But on Friday, April 30, the family-owned company whose properties include the Urbana newspaper — as well as dozens of papers throughout Ohio and in other states — filed for Chapter 11 protection in U.S. Bankruptcy Court in the Eastern District of New York.
According to an affidavit filed by Roy Brown — president and CEO of Brown Publishing and the grandson of Clarence J. Brown Sr. — a decline in local retail advertising has hurt the company financially.
The filing listed assets of $94.05 million as of March 31 and liabilities of $104.6 million. Brown Publishing is in default under both its first and second lien credit agreements, the company stated in its bankruptcy filings.
Trying to keep operations going
The company’s filings state that a new company, Brown Media Corp., established this year by Roy Brown and his current business partners, is seeking to buy the assets of the Cincinnati-based Brown Publishing operation.
Officials at the company headquarters did not respond to calls seeking comment this week. Members of the Brown family also did not return calls seeking comment this week and a call to the Urbana Daily Citizen was referred to the company’s Cincinnati headquarters.
In all, Brown Publishing owns 18 daily newspapers, 27 paid weekly newspapers, and several others, according to its website. Many of those publications are in Ohio, although the company also owns assets in other states, including New York, Texas and South Carolina. The company has 811 employees, including 687 full-time and 124 part-time employees.
The company last week asked the bankruptcy court to approve a plan in which Brown Publishing and its affiliated operations would be put up for auction. The same filing stated that a new company, Brown Media Corp., is proposing to buy the companies at auction at a bid of $15.3 million.
Other companies could bid and the price could rise, according to the proposed plan.
The company stated in court filings that for two years Brown Publishing sought to sell its assets and received virtually no interest. The company hired a newspaper broker to seek a buyer, but out of 88 parties contacted “only two expressed any interest in purchasing any of the Debtors’ assets.”
One offer was for just a few of the community newspapers; another was based on “liquidation valuation” and was much too low, the company stated in the court filings.
“After marketing the Assets, the Debtors have decided that selling the Assets to Brown Media represents the best, indeed the only, opportunity to maximize the value of those assets,” the company said in Thursday’s filing.
Brown Media Corp. is a Delaware company that was incorporated March 26 and would be owned by Roy Brown; Joel Dempsey, the vice president and general counsel for Brown Publishing; and Joseph Ellingham, the chief financial officer for Brown Publishing, according to court records.
Long history
For many long-time residents of Champaign County, the Brown family’s Urbana Daily Citizen has been a reliable source of daily news and information that they say would be difficult to do without.
The bankruptcy filing may not necessarily mean anything for the paper’s day-to-day operations, but many residents said there has been little information available so far, except for a single story announcing the parent company’s bankruptcy filing.
Idella Adams, a lifelong Urbana resident, said she makes daily trips to a local grocery store where she picks up copies of both the Urbana Daily Citizen and the Springfield News-Sun.
She said she has used the Citizen for coverage of local news events and advertisements from local businesses that are not always available elsewhere.
“It would bother me because I enjoy reading the Urbana paper,” she said.
Joseph Valore, who’s lived in the city since he was 12, said he’s had a subscription to the paper for decades. He said the paper’s strong point is the emphasis they place on local events.
“It is very important to me that I’m aware of what’s happening locally so that’s what I focus in on,” he said.
The Urbana Citizen is the home paper for the Brown Publishing company, which is based now in the Cincinnati area but which has deep business and family ties in Champaign County.
Clarence J. Brown Sr. represented the Champaign and Clark county areas in Congress from 1938 until he died in office in 1965. He was a newspaper publisher who also won two terms as Ohio’s lieutenant governor and secretary of state. The C.J. Brown Reservoir at Buck Creek State Park outside of Springfield is named after him.
When he died in 1965 his son, Clarence J. “Bud” Brown Jr. followed his father into Congress and served until 1983. He and his wife Joyce still live in Urbana and are on the board of the family-owned Brown newspaper company.
Their son Roy is the president of the newspaper operations, and has overseen several years of expansion and acquisition of other community newspaper groups. He ran for Congress in 2002 when the Dayton-area seat became vacant with the retirement of long-time congressman Tony Hall. Brown was defeated in the GOP primary by former Dayton mayor Mike Turner, who has held the seat since.
Roy and his brother Clancy Brown, an actor who lives in Los Angeles and who has had numerous TV and film roles, are among the largest owners of shares of stock in the Brown publishing companies that filed for bankruptcy.
Brown Publishing Co. is also involved in a legal dispute with Windjammer Capital Investors, an investment company based in California.
In the lawsuit, filed by Windjammer in Hamilton County Common Pleas Court last year, the California company claims it was entitled to about $9 million under a stock warrant agreement with the Brown Publishing Co.
However, the suit argues that instead of fulfilling its obligations to Windjammer, executives at Brown Publishing sought to create a new, separate entity, and planned to transfer assets to that new organization.
The suit argues the transfer of assets would have made it possible for the Brown Publishing Co. to avoid its obligations to Windjammer, and violated the terms of their agreement.
Attorneys representing the Brown Publishing Co. in the lawsuit did not return a call seeking comment Thursday, May 6.
Scott Kane, an attorney from the law firm Squire, Sanders and Dempsey is representing Windjammer, said the case. He said the case is set to go to trial in August this year, but is now on hold in light of the bankruptcy hearing.
However, Kane said he expects the case to continue against individuals within Brown Publishing.
The struggles of Brown Publishing mirror those shared by newspaper operations across the country.
Several newspaper companies, including the parent companies for the Chicago Tribune as well as the Lorain (Ohio) Morning Journal, have entered bankruptcy protection. The economic downturn added to the explosion of news-source options created by the Internet and drove down circulation and advertising revenues across the industry. Newspapers have shed staff and added other product lines to offset the decline in their traditional sources of revenue. The parent company of the Springfield News-Sun, Atlanta-based Cox Enterprises Inc., sold newspaper groups in North Carolina, Texas and Colorado due to the decline. Brown Publishing ceased publication of weekly newspapers in New Carlisle and Enon, in Clark County.
Several publicly-traded newspaper companies have reported stabilized finances in 2010 as the economy has recovered and revenue declines have stabilized.
The Brown publications includes weekly papers in the Dayton suburbs and newspapers throughout Ohio — Troy, Greenville, Xenia, Sidney, Hillsboro, London, Eaton, Georgetown, Galion, Ada, Piqua, Delaware, Urbana, Washington Court House and Wilmington. According to the bankruptcy petition filings the company owns business and relocation guides in Texas and Colorado ; papers and business journals in South Carolina, Utah and Iowa, and a group of weekly newspapers on New York’s Long Island.
Contact this reporter at (937) 328-0355 or msanctis@coxohio.com.
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