Who would buy a newspaper? Anybody?

At Jim Collins‘ event for his new book at BusinessWeek last night, a former journalist turned business exec asked why no one was snapping up newspapers now that their market caps are worth practically nothing. They have powerful local brands, don’t they? he asked. Don’t they?

The first reason no one wants to buy the trouble of newspaper, I suggested, is that it brings not only current loss but also huge shut-down cost and liability. But then, with more and more newspaper owners going bankrupt, they have an escape hatch from the contracts that cause that risk.

Right, the exec said, so what about that trusted local brand? Well, I replied, there have been too many surveys showing declining trust in newspapers by readers. I know folks in a few markets who’ve done research to test attitudes about a paper disappearing and what they got from readers and advertisers was shrugs. Newspapers spent years acting as local monopolies, charging high rates, and now that buzzard is coming home to roost.

Not only does Warren Buffett say he wouldn’t buy a paper at any price but Mort Zuckerman, who owns one, warns away from them.

Yet hope springs daily, if not eternal. In today’s WashingtonPost, business columnist Steven Pearlstein writes an open letter to Buffett proposing that he buy up not just one but lots of papers:

For close to nothing, investors can pick up some of the most respected regional brands in the news business, along with their (shrinking) lists of advertisers and subscribers. They can obtain modern printing presses for a fraction of their original cost. And they are able to hire from a deep pool of talented journalists, pressmen, salesmen and circulation experts desperate for jobs.

But presses are now a cost burden when your competitors get theirs for free. See above and trust. See above on buying losses and liabilities.

Nonetheless, Pearlstein has a plan. He says a strategic buyer “could assemble a national syndicate with millions of readers capable of achieving the economies of scale that have, for the most part, eluded our badly fragmented industry.” He has a point. The newspaper industry has never been able to cooperate – they all think they’re special.

What would such a consortium create under one roof? Pearlstein suggests a high-priced daily tabloid (“a daily newsstand price roughly equal to that of a small coffee at Starbucks” – which is to say the price of the NY Times or WSJ) aimed at “serious news consumers” with “high-quality local, national and international news and opinion… Local pages would be produced by a modest local news staff, with national and international pages from the syndicate.” If that’s an hour read, there’d also be the 20-minute read: another free tab like Metro. And then “a partly free, partly paid Web site that carries the local banner with a full offering of local content and advertising but operates from a single national platform.”

Nice try. But he has basically described Tribune Company.

Yesterday, I spoke in Miami for the International Newspaper Marketing Association. On my way down, I twittered about it, using the economy of speaking in Tweetlish and abbreviating Assn. A twitter wag asked whether that was short for assassin. Duck, he advised. Turns out that this group, from many countries, is as was advertised to me: open and eager for change. Still, the moderator played devil’s advocate (I think) and pushed what we often hear here: The paper still brings in cash, so maximize that (charge; charge more….).

I argued that if legacy news organizations have any hope, they have to rethink themselves from scratch, not trying to protect what used to be. I assured them that there were entrepreneurs in garages – well, meeting rooms – planning new news structures from scratch, with none of the advantages-turned-burdens of their companies.

And there’s the point: Owning a paper is not an advantage. It is now a burden to overcome. So wishing that someone would just swoop in and buy them, now that they’re worth practically nothing, is just that: a wish.

Pearlstein says he has the back of an envelope with numbers on it; I’ve asked him to blog it or send it along for discussion in the New Business Models for News Project. Maybe he can convince Buffett or someone to buy up the newspaper industry. But I think I’ll pass.

  • Hasn’t Pearlstein also described the AP? The AP could, if it felt like it, team up with local or freelance op-ed types and run a paper. Of course, why would it bother?

  • Steve- UK

    Why does everyone assume that PC based web browsing is the end game for the news media? Isn’t it more likely that consumers (real people, not geeks) will prefer to consume news and long-form text via mobile devices optimised for the purpose, complete with relevant location based services and integrated billing. In twenty years time, the idea of shackling oneself to a desk and squinting at a screen to read the NYT will seem laughably quaint and rather sad. Desktops are fine for active search, communication and discovery – but the majority of media consumption is a passive, serendipitous, lean back experience unsuited to the PC or Mac screen

    • invitedmedia

      i highly doubt “today’s” mobile device/pc and the ones twenty years from now will resemble each other at all.

      if you think so, i have a 20lb. phone in a bag that plugs into that thing we used to call a cigarette lighter and an antenna with a fun-to-lick suction cup to sell you (cheap, like an entire newspaper organization).

      who here ever said anything about “assuming pc-based web browsing is the end game”?

      the web morphs and moves on a daily basis… traditional media? not so much.

