Content Bridges

Tribune/Media News Deal Shows 14% Loss in Newspaper Worth This Year

Addendum to this post: Friday's Chicago Tribune story attributes the lowered selling price not to market value, but to the role of CareerBuilder (CB) in the transaction. Since Tribune and Gannett (the original buyer) both own stakes in CB, the thinking apparently goes that the deal had to capture the value of Career Builder as the paper would have moved from one company to the other. That value -- given sale -- would probably be in the two Connecticut papers' share of the Tribune's equity stake in CB, not in the annual revenues gained from the affiliation. So the thinking would go that Media News -- not a CB owner -- wouldn't be getting that value.

That argument has a certain logic, though I haven't done the arithmetic yet on the value of Tribune's current overall CB stake value. If it is correct, it would be surprising to see these assets going at close to what they went for earlier in the year. The stock market has taken down the value of most public news companies by more 10% during the same period. So that might well tell us that Tribune's original selling price was too low, or that Media News paid more than it had to, the latter being the more unlikely scenario. Of course, now Media News has a great concentration of properties in Connecticut and its cost savings -- through bundling and cutting "redundancy" -- makes the two properties more valuable to it.

As properties (post-Zell Tribune+) hit the market, we'll get the chance further to see value assessed.

Thursday Post:

How do you put a number on the toll of unstoppable newspaper print revenue declines this year?

One way is to consider today's announced sale of the Stamford Advocate and the Greenwich Time by Tribune to Media News. The sales price: $62.4 million.

Just last March, Tribune tried to shed the papers, selling them both to Gannett, which nullified the deal when it couldn't break existing labor contracts.  The sales price then: $73 million.

That's a 14% drop in roughly seven months.

Sure, New England may be hit harder than other areas by some revenue declines, but the number has great meaning nationwide. Double-digit revenue declines in classified advertising have already taken a substantial toll, diminishing newspaper value -- and power -- going into 2008.

NYT: A Good Month's a Reprieve, Not a Pardon

One reporter I talked today said the New York Times people he talked were "giddy." Well, why not, enjoy the day. The Times reported 3Q numbers that surprised everyone -- unexpected "above-expectation" reporting hardly within recent memory.

The Times reported earnings up 6.7%, with total revenue UP, I repeat UP, 5.5%.

Compared to other recent earnings like Gannett's (Newspaper Revenues -- -5.6%), McClatchy's (Newspaper Revenues -- -9.2%) and Media General's (Newspaper Revenues -- -6.7%), that's great news. Wall Street thought so too. In an up day at the market, NYT stock caught an upwind, closing up an unbelievable 9.83%. Observers would have the day to enjoy the irony that Morgan Stanley, long a public critic of the Sulzbergers, finally threw in the towel just a week ago. It sold its 7.2% stake near the 52-week low. So today's rise would have been worth about $19 million, not bad even by Wall Street standards.

Maybe the Times execs will have some time to savor their small triumph. Though their advice that October looks less of a turnaround than September and more like a return to that troubling first half doesn't bode well.

Neither do the classifieds and retail numbers:
----Classifieds down 14.4%, with the shared real estate+ woes of the rest of the industry;
----Retail down 7.3%, as department store consolidation and the move to web ads takes a continuing toll.

The bright spots, though, clearly, are affirmations of the Times strategy:

Will Zell Get Personal With the Seats of Cubs' Fans?

Sam Zell's back in the news, wowing journalists with "open collared shirts and jeans", telling them that he's no Nero, dumbly picking up a fiddle as a conflagration roars around him.

We know Sam's not dumb, and he's got a small fleet of MBAs dispatched to learn about the Tribune's various business units, "learning" as in deciding what to keep, what to toss, what to downsize, if and when the long-awaited sale goes through. Staff will know it's serious if the consultants carry tape measures or start counting ceiling tiles.

