Posts about newnews

Newspaper stock and the paper it’s printed on

There’s more bad news in store for newspaper-company stockholders following the Knight Ridder sale. McClatchy is bound to find that the multiple it gets for the 12 big-city and no-growth-market papers it plans to sell will be lower than the less-than-steller multiple it paid for KR itself…. if it even manages to sell all of them.

This will raise the effective price McClatchy paid for the papers left, but it lowers the multiple the multiple analysts and stockholders will ascribe to newspapers. McClatchy is all the more committed to a shrinking industry and this will continue to hit its share price. The cutbacks the surviving, adopted KR papers avoided for the moment will come eventually. And the orphans are sure to be doing their imitations of Oliver at dinnertime soon. Bad news and more bad news.

And I’ll argue that the same effect is waiting to haunt other big, one-size-fits-all media companies as they are saddled with big costs while smaller, nimbler, more effective, targeted, and efficient competitors eat at them. Newspapers are the cash cow in the coal mine.

Janet Whitman explains it in the NY Post:

The dearth of bidders for Knight Ridder, which put itself on the block in November amid pressure from large investors unhappy with its weak stock price, reflects the uncertain prospects for the newspaper industry. Newer rivals such as the Internet are snagging readers and advertising dollars.

That could make it tough for McClatchy to fetch attractive multiples for the papers it hopes to sell. McClatchy acquired Knight Ridder for a multiple of less than 10 times expected cash flow, well below historic multiples 12 to 13 times for newspaper deals.

“We think the multiple paid is unlikely to produce much cheer for newspaper investors,” said Lauren Rich Fine, who follows the publishing industry for Merrill Lynch. She added that it “will likely cap multiples in the group for some time unless fundamentals improve.”

What’s the solution? There are no white knights left. What the industry needs now is tough, strategic management that drives the news business away from its dependence on paper to a very different future in any media. You have to shrink to grow.

: I just came across a media stock blog — appropriately shrouded in black — where the analysts are at war over this deal. The oft-quoted John Morton says it’s bad news; another says the big papers will get a higher multiple (can I have what he’s smoking?).

Too big

Big city newspapers are in trouble. Witness:

: McClatchy, buying Knight Ridder — for a price that will not make other newspaper companies jump for joy — announced that it is turning around and selling 12 of them, precisely the ones that used to be crown jewels but now are zirconia:

The McClatchy Co., which today said it will buy Knight Ridder Inc., plans to sell 12 of Knight Ridder’s 32 newspapers, including The Philadelphia Inquirer, The Philadelphia Daily News and the San Jose Mercury News, saying that those papers don’t fit the company’s longstanding criteria of buying newspapers in growing markets.

Ouch. This says that smaller papers are worth more. I don’t think that will continue to be the case forever; the problems will trickle down. But the problem with big papers is that they’re too big: They try to be all things to all people; they have very high costs; there is no growth in the market and no growth in the business. Not pretty.

: See now the State of the News Media report on big papers:

The species of newspaper that may be most threatened is the big-city metro paper that came to dominate in the latter part of the 20th century. The top three national newspapers in the U.S. suffered no circulation losses in 2005. The losses at smaller newspapers, in turn, appeared to be modest. It was the big-city metros that suffered the biggest circulation drops and imposed the largest cutbacks in staff. Those big papers are trying to cover far-flung suburbs and national and regional news all at the same time — trying to be one-stop news outlets for large audiences. In part, they are being supplanted by niche publications serving smaller communities and targeted audiences. Yet our content studies suggest the big metros are the news organizations most likely to have the resources and aspirations to act as watchdogs over state, regional and urban institutions, to identify trends, and to define the larger community public square. It is unlikely that small suburban dailies or weeklies will take up that challenge. Moreover, while we see growth in alternative weeklies and the ethnic press, many small suburban dailies have shrunk.

: The bottom line is that the bottom line is looking worse and worse. Big newspapers have to get smaller. The first step in that is cutbacks. Reality.

Last week, the Washington Post announced that they’re cutting 80 newsroom jobs. Some lament this as a kick into the kidneys of journalism. I say it depends on what they cut. There is undoubtedly fat in newspaper organizations.

And there is also fat in the product — stuff that is there only to try to be all things to all people, which just isn’t economical anymore. So the LA Times joins its sister Tribune Company papers as well as papers in Atlanta and Denver cutting back on stock tables and Nikke Finke says (and I have no inside info on this) that the NY Times will do likewise on April 1.

About friggin’ time. The Star Ledger did this in June 2001 and, I’m told, suffered a net loss of circulation of about 25. Yes, 25. Think of all the millions these papers could have saved in the meantime if they’d had the balls to make a decisive decision. But they’re too big. They lumber.

How much more of a wakeup call do they need?

: See also Michael Zielenziger’s piece in the UC-Berkeley alum mag about the diminishing role of newspapers in their communities.

You’re welcome

Paul Reynolds, a journalist at, writes a paean to blogs.

For many in the “mainstream media”, as bloggers call us, weblogs are at best a nuisance and at worst dangerous.

They are seen as the rantings and ravings either of the unbalanced or the tedious.

My experience over the past few months has led me to an opposite conclusion.

I regard the blogosphere as a source of criticism that must be listened to and as a source of information that can be used.

The mainstream media (MSM in the jargon) has to sit up and take notice and develop some policies to meet this challenge.

Digging a paper

The Wisconsin State Journal now allows readers to vote a story a day onto the front page. That’s a nice start, good symbolism. The real win will be when papers get their publics to vote on what stories they’re not covering that they should be.

Guardian column: How to interact

My Media Guardian column today is a distillation of what I’ve been saying about the means and needs of interactivity. The beginning and end (who needs a middle?):

Interactivity isn’t easy. I must confess that when I wrote for large publications, I said that I loved my audience … but that didn’t mean I wanted to actually meet or talk with them. The people who reached out to me as often as not did so with crayons and crackpot conspiracies, and that helped set my view of interactivity. I think the same is true for much of mass media. The old forms of interactivity helped make us into – or rather, gave us an excuse to be – isolated snobs. The internet changed all that. Online, for the first time in my career, I developed eye-to-eye relationships with readers. And I learned to respect the knowledge, intelligence, goodwill and good taste of those I saw as a mass. I embraced interactivity with obnoxious fervour and would not stop repeating, “News is a conversation … ” …

Rather than restricting interactivity, I would find ways to expand it. The [Washington] Post already is a pioneer in linking to outside blogs that write about its stories. Such linking, I believe, can yield more productive conversation, since these people are writing their opinions on their own websites, under their own names, and not just lobbing anonymous snark grenades into comments. But papers should also stop thinking that the world revolves around them and what they write. Instead, they should listen to hear what the public is talking about that the paper is not writing about. And papers should make readers into collaborators – not just sending in photos from news events but suggesting and reporting on stories. Interactivity isn’t just a gimmick. It is a key to a new journalism.

Alternate link here.