With Dean Singleton being promoted out of an operational role and into irrelevance at MediaNews Group, some industry-watchers are speculating that this could be a turning point for newspapers – and maybe a positive one.
Singleton transformed MediaNews from an unknown regional holding company into the country’s sixth largest newspaper publisher, with weekday circulation of 2.4 million. His able sidekick was the company’s president, Joseph Lodovic, whose financial wizardry enabled much of MediaNews’s growth. When the company entered bankruptcy last year, Singleton and Lodovic engineered a debt-reduction plan that still left them with a significant stake in the company, a rare outcome in a Chapter 11 filing.
Both are now out. Singleton has been promoted into a powerless strategic role and Lodovic has retired. Martin Langeveld, who worked at MediaNews for 13 years, offers a shrewd analysis of the ownership picture of the U.S. newspaper industry. It is now dominated by bankers, hedge funds, investment bankers and others who could care less about public service or journalism. But that’s not necessarily bad.
Langeveld looks at the industry’s ownership map. The majority of newspaper holding companies in the U.S. have experienced one or more bankruptcies over the last five years, leaving control in the hands of creditors and shareholders. Langeveld presents a chart showing who is now in charge at companies like MediaNews, the Philadelphia Media Network, Journal Register Co., Freedom Communications, Tribune Co. and others. It turns out to be a small circle of friends, led by Alden Global Capital, which has stakes in no less than six media companies that are emerging or have emerged from bankruptcy.
Langeveld sees the possibility for a massive consolidation to take place now that so many interlocking directorates are mapping the future of these distressed companies. Which is a good news-bad news scenario. “Strategic geographic consolidations, if operationally led by someone of [Journal Register CDO John] Paton’s caliber, could be a potent force for the rejuvenation of the industry, including a renewed focus on…local journalism,” he writes. But there’s also the pessimistic view, which is that these firms simply get chopped up and sold off piecemeal.
The timing could be good for the dismemberment scenario. After crossing the Valley of Death in 2008 and 2009, most U.S. newspaper companies are once again on stable, if shaky footing and many are profitable again. The Los Angeles Times might even fetch a price of $1 billion, says Sharon Waxman of The Wrap, quoting industry analysts. That would be a shot in the arm to Tribune Co., which could barely even give away its newspaper properties when it was frantically bailing water in the days before it entered Chapter 11. It could also be good news for The New York Times Co., which couldn’t even get $25 million for its distressed New England properties two years ago, but which might be primed to take another run at selling off the Boston Globe.
So investors might choose to get while the getting is good, but they might also opt to stay in for the long haul. Ken Doctor sees the possibility of progress as investors consolidate control. “We’re seeing increasing impatience among the new owners with the old leadership,” he writes on PaidContent.org. “A growing conventional wisdom among them: Too many newspaper CEOs just aren’t moving fast enough to grasp the mostly digital, multi-platform future.” If investors do believe that media companies have a future – and the 2010 recovery in stock values provides at least a glimmer of hope – then they may bring in new management that has a clue about the new media world.
“At Freedom, the new owners brought in as CEO Michael Mitchell Stern, who came from DirecTV,” Doctor recounts. “In Philly, they brought in Greg Osberg as CEO and publisher; Osberg comes both from magazines and digital start-ups. The new Star Tribune owners brought in Mike Klingensmith, a Time Inc. alum. The new formula: out with the newspaper-only people and in with media people.”
Or, as John Paton recently said, “Stop listening to the newspaper people and start listening to the rest of the world.”
A Test for Tablets
The Daily for the iPad is set to launch any day now, and media watchers are abuzz over whether a tablet-only news product that is reportedly backed by $30 million of Rupert Murdoch’s money has a chance.
In case you missed it, The Daily is Murdoch’s bet that tablet owners will pay a buck a week to get a quality news service. He’s reportedly hired 100 journalists, including some well-recognized names, and set in for the long haul. It’s a bit retro, even while being progressive. For example, the text won’t have any hyperlinks and there will be no Web equivalent that readers can share. Apple is helping out by making The Daily a signature product on its new iTunes subscription service.
Ken Doctor hauls out the old spreadsheet and calculates the economics of the venture. He figures that if about .25% of tablet owners opt in for a yearly subscription, The Daily can clear $10 million in annual reader revenue. Can advertising make up the difference? That’s the question, and without any similar products to use for comparison, it’s anybody’s guess. Doctor’s view is that The Daily has a chance, but Murdoch is a risk-taker who has some history of spectacular failures. For Rupert, though, $30 million is pocket change. (Martin Langeveld also shares his thoughts on The Daily over on Quora).
Speaking of subscription fees, speculation over what The New York Times will charge for access to its web content is at a fever pitch. BusinessWeek says the fee will be less than the $19.99 a month the Times charges for its Kindle edition. This is a minor scoop at best, since a Times Co. executive said as much last month. We just wish the Times Co. would announce a pricing plan so we can get some sleep.
Big Pay for Big Names
C![](http://static.businessinsider.com/image/4cab5f7b7f8b9a0513f40300/howard-kurtz.png "The Washington Post's Howard Kurtz Is The Latest "Gray-Haired Dude ...")
onventional wisdom in the journalism business is that new media ventures pay a lot less than the traditional outlets they replace. But that isn’t necessarily true, according to The Wire. The insider-y media site, citing unnamed sources, says that big-name journalists such as the Washington Post‘s Howard Kurtz are commanding six-figure salaries at some well-funded websites. Specifically, The Wire says Kurtz is getting a $600,000 salary at Daily Beast, while Tim O’Brien commands $400,000 a year at Huffington Post. “We may be entering a new golden age of journalism, in which the most-talented digital journalists can make way more than their print counterparts ever dreamed of,” writes Henry Blodget.