Of course, more doubt -- as if the deal needed more -- has been thrown on the deal by FCC Chairman Kevin Martin's push to clear away the barriers to more media concentration and cross-media (TV, newspaper and more in the same market) ownership in the same market.

But in Chicago, those weighty matters are less fun than the parlor game of "What Will Sam Do?"

And given his background in real estate, the games goes to sellable assets.

Of course, we know of the talk of selling out the valuable ground beneath big-city newspaper buildings in Chicago and L.A. Selling the land and the buildings would of course fetch hundreds of millions.

But the game gets more interesting when we hear about Sam keeping the Tribune Tower, but tossing out some of the staff and replacing them....with condo owners. That's right, the new in-demand Chicago Trump Tower could get a neighbor. "Live with the Colonel (McCormick)" could read the (Tribune!) ads: "Once in a Lifetime Opportunity to Own a Piece of the Tower." Trump's places are going for about a mill apiece on average. Maybe Sam, citing historicity, could fetch the same. Replace cost centers (complaining reporters) with profit centers (happy homeowners).

But the game that's even more fun is doing the arithmetic on Wrigley Field. Sure, Sam's said he's going to sell the Cubs and Wrigley: "Maybe (the Cubs) is a business. But it's not a business I understand. So I think I'll pass it on to someone who understands it as a business or to someone who gets enough psychic income that they don't give a shit," he said this week.

Here's the Wrigley Math: Keep the Cubbies and Wrigley and sell personal seat licenses. There's precedent in Chicago where the new Soldier Field sold them for as much as $10,000 for the best seats and down to a thousand or so for cheap ones. Now, Wrigley's considered one of the two gems of baseball (with Boston's Fenway Park), and fans would have -- you guessed it -- a once-in-a-lifetime opportunity to buy.

So, let's see. With a capacity of 41,118 and a $10,000 premium price, that could be a windfall of $411 million. Okay, so the game goes, $10,000 is way too high. Maybe an average of $5000, still netting $205 million + beer and peanuts and tickets (bought annually as before) forever.

Remember, it's just the parlor game going around Chicago. But also remember, Sam didn't get rich playing Candyland.

More Content Bridges post on Zell and Tribune, here

Is Locial the Next Wave?

Local + Social = Locial? There are probably better words, but it's a concept that's important. Bob Tedeschi's report in the New York Times today highlighted LifeAt, MeetTheNeighbors.org and i-Neighbors.org. They are all sites that use the social networking sites to connect us to ..... people next door, down the block or in the area. It's an easy idea to understand, and one that makes a lot of sense.

It gets rid of an artificial divide, showing in fact that online connections can actually support physical proximity. Yes, you can have 237 "friends" on MySpace, but you can also be connected -- mini-casting neighborhood concerns, throwing block parties, sharing tips on contractors and day care providers -- with those close to you, but who you've never met or have only nodded to in passing.

The truth is we often know little about our neighbors these days. So the ability to share information, news and skills -- on our own terms -- makes a lot of sense. LifeAt concentrates on apartment buildings, while i-Neighbors is a sociologist's experiment in connecting people. While sensible, the business model is of course still developing; fees from apartment owners and the like. It's another area in which local media should have an interest. Connected to the power of local news and information and local calendars, this is the hyper-est local.

Certainly, experiments from Backfence to MyHub to Pluck's various initiatives have given it a try. One maxim among them has been the need to be both local and to have critical mass, which meant "communities" of 60,000-100,000 people. Maybe that'll work in some cases, or maybe, it's just a slice of who we are. Maybe in local-local, it doesn't take (just) a critical mass, it takes a neighborhood.

Overall, it seems the web is forcing us to come to grips anew with basic questions of identity. It doesn't take a social psychologist to tell us that identity is quite a complicated thing. It's part who we are, where we came from, what we like to do, what we work at, who we hang out with and who we connect to. That's no algorithm yet invented that can deal with all those intricacies, in proportion, by time of day, week and place. Maybe that's why we're all still fumbling around with these wonderful new tools that offer the promise of connectedness, but deliver so many disconnects along the way.