  • Just spent the day at the International Classified Media Association conference in Tallinn “Shaping the future of Classifieds”. One panel was a group of Millenials (those born after 1982).

    They were asked whether they read a printed newspaper resounding answer no (they were pretty incredulous at the question). Would they pay for content online – again no. They were confident someone would do it for free.

    Their general use of the web was completely different to the conference attendees (most 40 plus years old CEO types) and their expectations of it were different – any media organisation needs to look at these future customers when trying to define any online strategy.

    BTW just read (or listened to) WWGD excellent, the millenial panel constantly referred to how they use and pass on links.

  • Craig

    @Rob Paterson

    What was the perspective on the conference “Shaping the future of Classifieds”?

    All of the themes in WWGD apply just as well to classified listings as they do to news….

    • @Craig – there were many perspectives at the conference because of the mix of pure online businesses and print. Some still struggling to come to terms with the web and others living in the new link economy – I’ll leave you to guess which ones were doing well.

      WWGD was referenced a lot and you’re right the rules do apply and in our business we’re going to be living by them.

  • Mike Manitoba

    Hey, Rob, you should’ve asked them if THEY’D work for free.

    • To some extent they already are – by contributing to content and in some instances application development to the websites they use and love.

      While I don’t think they’ll be working for free – their expectations about their working lives were very different from ours.

  • AlanW

    This is ridiculous. The Internet’s been around for decades now and there’s no paid content model. No one wants to pay for anything – news, entertainment, music, whatever. And no one is making up the lost paid content revenue with advertising (OK, aggregators are doing OK, but you need like three of them to provide all the world’s content).

    We’ve played this “some innovator will figure out a model” game long enough. Either people’s willingness to pay for content will have to change (unlikely) or online advertising rates are going to have to skyrocket (somewhat less unlikely). It’s either that or accept that any product or content that relies on intellectual property is simply going to whither away.

    When all information is free, information won’t be worth paying for.

  • New Model

    “As you know, we famously don’t pay our bloggers” – Arianna Huffington

  • Blasphemy…

    Banding news organizations together can work, however:

    What about the Tremendous Fixed Costs associated with presses?

    Should organizations declare bankruptcy, forfeit their brick & mortar lines, and focus on Digital News? …

  • You wrote: “their market caps are worth practically nothing. ”
    Actually, their “real” market caps are higher than you might think. To get some sense of real value, you need to add debt to the market price of the outstanding stock. For many of the newspapers, debt levels are very, very high. If you buy the newspaper, you also buy its debt…

    You should also realize that for some papers, the quoted stock prices are not actually measures of the company’s value. Stock price is largely effected by expectations for the stock’s momentum. (i.e. price is set by expectation of future price level – not by analysis of the company’s real “value” as shown via fundamentals or expectations of actual business returns. — Many of these prices are “speculative” and should not be considered to have any relationship to business value.)

    bob wyman

  • The San Diego Union Tribune was sold to a private equity group….most likely, for the real estate, which is probably worth more than they paid for the entire newspaper.

  • Some bloggers ARE being paid. Indirectly via ads, referral commissions etc. – not via subscriptions. Although Kindle blog publishing is going to change that.

    The dinosaurs are dying out…once again. Welcome to evolution!

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  • Just reading a newspaper feels nostalgic now days. I think they are a dieing breed. Some may make a shift to online models but most will simply not survive. Good article.

  • This is an interesting question to revisit today a couple of years later. Now TV Stations are all available to be bought for under a $1M too, sometimes coming along with even less in liabilities and even more in real estate value (they sometimes own their own building, trucks, equipt, etc). I like the idea of preforming an experiment in a small town in America to see if you can convert the newspaper readers and local tv stations to consume their news online, and stop that waste of newspaper printing *NOW* and move everyone more towards tv over i.p.