Stuff we’ve bookmarked recently.
The world’s ultimate value investor – Warren Buffett – has apparently decided that there’s untapped value in newspapers. His Berkshire Hathaway has just purchased 63 of them along with a 3% stake in Lee Enterprises, and Buffett says he plans to buy more. Newspaper lovers should applaud Buffett’s interest. A self-described newspaper “addict,” he believes in an intensely local editorial focus and a sustainable business model. His interest in the newspaper industry could be a boost for paywalls. “The original instinct of newspapers was to offer free in digital form what they were charging for in print. This is an unsustainable model and certain of our papers are already making progress in moving to something that makes more sense,” he wrote in a letter to publishers.
The New York Times traveled to Buffalo to check out The Buffalo News, which Buffett has owned since 1977. It found a profitable operation that has scaled down intelligently over the years through buyouts rather than layoffs. Buffett has little personal involvement in daily operations, but his philosophy of investing in local coverage and skimping on overhead is evident everywhere. Media Audit says The Buffalo News has the second highest audience penetration of any newspaper in the country. Part of this could be because the Rust Belt population of the area is older than the typical demographic, but it’s still remarkable that more than 70% of Buffalo households have read the paper within the last month.
If anyone can figure out how to make a newspaper profitable, it’s Warren Buffett. He built an estimated net worth of $44 billion by buying distressed businesses at the bottom. His interest in this industry would indicate that there are better days ahead.
First-quarter 2012 total expenditures totaled $5.18 billion, down 6.86% from $5.56 billion a year earlier. Online revenues grew by just 1% to $816 million, which was the smallest for any quarter since 2009 and not nearly enough to offset the 8.2% drop in print revenues, to $4.36 billion. The Newspaper Association of America previously revealed that print revenues (in absolute dollars) fell by half between 2005 and 2011. And there is no end in sight.
“There are a lot of new things to like about today’s Observer,” writes Kari Borgen, publisher of the Observer of Union and Wallowa counties in Oregon. Borgen goes on to celebrate the Observer‘s new design, added features and bonus puzzles, among other goodies. What she fails to dwell upon is the fact that the issue that “seems bigger and feels heavier to you today” is that way because frequency has been cut from five days to three. The Observer eliminated Tuesday and Thursday editions and now publishes only on Monday, Wednesday and Friday. No one has yet gotten around to updating the About page with this information.
Details of the legal wrangling between stakeholders, negotiations with the FCC and the likelihood of judicial approval of a restructuring plan will leave your eyes crossed, but the bottom line is that the company’s three-year stay in Hotel Chapter 11 may finally be nearing a conclusion. There’s still regulatory and legal wrangling to be resolved, including a petition to transfer Tribune Co.’s broadcast licenses to a group of banks and hedge funds that will own the company. There’s also a challenge from a group of junior bondholders who are challenging the restructuring plan and who might sue 35,000 former Tribune Co. shareholders to recover more than $2 billion in claims.
Whatever happens, the likely outcome is that Tribune Co. will be carved up and sold off piecemeal by the banks and hedge funds that assume ownership. The real value of the company is in its portfolio of 23 TV stations and some other equity investments. The newspaper business is barely a rounding error on the balance sheet. The story in the Tribune notes, “Before the Zell deal, Tribune Co. entertained offers topping $2 billion for the Los Angeles Times alone, but today, according to a recent valuation analysis by Tribune adviser Lazard Freres & Co. the entire publishing group of eight newspapers, including the Times and Tribune, is worth about $623 million.”
By the way, the Chicago Tribune is considering a novel approach to paywalls. Instead of charging for access beyond a certain number of articles per month, the paper would charge for bonus content, as ESPN does. The tactic has worked well for sports addicts, but observers question whether it can succeed in local news. It hasn’t done so anywhere yet.
The always-provocative Mathew Ingram writes about why we need to reconsider the concept of the article in publishing. This traditional approach to packaging information is rooted in the limitations of printed media where hyperlinking was impossible. Now, however, we have the ability to deliver only what’s new and link to the rest. Jeff Jarvis has been beating this drum for some time and in a post entitled “News articles as assets and paths,” he suggests that articles will devolve into component parts that can be mixed and matched according to need. Why reinvent the wheel with hundreds of words of background every time we update a story? Simply provide the new information and link to the rest. Jarvis has even suggested that new kinds of media organizations could emerge that specialize in different kinds of assets, such as news, multimedia or background. An example of the latter is Wikipedia, which is a great source of background information for many timely events. Reddit is building this model with its Ask Me Anything forum, which has become a coveted destination for book authors. Basically, Reddit is becoming a specialist in Q&A assets.
Everyone is doing infographics these days, and we’ve never seen a bandwagon we couldn’t hop on. This one was actually created by Frugal Dad last November, but it popped up on Business Insider last week. Some of the information is out of date. For example, GE no longer owns NBC, so the sixth company is now Comcast. And Time Warner got rid of AOL. But the main point still holds: Media consolidation has reached a pinnacle, with only six corporations controlling 90% of media in America. And 250 million bloggers and Twitter users controlling the rest.
Source: Frugal dad