And, as these fledgling sites show, just maybe the death of distance doesn't have to stop us from being neighborly.

Can You Say New Century Network in Japanese?

NCN -- the New Century Network -- is an increasingly distant memory, but one revived by the recent news that the top 3 national Japanese dailies are teaming up. Yomiuri, Asahi and Nikkei (the business daily of Japan) enjoy close to 30 million in daily circulation. That's a tribute to the intensive home delivery systems in place in Japan, a strategy that means that more than 50% of newspaper revenue is circulation-based. That's compared to the 20% or so in the U.S. and and 25-35 in parts of western Europe.

But the Japanese papers read the same handwriting on the digital walls. (Some good data on ad decline there, here.)

Older people are reading print, but younger people are using the web for news, and to news aggregators including Yahoo and increasingly, yes, Google. Yahoo's early Japanese partner was Softbank, which maintains a 40%-plus ownership stake. Yahoo Japan is still the search share leader there, according to a recent Comscore report, with 47.4 percent. ,And Google's movin' on up, rapidly, now claiming a 35 percent share, and having increased its search volume 53.3 percent in the last 12 months. (Yahoo's search volume is down 12.4 percent).

So three dailies are doing what U.S. dailies tried, and failed to do, in 1997-8. Their news portal (so far, unnamed) is set to launch in March, 2008, with links to each of the paper's individual sites. From afar, it looks like a half-baked strategy -- for 2008. In 2008, the web world in Japan and worldwide is so broad that to draw a circle around just three providers -- even the three biggest -- won't have the kind of impact  the publishers intend. They'll make it marginally easier for readers to find news, but other aggregators will be able to offer lots more, unless the news portal steps outside the boundaries of its owners' content.

Search/aggregation, after all,  is the preferred form of entry for most internet readers, and with news video coming on strong, search aggregators (who are of course harnessing video faster than print-based news companies) add to their advantage. 

That wasn't even much of an issue when the New Century Network almost got off the ground in the '90s. The memories of it are getting hazier, but I still recall The Last Supper of NCN, held in Denver (Brown Palace Hotel?) in 1998, soon after I'd joined Knight Ridder New Media. As I recall, the participants dined on bruised ego and the meringued illusion that newspapers companies would come to dominate the Internet.

Suspicious of each other, the heads of the nine chains represented couldn't get to a workable agreement, though staff had been hired, many mock-ups were in process, and a site -- NewsWorks -- had been built out. A good history of the project is here in the Business Week archives -- free of course.

The NCN debacle goes down as The Lost Moment in American daily history.

Of course, we all know the story by now: Content increasingly became commoditized and free, and newspapers have assumed a smaller and smaller role as the Web's come to dominate the publishing future. Decades-only business models are passing before our eyes, and looking ahead, daily publishers only see more pain.

ProPublica, MinnPost Burst Out of the Box

If you look through the growing haze of daily downsizing, you can see a sun trying to rise.

While no single model of new journalism funding has yet emerged whole and succcesful, we can see common elements in experiments ranging from the just-announced ProPublica to the soon-to-launch MinnPost to the newer national politics site, The Politico, and the other locally oriented start-ups like the Northwest's Crosscut, Dallas' Pegasus News and Voice of San Diego.

Most important is the passion. Behind each is a set of people who believe that there are sizable groups of readers hungry for good, independent journalism. That conviction then leads them to assemble -- one way or the other, to start -- experienced journalists, turned out or turned off by the spirit-sapping downsizing now endemic to the trade. It's the in-between -- how to pay those want-to-be optimistic journalists to serve those want-to-know readers -- that's being worked through. The forms vary from foundation grants to membership fees to online ad revenues and to a sense that new funding will arrive as the public sees a new way to further inform itself. That last point is huge, I think. Readers do have the sense that something is being lost in the downturn traditional journalism faces, but they haven't been given an opportunity to find and support newer forms. That's changing.

