UPI Again Files for Bankruptcy; Buyer Is Sought : Media: The move allows the news service to avoid payment of as much as $2 million to creditors who want to redeem stock granted during its first reorganization six years ago.
United Press International, the once-powerful news service that has flirted with extinction for a decade, filed papers Wednesday seeking bankruptcy protection for the second time in six years.
Officials said they hoped the bankruptcy petition would give them time to seek a buyer--something UPI has been searching for unsuccessfully for months.
Moreover, the filing allows UPI to avoid the payment of perhaps $2 million to creditors who are demanding redemption of stock they were granted as part of the company’s earlier bankruptcy reorganization in 1985-86.
UPI, which has run through a succession of owners in the past 10 years, has debts of $65 million and assets of about $22 million, the company said in papers filed in U.S. Bankruptcy Court in New York.
It said it owes money to about 4,000 creditors in 47 countries. Its biggest debt is $2 million owed to the Internal Revenue Service. UPI owes Contel ASC, a telecommunications firm, $900,000 and owes AT&T; $800,000.
Under its Chapter 11 filing, the news service will continue to operate while a judge supervises its reorganization.
“We do not expect the process (of reorganization) to impede talks with any qualified purchasers or investors,” UPI President and Chief Executive Pieter VanBennekom said in a statement.
However, one potential buyer, Toronto Sun Corp. of Canada, told the Associated Press on Wednesday that it would not take part in a purchase unless some other major investor took the lead.
Most other potential buyers have had several chances to acquire the company since the late 1970s.
UPI once boasted that it was the lone alternative to the Associated Press as a source for news used by the nation’s newspapers, TV and radio stations. But in recent years, many major newspapers have organized services to feed their news reports to subscribers, while such services as Reuters have expanded their coverage in major U.S. and world cities.
UPI also suffered in competition with AP, a nonprofit cooperative financed principally by its member newspapers. Nor did it help that UPI’s original owner, the Scripps Howard chain, sold the service in 1981 for $1 to a company with so little financial backing that it gradually sold off most of the company’s profitable subsidiaries to raise cash.
UPI Chronology Some important dates in the history of United Press International:
June 21, 1907: United Press founded by E. W. Scripps as a privately owned wire service. Transmits 12,000 words of Morse code over leased telegraph lines to 369 afternoon newspapers.
1935: Begins tailoring news for broadcasters.
1952: Scripps sells UP its Acme Newspictures photo agency, which formerly operated as a companion company to UP.
May, 1958: UP merges with William Randolph Hearst’s International News Service and is renamed United Press International. UPI has 6,000 employees and serves 5,000 newspaper and broadcast clients.
1982: After subsidizing UPI’s losses for years, the Scripps family sells the service to Tennessee businessmen Douglas Ruhe and William Geissler for a token $1 and agrees to contribute $5 million to see the service through the transition.
1985: UPI files for protection from its creditors under Chapter 11 of the federal bankruptcy code and a wave of layoffs begin.
June, 1986: Ruhe and Geissler sell UPI to Mexican businessmen Mario Vazques-Rana and Houston real estate developer Joe Russo, who were selected over rival bidder Financial News Network, for $41 million. Rana, who controls 90% of the company, promises to continue UPI as a general news service. Employees take a 25% wage cut to keep UPI afloat.
February, 1988: Rana sells UPI to Infotechnology Inc., which owns 46% of Financial News Network. UPI, which lost $40 million in the past two years, seeks to differentiate its news service by covering less local news and focusing on major news events, enterprise stories and explanatory journalism.
November, 1990: Employees vote to take 35% wage cut.
March, 1991: Infotechnology and FNN seek Chapter 11 protection from creditors.
Aug. 28, 1991: UPI seeks to reorganize under Chapter 11, listing $65.2 million in liabilities and $22.7 million in assets. The company says it has 586 employees.