Mark Potts sums up and points to analyses by Alan Mutter, Ken Doctor and Mike Simonton suggesting even worse news ahead for the newspaper industry. Revenues continue to fall faster than cost cuts can make up the difference, suggesting that ongoing cuts are likely for the forseeable future. Potts suggests the unthinkable, which we joined him in predicting two years ago: “We’re going to lose a big newspaper (several, actually). And it’s going to happen sooner than anybody thinks.”
One of Potts’ sources is Alan Mutter, whose number crunching constantly turns up interesting insights about the state of the business. Mutter says newspaper companies are still turning in blue-chip profit margins. That’s good, right? Not if your business is collapsing. It means that newspaper companies are hacking away at the product in order to sustain profits. One wonders why. It’s not as if anyone is buying newspaper stocks. When businesses are forced to reinvent themselves, it usually means swallowing the bitter pill of accepting losses while the old business is discarded and a new one developed.
By propping up their profits, newspaper companies are only setting themselves up for a harder fall. Troubled companies can choose to either invest in product development and try to build new businesses or manage their cash cows down into the ground. Mutter’s analysis suggests that publishing executives have already made that choice. That’s with the possible exception of Sam Zell, whose deep costs cuts at least appear to have a strategy behind them.
Is The New York Times worth just $750 million? That’s its actual value, according to an analysis by a BusinessWeek intern. Jay Yarow walks us through the math and then quotes an analyst saying, “”Valuations have fallen to unprecedented levels that have no relationship to reality.” True, but no one is stepping up to the plate yet, suggesting that Wall Street still believes we’re nowhere near the bottom. In the meantime, the Times‘ investment in its new Manhattan headquarters building is reportedly worth $750, which means that for that price you could buy the paper and get the building for free. Or vice versa.
And Finally
It used to take a team of writers and designers to create a newspaper spoof. Now it just takes Roy Rivenburg. The writer has dreamed up Not the Los Angeles Times, a very funny takeoff in the finest tradition of the Onion and a raft of newspaper parodies that came out in the 70s and 80s (our favorite was Off The Wall Street Journal). Selected headlines:
- State sells San Diego to erase budget deficit
- Wal-Mart unveils $29 defibrillato
- Galleria escalator stalls, dozens of riders trapped
The site is only one page deep, but clicking on the links provides further amusement.
Comments
This entry was posted on Tuesday, July 29th, 2008 at 8:07 am and is filed under Facebook, Fake News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