First, consider the news that former Wall Street Journal top editor Paul Steiger is heading ProPublica. It's a new non-profit, dedicated to creating national quality investigative journalism. The funding will start paying for 24 journalists, and when's the last time you heard of more journalists being hired than you could count on two hands.

Here the funding comes from Herbert and Marion Sandler, who are providing $10 million a year to support the project (Slate's Jack Shafer on the Sandlers, their political and funding past, here). Steiger, with 16 WSJ Pulitzers in his portfolio, provides instant cred. He says ProPublica will pay essentially market wages. It will then place its stories to major media, though it sounds like a business model around syndication, licensing and advertising can use some work.

It's a great back-to-the-future model (I like it: ProPublica says public interest in a very retro, Romanesque fashion), a new kind of guild for the 21st century. If the world has unlocked the ad/editorial connection, this kind of model says, okay, let's concentrate on what we know how to do best: produce great journalism. Importantly, these will be experienced journalists, edited by top editors. It's light-years away from a world of neighborhood, user-gen community journalism -- though there's nothing wrong with that in the right context.  But user-gen is no substitute for journalism.

This week also brought us a date for Joel Kramer's MinnPost start-up in the Twin Cities: Nov. 8. On that day, the once-proud Twin Cities journalism scene, bastion of competitive, above-average (located near Lake Wobegon after all) press work becomes another key exhibit in the emerging case being made for a new journalism.

Kramer says he is ahead on financial and community support targets:

• Money raised for the non-profit:  $107,000 from 220 member-donors, beating MinnPost's projection of $75,000 for all of 2007, Kramer said. The biggest new local contribution --  $36,000 --comes from a local family foundation, the Martin and Brown Foundation. That brings the total start-up fund to more than $1.2 million, including the early donations from four local families, including Kramer's. That's a war-chest that will provide some breathing room. I asked Kramer whether family foundations will likely play a key role in funding operations like his, as enterpreneurs in other parts of the country look for funding. "Small family foundations are really the equivalent of individual donors," he says. Basically, Kramer says those seeking such support should work them the same way they do others -- "we do meetings, we do breakfasts" -- understanding that family foundations offer wealthy people tax advantages in making donations. One upside, he says, is that decisions can be made quickly, often by a single person.

9 Questions on the Launch of Fox Business Network

Ah, we're into the week of The Wiles and Wails of Roger Ailes. Fox Business Channel launches Monday, all industry eyes glued to the story, the first demonstrable play associated with Rupert Murdoch's Dow Jones putsch. That sale is due to close in November, but this FBN launch is a first act in Murdoch's quest for global domination of the business news and information business.

Ailes has long been a character of Rovian dimension, and he gets to see if he can put the same fright into CNBC that he put into CNN. His confident swagger was on glorious display in -- naturally -- the Wall Street Journal last week, as he gave an interview.

A little trash talk, a few war metaphors, and tomorrow, we'll be off to the races:

WSJ: How has the network changed since you left?

MR. AILES: It's gone down in ratings dramatically. I checked the numbers of the fourth calendar quarter in 95, my last year there. Their total day is down 5 percent and their demographic is down 15 percent. Prime time is down 61 percent and prime time demo is down 53 percent. So, it's changed quite a bit since I was there.

And leave it to Ailes to use war metaphors to make his point:

MR. AILES: I never predict offensive goals. I think that was Israel's problem in Lebanon. Look, there are too many variables: is there gonna be a recession? Will that affect the ratings on either channel? Will CNBC suddenly get better? Will something work out with The Wall Street Journal? Will we be better than expected? Is it gonna rain? There are just too many variables. So you don't go out there and say: I'm gonna do this.

