03/21/2010 05:12 am ET Updated May 25, 2011

Con Games: Singleton's ShamWow Strategy

In the summer of 2007 I reported from the Aspen Institute upon the "Death Of Newspapers Greatly Exaggerated," as put forth by William Dean Singleton, the chief bottle-washer at MediaNews Group, owner of the Denver Post, the San Jose Mercury, and multiple other newspapers across the country.

Now comes the news of the bankruptcy filing of Affiliated Media Inc., the MediaNews holding company, in a Chapter 11 shuffle that means, according to Singleton's official statement, that "current shareholders will be losing the value of their holdings." That's right: if you owned stock, you just got wiped out faster than you can say "ShamWow."

Singleton retains control and some $930 million in debt will be reduced to $165 million, with Bank of America and other lenders receiving equity in the restructured Affiliated Media. The balance sheet has thus been cleaned up, and Singleton has been talking smack about consolidation by saying "look at a map" to find candidates.

More to the point: how can a company that came up so short "participate in the consolidation and re-invention of the newspaper industry"? Keep in mind that Affiliated Media Inc. is the nation's second-largest newspaper publisher by circulation and owner of 54 daily newspapers, over 100 non-daily newspapers, not to mention a television station in Anchorage, Alaska.

Allow me to go back to Aspen some sixteen months ago, when Singleton was saying the future was so bright he had to wear shades.

"Our audience in our newspapers has never been as big," Singleton said. "It's light years ahead... This is not a dying business. This is a changing business... We have to reduce the cost on the printed side... and invest on the digital side."

Singleton stated further that online revenue at MediaNews constituted just 7 percent of total revenue but 22 percent of profit. He predicted that half of all MediaNews revenue would be generated online by 2011. By next year, in other words. He was also bullish about the prospect of online specialty print publications replacing core print revenues.

"They'll catch each other," he said.

In a different setting, Singleton promised: "I think print's going to be important for a long time... Print is still the meat. Online's the salt and pepper."

So what is MediaNews Group's plan to prosper in the salty, pepper-pot digital age? The company is planning (a) to start charging for content at newspapers in Chico, California, and York, Pennsylvania; and (b) to block Google News from accessing its paid content.

"The things that go behind pay walls," Singleton said, "we will not let Google search to, but the things that are outside the pay wall we probably will, because we want the traffic."

Let me get this straight. Singleton's strategy to re-invent the newspaper industry is to charge for content in Chico and York and prevent any consumption by the massive audience assembled by Google. And to stay preternaturally bullish about print.

A further insight into the future Singleton foresees, such as it is, came from a Q&A he sent to employees upon the announcement of the great good news of the bankruptcy filing.

"Question: Aside from this transaction, how is our business doing?"

"Answer: During an extremely difficult environment for newspapers over the past three years, MediaNews has outperformed the industry as a whole. Total circulation grew for the September Audit Bureau of Circulations 6-month reporting period, while industry circulation dropped 10.6%. Our growth included gains by the Denver Post after its primary competitor ceased publication. Excluding the Denver gain, our circulation dropped 4.8%, still well below the industry's 10.6% decline. On the advertising side, the Company's innovative sales initiatives have resulted in advertising declines lower than the industry as a whole. The December quarter, while still down substantially, has performed much better than the first nine months of the year. All but one of our newspapers are profitable."

Translation: we don't stink as bad as the rest of the industry. Consolidation and cost-cutting can only go so far until you cut through the meat to the bone. I wish William Dean Singleton Godspeed to go with his clean balance sheet. He's going to need it.