade and pension obligations, which have grown approximately 52% since 2009…”)

JRC and its Digital First parent have been forceful advocates for a particular vision of the future of news. Memorably, Paton told a gathering of news executives that the value of journalism in the marketplace “is about zero.” It’s an outspoken opponent of digital subscriptions, hewing to a vision of free Internet culture supported by digital ads.

That vision, as we’ve said more than once, is in a hurry to jettison the American newspaper business’s most valuable traditions in favor of vague pronouncements about reader engagement and the use of social media, which are already widely adopted across the newspaper business.

The rest of the news business (with some glaring exceptions) is already moving on from free-content and quantity-driven models and is heading in a different direction: keeping print alive, while charging for online access to try to maintain quality—and vice versa. Call it the muddle-through approach. It’s not sexy but it fits a new news reality that has changed dramatically since even 2009.

It’s quite possible—likely even—that other major newspaper companies will have to restructure under bankruptcy protection to make it to the other side. But if they do, those with digital-subscription revenue streams will have a better shot of making it in the long run.

JRC is about to take a second bite at the apple, the bankruptcy court willing. Here’s hoping it can crack the code on a digital business model (perhaps with the help of subscriptions) that supports the kind of newsgathering its communities need.

In the meantime, a little humility wouldn’t hurt.

Ends 7/31: If you'd like to help CJR and win a chance at one of
10 free print subscriptions, take a brief survey for us here.

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.