“Balderdash,” says the Beast. In a rejoinder to Blodget, Beast Executive Editor Edward Felsenthal says he was “flabbergasted to read the salary figures you tossed out for Howie Kurtz.” However, Felsenthal doesn’t provide any guidance on what the Beast is actually paying Kurtz, and HuffPo isn’t talking.
Meanwhile, Blodget takes the opportunity to add The Daily and Bloomberg LLC to the list of generous employers. Bloomberg, he notes, “has quietly become the second-richest and most powerful media organization in the world.”
Does this mean happy days are here again for journalist pay? Not likely. The majority of grunt-level former reporters still say they’re getting half of what they were making in mainstream media, or less. Demand Media, for example, reportedly pays about 10 cents a word for its articles, which are assigned based upon their performance in search results.
Comments
This entry was posted on Friday, January 21st, 2011 at 8:14 am and is filed under Fake News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
So starts of the cannibalization of the media.
All parties involved will eat the flesh of the near-corpse for a few rounds of mergers and media consolidations to pluck the last of the remaining cash from the sale of the assets on the new trimmed down organizations, shedding jobs, physical plant and real-estate with each winnowing, before settling down to a skeleton crew before being sold off for a final time and disappearing from sight.
I hope some organizations will have made their peace with e-publication and internet distribution by then because those will be the only game in town.
Note that I didn’t pick a particular medium. They’ll eventually all go through the process to some degree or other. The internet is a seismic paradigm shift in the distribution of all IP. (This is all part of the unintended consequence of a military command and control communication strategy designed to survive a nuclear strike by the Soviet Union.)
Media consolidation won’t be a savior for the industry, in fact, it’s one of the biggest reasons the industry is in the mess it is in the first place. You simply can’t put people who don’t know the industry in charge with only the bottom line as the deciding factors and little to no understanding of the dynamics of the industry, which has and will never function as a standard industry.
Publishing, particularly newspapers, have a complicated dynamic in regards to their relationships with audience and advertisers. The consolidation run of the previous couple decades shows pretty clearly that ignoring this dynamic has only damaged both of those relationships. I’ve had the misfortune to work for publications on two separate occasions that were bought up in the previous consolidation sweep, and I can tell you in no uncertain terms, it turned out to be a catastrophe in both cases.
The new owners, who were looking simply at the bottom line, cut key elements indiscriminately, like content and circulation, for example, simply because they look like giant money drains when scanning a budget sheet. Without realizing that those two elements are the core foundation of any money you hope to make, and treating them accordingly, we lost vast amounts of readership, which was them followed by a steady decline in advertising revenue. And this happened well before the collapse of a few years ago.
One of those publications went under under less than three years after the buy (at the time of the buy, it was a thriving enterprise, growing by 30 % or more per year). The other is still around but barely holding on by life support, with a minor skeleton crew bringing in a pittance of what it once was. The managers still think the economy is to blame, and it is to an extent, but that doesn’t explain why things were heading in a steady downward trend when the industry was still setting records for overall revenue.
Another run of consolidation will just expedite the collapse of these companies.
@msbpodcast
Exactly. Good point.
[His able sidekick was the company’s president, Joseph Lodovic, whose financial wizardry enabled much of MediaNews’s growth.]
I laughed at this statement. This guy did nothing except drive the company into bankruptcy and then bails out just as the Titanic is about to sink. Some legacy.
In case anybody missed it, Rupert Murdoch and Eddy Cue (standing in for Steve Jobs) launched on February 3, 2011 The Daily.
Can anybody say: The inevitable end of the paper part of newspaper?
Good old Rupe has just put a stake in the ground based on the cost of putting together the news, minus the paper part.
The economics of using the iPad are interesting (the price is half of The Post in NYC, considering the elimination of all production, distribution and related costs 14c/diem/copy is actually quite profitable,) as are the economics of producing an advertising vehicle using a news feed on a delivery platform. (Pure gravy!)
I have just realized something.
If you already have news room staff, if costs almost nothing to start up a news gathering operation*.
If you’re using Apple’s or Google’s ad proliferation mechanism, you can get per-view or click-through revenue, to which you can add your own ads (at first it will be strictly per-view revenue,) to build a revenue base for your news gathering organization*.
Then we come to the really interesting part, (and art) the dissemination of articles across distribution vehicles (the platform can be the Apple iPad, Google’s upcoming tablet, some other competitor or over some internal network) which will be content aggregation.
This will fundamentally change the nature of being a news bureau.
While I do not expect human nature to change, meaning that a particular “wing” will seek itself out.
People who like Mr. Murdoch’s slant on things will seek aggretators with that particular Point Of View (POV).
The same goes for the New York Time’s POV, Utah’s Christian Science Monitor’s POV, the Wasington Post’s POV, as well as POVs from international editions, like the BBC, The CBC, the ABC, Al Jazeera, the Vatican’s Correriere Italiano and Sicily’s La Voce della Omertà**
Web editions can be delayed for a day or two, or three, or a week, while the app version can occur every morning.
Those who need to know will support you while everyone else can wait while the news is not so new.
That is what will
* I can’t call it a news paper because there no paper, but the important new gathering functions are essentially unchanged.
** If you ever see a publication by that name just listen to what the hairs on the back of you neck are saying and back away, leave, never to return and pretend it never happened.