BizWorthy: Possible Bankruptcy For Observer Parent Company, Atrium And Novant Battle Over Beds
Last week the Charlotte Observer’s parent company, McClatchy, announced it will stop printing Saturday editions at all of its papers next year. The California-based company, which also owns the Raleigh News & Observer and the Rock Hill Herald, is about $700 million in debt.
The IRS has declined the company’s request to defer making payments to its pension plan. That’s raised the question of a possible bankruptcy.
Marshall Terry: So if McClatchy does declare bankruptcy, Tony, what would that mean for the Observer?
Tony Mecia: Well, it's important to understand, Marshall, what bankruptcy means and what bankruptcy doesn't mean. A lot of times we think of bankruptcy as meaning you're completely out of money and you have to shut down. That is not what a corporate bankruptcy means. And typically, companies, when they enter bankruptcy, it gives them a chance to reorganize, to keep their creditors at bay while they come out with a different business plan and can emerge stronger. And we've seen that with a lot of different companies that have filed for bankruptcy and emerge as stronger companies.
So when you say, "Well, what does it mean for the Observer?" I mean, it's sort of hard to know. No company wants to be in bankruptcy. There are a lot of things that are unpredictable about being in bankruptcy, but it's not necessarily a bad thing for the operation of the Observer and the other newspapers if they can shed some of that debt and come up with a plan that makes them viable going forward.
Terry: The Observer, like a lot of papers, has struggled in recent years. You asked a few current and former leaders in Charlotte media what they thought the future of news coverage in the city looks like. What were some of the responses you got?
Mecia: Yeah, I would say the most overwhelming response I got is one that -- and this is nothing new, really, or surprising -- but printed papers have not been succeeding for a while. And that the trend line is much more toward digital publications, towards online publication. I mean, you see the Observer moving this direction as well. You see other news organizations that are in other media moving that direction. And so what I'm hearing is that the future is maybe instead of having a newspaper be the main center of media in a city, that you're going to have a lot of smaller media. That each are a little more niche, that have their own area that they look into and that provide very different things to their readers or consumers.
Terry: Onto some banking news, now. Federal regulators have approved the planned merger of BB&T and SunTrust. The new bank would be called Truist and it would be headquartered in Charlotte. So has the merger now cleared its final hurdle?
Mecia: I think this was the last major hurdle. They've said that they want to close the deal on Dec. 6. And so it looks like all signs are go for that. You know, SunTrust, based in Atlanta, BB&T based in Winston-Salem, are combining moving about 2,000 people here in Charlotte. I think that's a good thing for Charlotte. And it certainly looks like it's going to happen.
Terry: And the building that will be Truist's home in uptown is expected to sell for record price soon, right?
Mecia: Yeah. Cousins Properties, which owns the Hearst Tower, said on its earnings call a couple of weeks ago that it believes that it will be sold to Truist at a pretty good price of $455 million, almost a million square feet. So, I mean, that's a pretty good price. The previous record in North Carolina was from the Bank of America Tower at Legacy Union. That deal closed last week. That was $436 million. So this Hearst Tower sale, which they believe will happen in March, should be the most expensive office building sale in North Carolina history.
Terry: The two big hospital networks in Charlotte -- Atrium and Novant -- are fighting over patient beds. The state says there's a need for about 75 additional hospital beds in Mecklenburg County, and Atrium wants all of them. So why does Atrium say it should get them all and that Novant should get none?
Mecia: So Atrium and Novant have had to file paperwork with the state making their cases on how many beds they should get. The state regulates things like this. And Atrium says it should get all of the beds because it says it is creating all of the demand for new beds in Mecklenburg County and that Novant has a surplus of beds. Now, Novant says actually their facility in Matthews really needs extra beds, that they have patients that are leaving the operating room that have to wait to get into those beds and that they're just becoming over capacity. So they say they really need that.
So the state is going to sort it out. I mean, these are hundreds of pages of detailed tables of data. You know, it's hard as a layman to know exactly who's right, but the state's going to sort that out and make a determination.
Terry: Finally, you've been looking into an industry that's on the rise in Charlotte -- upscale pet boarding. So I assume these places offer more than just a concrete pen and a bucket of water?
Mecia: Marshall, Some of these places are pretty nice, I have to tell you. They've got swimming pools that are shaped like bones. They have luxury townhomes with flat-screen TVs that show Animal Planet so your pet can relax and unwind after a hard day of playing fetch or tug-of-war with other dogs. Some of these have really gone upscale.
You're seeing a lot more of these open up. There was one that opened up this week in Ballantyne. There's some near the airport. Thjs is something that has been going on for about the last 10 years or so. As the city grows and there's a lot of affluence here and people start treating their pets a little more as humans.
Terry: What are the prices on these sorts of things?
Mecia: Well, one of the owners that I talked to said that a place by the airport, Pet Suites, the rooms start at $36 a night. You can add to that play packages in bronze, silver and gold levels. Or if you want to upgrade to one of the luxury suites, you can do that, too. And those start around $55 a night. Some of these sound nicer than some actual hotels that I've stayed in.