Covenant lite deals and the 30 percent cushions attached to many publishing loans a few years ago seem almost laughable today. Publishers are now being held to much stricter covenant terms and for many, that’s an even bigger immediate danger than losses in revenue and EBITDA.   

Last month, a memo from BNP Media executives informing staffers of a 25 percent pay cut said banks are "forcing near unattainable terms on companies such as ours, considering the fact that there has been such a severe downturn in the economy."

The margin for error is razor thin for many publishers. Bankers are increasingly taking control of publishers, including GE Capital negotiating with ABRY Partners for the takeover of Cygnus and BIA Digital taking over Douglas Publications, which it first invested in as part of Douglas’ estimated $15 million acquisition of the Briefings Publishing Group.

But is it the fault of bankers or publishing executives overleveraging their companies and taking on too much debt?  

"This is an easy time for CEO’s to blame bankers and for bankers to blame CEO’s," says Reed Phillips, managing partner at DeSilva & Phillips. "The truth is that there was a great supply of capital available and many publishers took advantage and leveraged their companies to very high levels. Because of the great supply, companies could play one bank off another and get better terms and more leverage. The end result was that this spiraled out of control because everyone – the banks and the companies – erroneously believed that the good times would continue. Instead, the music stopped and now a lot of people are paying the piper."