The Star Tribune falls behind in its deathrace with the Pioneer Press.

The news in January that the Star Tribune had filed for Chapter 11 bankruptcy brought cheers from the center-right corners of Minnesota and a few creative ribbings for the publication whose political coverage and editorial commentary had been a bane to conservatives and a boon to conservative bloggers.  The paper’s union and others brushed off the effects of the bankruptcy, noting the paper had been profitable to the tune of $26 million. 

Less spoken of was the $50 million cut from the budget over the past year to achieve the profit or the fact that the number reflected a nearly 50% drop in revenue from 2007.  And coming on the heels of skipping a quarterly debt payment of $9 million last fall and needing to cut another $20 million from the budget, the Strib’s belief that it would emerge from bankruptcy healthier than before was playing out like a deleted scene from the “bring out yer dead” joke in Monty Python and the Holy Grail.  Worse, the paper is now listed among the Top 10 likeliest newspapers to fold or be forced to go totally digital:

The paper may not make money this year even without the costs of debt coverage…The odds are that the Star Tribune will lose money this year if its ad revenue drops another 20%. There is no point for creditors to keep the paper open if it cannot generate cash. It could become an all-digital property, but supporting a daily circulation of over 300,000 is too much of a burden. It could survive if its rival the St. Paul Pioneer Press folds. A grim race.

Could the Twin Cities media scene really become a combination of Soylent Green and an Aesop’s Fable with the much smaller Pioneer Press outlasting the Strib?  Despite the same rounds of cuts and buyouts affecting all papers, the Pioneer Press’ circulation for 2008 actually increased - even as the national circulation avearge dropped by 4.6% (including the Strib at a 4.26% fall). 

But how aggressively would the Press move to gobble up the Strib’s prior readership?  Given the new business model of the Press‘ owners, MediaNews, the answer might be not much.  MediaNews has adopted a micro-targeted paper strategy – basically a personalized electronic newspaper - called “I-News” that has allowed many of MediaNews’ smaller papers to compete in addition to cost-cutting moves like fewer delivery days.  A massive influx of capital to try and capture the Strib’s former market isn’t in keeping with MediaNews’ corporate culture and may not be possible between the current economy and MediaNews’ $350 million in loans taken out to purchase a handful of papers including the Pioneer Press.

The bottom line is that the Twin Cities media future likely has only two options - 1 statewide paper or none.