Bankruptcy judge approves sale of Reading Eagle to chain

Posted on Wednesday, May 22nd, 2019 By Michael Rubinkam, Associated Press

READING, Pa. (AP) — A federal bankruptcy judge on Wednesday approved the sale of the 150-year-old Reading Eagle to a publisher known for its aggressive cost-cutting.

MediaNews Group, better known as Digital First Media, offered $5 million for the assets of the Reading Eagle Co., which filed for bankruptcy protection in March. Chief Judge Richard E. Fehling signed off on the deal after a hearing Wednesday.

Digital First's portfolio includes about 200 papers and other publications, including The Denver Post and the Boston Herald. Its biggest shareholder is Alden Global Capital, a New York hedge fund that invests in distressed companies.

Digital First has a reputation for buying struggling newspapers and slashing their staffs, and job cuts are widely expected at the Eagle. The Pennsylvania paper began publishing in 1868.

"The Reading Eagle has always had an outsized role in defining this community. It is far and away the dominant source of news," Berks County Community Foundation CEO Kevin Murphy said.

He said hundreds of people have talked to him about the Eagle since it entered bankruptcy.

"I don't remember anything in 25 years that has jolted this community more than this bankruptcy news," he said. "It has been a process of shock and grief."

The Eagle, where the late "Rabbit, Run" novelist John Updike got his start, has an average daily circulation of more than 37,000 on weekdays and more than 50,000 on Sundays. The Reading Eagle Co.'s other properties include news-talk radio station WEEU-AM and a weekly newspaper. It employs more than 200 people.

In court papers, Digital First said it plans to take WEEU — which began broadcasting nearly 90 years ago — off the air, unless someone buys its federal broadcasting license.

Like many other newspapers, the Eagle has struggled with declining ad revenues. It was also burdened with heavy debt from the 2009 expansion of its downtown printing press and distribution center. The newspaper said it has been losing millions of dollars a year.

"We're either going to have a sale, or we're going to have a liquidation," Reading Eagle lawyer Robert Lapowsky told the judge Wednesday.

Peter Barbey, the president and chief executive of the Reading Eagle Co. and the great-great-grandson of the newspaper's founder, had been loaning it money to keep it afloat.

"Today's court ruling further guarantees the Reading Eagle Company survives for the good of the community, our employees and journalism in the Berks County region," Barbey told the Eagle.

Through a spokesman, Digital First said it was "pleased to save the Reading Eagle from liquidation and help ensure the people of Berks County don't lose access to an important source of local news and information, as has unfortunately happened in too many communities across the country."

The company said it will "re-create" the Eagle so the paper "has the appropriate resources" to provide local news coverage. Digital First did not say how many of the paper's workers it plans to lay off or whether it will reduce the number of days it publishes a print edition.

Employees who are let go will not receive severance pay, according to the sales agreement.

News of the Eagle's sale resonated beyond Reading, one of the nation's poorest cities.

"It's disconcerting to hear of an impending mass layoff w/ one of PA's most storied news outlets," tweeted Pennsylvania Attorney General Josh Shapiro.

Hundreds of U.S. newspapers have shut down over the past 15 years as news consumers have migrated to the internet. The number of reporters, editors, photographers and other newsroom employees in the industry fell by 45% nationwide between 2004 and 2017, according to the Pew Research Center.

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