For Sale -- Mostly Second-Rate Newspapers

The Wall Street Journal ^ | Nov 19, 2005 | John Ellis

[abb]

On Nov. 1, Private Capital Management LP, a large shareholder in numerous newspaper companies, wrote to the management of Knight Ridder asking that the nation's second largest newspaper chain "aggressively pursue the competitive sale of the company." Two days later, two other large shareholders seconded the motion. Shortly thereafter, Knight Ridder announced that it had decided to "explore" alternatives, "including a possible sale of the company."

It is axiomatic on Wall Street that bear markets beget consolidation. The bear market in the newspaper industry should foretell a spate of mergers and acquisitions. But what if there are no buyers? This is the question that looms over Knight Ridder. Companies that might reasonably be expected to jump at the opportunity to acquire Knight Ridder, like Gannett and the New York Times, have expressed zero interest. New media companies -- Yahoo! and Google -- weren't even called for comment. In the end, it was left to a few Wall Street talking heads to announce interest, which they did by insisting that "big private equity firms" would be the likely buyers, if only to acquire the whole at a discount and then sell off the parts for a gain.

This lack of enthusiasm for a company once regarded as a money machine is evidence of how thoroughly the Internet has disrupted media business models. And with broadband now reaching into more than half of U.S. households, disruption has morphed into menace.

Knight Ridder has been publishing mostly second-rate newspapers for as long as anyone can remember. Its strategy has been straightforward: Leverage de facto monopoly newspaper status in individual cities into ownership of the classified advertising business in those communities. With high-speed broadband and wireless access now a fact for most Americans, consumers are no longer at the mercy of second-rate information providers.

[Grampa Dave]

Here is the article I was semi citing. This was a WSJ article that appeared in SFGate.com

http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2004/05/20/financial0858EDT0032.DTL&type=printable

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This is just an excerpt:

For Fox News, ad-sales market isn't fair, balanced
- JULIA ANGWIN, The Wall Street Journal
Thursday, May 20, 2004


(05-20) 05:58 PDT (AP) --

NEW YORK -- Paul Rittenberg, head of advertising sales for the Fox News Channel, got on the phone recently to counter a lowball offer. Chrysler wanted to buy nearly $2 million of commercials -- but at a cut-rate price of $8 per thousand viewers.

Mr. Rittenberg pushed for $11.98, almost a dollar below his original asking price. Chrysler turned him down. As he hung up the phone, Mr. Rittenberg said nervously, "I hope CNN didn't get it."

The haggling illustrates a frustrating paradox for Fox News. No longer a struggling upstart, it is beating Time Warner Inc.'s Cable News Network handily in the ratings. But in the peculiar market for television advertising, where the usual rules of supply and demand don't always apply, it has trouble commanding the same rates as its rival.

[ForGod'sSake]

Thanks for the info/links! I'll need to check in on 'em tomorrow; my eyes are starting to cross ;^)

[Joe Boucher]

Well the entire paper of liberal crap is probably evened out by one sane article by Mr. Williams at least in the editors mind.
These fools just don't understand why their bottom line is shrinking.
Lies printed on fish wrap.
I too am fed up with the lib media pushing gay agenda on us. I just will never accept the fact that it is not a sin.

[Liz]

Excellent points. Stupids are stuck on "liberal."

[Malacoda]

We only buy the Inky once a week, to a) line the bunny's cage, and b) start the fire.

Seriously.

[calrighty]

"Why would we want to buy second rate fishwraps which no one wants to buy? "

Good question

1) If you can steal it
2) If it is fixable
3) If it is breakable

[calrighty]

That's because it is : )

[calrighty]

Like new cars?

[Tribune7]

You know, the 50 cents is probably worth it for that BUT for just a dollar you can get the Wall Street Journal -- the Friday edition is the best -- and actually have something to read before the fire & the bunny cage.

[ForGod'sSake]

But in the peculiar market for television advertising, where the usual rules of supply and demand don't always apply, it has trouble commanding the same rates as its rival.

Dave, thanks again for links to the working innards of this business; interesting stuff. The FACT that FoxNews, averaging twice the audience as CNN, is just now able to charge similar ad rates is, well, curious. The rationale behind this anomaly seems to be guesswork as much as anything else, but whatta I know. It also didn't add much toward my theory re the easy pickins' demographic. Didn't seem to hurt it either ;^)

FGS

[ForGod'sSake]

Like new cars?

Yup; and maybe more particularly products where a perceived value can replace or enhance an actual value/utility/benefit. Diamonds are forever??? Puleaze! Not even a marginal investment(depending upon one's goals I suppose). Ads are designed to separate people from their money, plain and simple, and these people are very good at getting consumers to, well, consume. Good for business, at least in the short term?

FGS

[Grampa Dave]

Try sending a copy of that article to the boards of some major advertisers on CNN and see how they respond or if they respond.

[calrighty]

"Good for business, at least in the short term?"



Yeah, I spose so. The auto makers sure need the moolah!

[ForGod'sSake]

Try sending a copy of that article to the boards of some major advertisers on CNN and see how they respond or if they respond.

Heh. You know, as much as anything else, it may be human nature's resistance to changing horses, whether in midstream or not. "It's just the way we've always done it" is a phrase you hear a lot. Established relationships/structures are hard to overcome; been there, done that myself. Successful "cold" calling, if you will, is an art as much as a science. People are inclined not to fix something that ain't broke??? They have to be convinced the current state of affairs may in fact be counterproductive to their goals. A better mousetrip is not always self evident?

FGS

[oldbrowser]

Sold my stock a while back. Looks like a total turkey. Might better invest in GM.

Let Algore buy it, think of all the trees he could save.

[SamAdams76]

I cancelled my last print subscription last week - The Boston Herald.

True, the Boston Herald is a conservative voice in Boston. But I've been very disappointed with the quality of the paper lately. There is very little hard news and the front page (as well as many pages inside) are gradually being given over to celebrity/gossip crap. It's getting to be an embarrasment having that thing land on my driveway because it looks like the National Enquirer now.

There are still some good editorials buried in the Herald but since those are readily available on the internet, there is really no more reason to get the paper itself.

I let the office know all this when I cancelled the subscription. Don't know what good it will do but if they hear from enough people, maybe they will make a change.

[ForGod'sSake]

Manufacturing generally seems to be taking it in the shorts in this country. This segment of the economy supports a huge number of well paying jobs. They are slowly going bye bye. What comes next? Lower paying "service" industry jobs? Are we headed in the wrong direction? There's probably some good history to be found re this development, but I haven't searched it out. Maybe someone with the search skills can come up with something. Just on the surface it doesn't look good for long term economic growth for the U.S.

FGS

[calrighty]

I get flamed for this by some FReepers, but we are losing a great deal of our economic base, and this needs to stop.
I think my perspective is a bit more useful than most, as I travel all over Asia, London and elsewhere financing businesses.

[ForGod'sSake]

...as I travel all over Asia, London and elsewhere financing businesses.

Must have some deep pockets.

In any case, maybe someone(s) wants to level the world playing field?

[calrighty]

"In any case, maybe someone(s) wants to level the world playing field?"

Smart man! I would like to ask the someone(s) WHY?