A newspaper industry reeling from plunging advertising revenues is taking another hit with the bankruptcy of a Yonkers company.
Metro Newspaper Advertising Services filed for Chapter 11 reorganization on March 27, estimating less than $10 million in assets and as much as $50 million in liabilities.
Metro was formed in 1932 as a consortium of major market newspapers to attract national advertising. More than 200 advertisers use Metro as their agent to order ads in print publications.
The bankruptcy petition lists more than 2,000 creditors, mostly newspapers, ranging from the Aberdeen American News in South Dakota to the Zapata Times in Laredo, Texas.
Its largest unsecured client debt is to MJS Communications, a Massachusetts company that places advertising in publications that serve college students, military personnel, Hispanics and African-Americans.
Well-known newspaper brands are among its largest creditors: Chicago Tribune, $960,000; San Francisco Chronicle, $741,000; Los Angeles Times, $634,000; The Wall Street Journal, $410,000; and, The Boston Globe, $386,000.
Metro hit its peak in the mid-1990s, according to court papers, realizing sales revenues of about $150 million a year.
In the late 1990s, two senior employees took the company private. Phyllis Cavaliere is CEO and Michael Baratoft is president.
From the 2008-09 recession to today, “advertising and newspaper industries have continued to experience financial distress,” the company states in a bankruptcy filing.
Metro closed offices and cut expenses, and it looked as if it had turned the corner last year. But a one-time debt restructuring disrupted cash flow, the company claims, and then there was a noticeable downturn in the industry in the first quarter this year.
Accounts are in arrears and it has had to place new ad orders on a cash on delivery or on a cash before delivery basis.
The renamed Tribune Publishing Co., tronc (Tribune online content), says it was told around March or April that advertisers were leaving Metro for other agencies.
Metro said in a March court filing that it believes it can successfully reorganize and emerge from Chapter 11, if it can get a respite from creditor pressure and focus on building up accounts to previous levels.
It employed 41 people when it filed for bankruptcy protection.
But tronc states in a court filing that a Metro representative said on April 6 that the company was shutting its doors.
On April 26, according to tronc, Cavaliere told creditors that Metro did not have a viable business and that the employees had been terminated, except for five or six people to “clean things up.”
Clarification: A previous version of this story reported that the Internal Revenue Service filed a $19.4 million claim on May 9. On May 10, the IRS withdrew its claim and filed an amended claim for $0. CEO Phyllis Cavaliere said the IRS had confused Metro with another company.