With the idea that consumer habits are changing, coupled with the fact that the current economic conditions have reduced advertising revenue, the holding company for a major print-media organization declared that it plans to file for Chapter 11 bankruptcy.

Affiliated Media Group, the holding company of Media News Group, announced in a press release dated January 15 that the company planned to restructure. In their press release, Affiliated Media announced that they had obtained approval of their lenders to a financial structuring of the company.

They stated in their press release that the structuring would reduce sharply their debt, boost their cash flow and allow for greater financial flexibility. Although Affiliated Media operates several newspapers throughout the state of California, it focuses largely on the Los Angeles and San Francisco areas, with no prominent publications in the greater San Diego area.

Although Affiliated Media claims that the reorganization does not involve the newspaper organization nor will the newspaper operations be affected by the reorganization, one can't help but wonder what the impact of changing consumer habits were, if any, on Affiliated Media's decision to reorganize. It is no secret that print media readership is declining under the bounty of online media. And with two major media bankruptcies within days of each other, the other being the liberal talk-radio station, Air America, one can't help but inquire into information-gathering patterns of the general public. Is there a change in the way Americans want to get their news stories? Or are both of these bankruptcies linked directly to the economy, with companies shying away from paid advertising slots in the radio and in newspapers?

The two bankruptcies are distinctly different. Air America plans to file for a liquidation bankruptcy under Chapter 7 of the Bankruptcy Code. This would essentially mean that Air America would cease operations.

Affiliated Media, on the other hand, is filing for a Chapter 11 reorganization, a rehabilitation bankruptcy. It will continue operations but will reorganize.

The decision to file for a Chapter 11 or a Chapter 7 bankruptcy is not an intuitive one. There are several factors to consider including the possibility of negotiating the debts of the company and the potential for insolvency. In the end, the choice to file for one type of bankruptcy over another can be as much of a strategic business decision as it is a legal decision.