But the wiles of the man are well-earned. Here are nine questions for News Corp upon launch:

1. What’s the attitude of FBN going to be? Ailes’ Fox News Channel is all about attitude. It’s news with a scowl, the face of Bill O’Reilly. That won’t work as easily with FBN. Will it be business news with a knowing insider’s wink? No, we don’t expect the Fox News spin here (two well-coiffed, super-carnivorous Irish-Americans vs. a single bespectacled, nice-guy (on nice-gal) weakling du jour from NPR).

Plenty of Americans like spin with their politics, but they won’t want it with their pocketbooks. “Free Markets, Free People” – the cry of the largely discredited neocons – only goes so far. Already, we’ve heard from FBN managing editor Neil Cavuto that other media over-covered Wall Street’s recent spate of company scandals, for which incidentally the soon-to-be-Foxed WSJ has won accolades. But investors have been outraged by the dealings, and they know they were getting screwed. Money is money, and FBN’s viewers will want the network to help get them get more of it.

So Fox’s moves here will have to be more nuanced. It will be tricky getting this formula right, but it did take FNC 4 years to overtake CNN.

2) How many more Carly Fiorinas are going to come out of the woodwork? Hey cable TV and the web have proven anyone can be an analyst. Fiorina – short on recent success, but a name that will be a shiny lure as FBN fishes in CNBC’s big pond and beyond – will get viewers to look. Expect more names to line up for the FBN show.  Forget Scott Boras and A-Rod, this is a great time to be an agent for the likes of Suze Orman, Jane Bryant Quinn, Jim Cramer, Andrew Tobias and James B. Stewart.

3. How Main Street will FBN go? Organic, a San Francisco-based ad agency, defined four potential targets from Nest Egg Newbie to Middle American Main Streeter, as it suggested FBN broaden its scope beyond CNBC’s narrow focus. Advantage to FBN: Getting beyond the narrow CNBC Investing-oriented reader, reaching more money-oriented viewers, in two huge personal finance categories: Spending and Saving.  Disadvantage to FBN: Going mid-market reduces the demographics FBN has to sell ads against. CNBC’s viewers have average net worths of $2.7 million, says the company.

Remember the current market is all about niche. While the potential audience of CNBC is 90 million households, most of us find it way too boring compared to the Top Chefs, the Survivors and the Discovery specials. In August, CNBC’s average audience numbered only 87,000 people, aged 25-54, according to Nielsen.

So, yes, FBN is on to a big idea here. There may well be a market vacuum. But it exists for a reason. Most Main Streeters don’t look at stopping by the bank as fun, they’d rather spend money and leave the strategies to others.

Consequently, expect this Main Street approach to take on lots of the per fi magazine evergreens – Retire Rich! (yes, yet again this month from Time Inc.’s Money). You know the 24-hour TV cycle can endlessly run “How to Save for Your Kids’ Education,” “Top 10 Places to Retire,” and “Picking the Right Financial Advisor for YOU.”

4. How will FBN leverage the reporting and personality assets it is buying (in November) as it closes the Dow Jones purchase? We do know that CNBC has a fairly tight exclusive to use WSJ reporters on air into 2012. Murdoch has publicly made the point that the deal applies to “hard news”.  It would be fun seeing a court apply a hard/soft scale to stories. Look at Murdoch’s posturing as setting up the argument that all those personal finance writers and columnists, all those contributors to the Journal’s expanding Weekend (arts, leisure, spending) and Pursuits sections plus all those Marketwatch and Barron’s writers aren’t covered by the deal.

5) How much will FBN be a TV play, and how much will it be a well-coordinated multi-channel play? Let’s recall that Rupert bought Dow Jones for $5 billion – at a 67% premium – because he sees its global multi-channel value. He’s named this initiative the Fox Business Network, unlike the 10-year-old Fox News Channel. First off, we’ll have to check out how FBN’s website evolves, how it connects to interactive financial advances of Marketwatch (nice customizable portfolio recently launched in beta) and how it connects to the company’s other online brands – wsj.com, barrons.com and Marketwatch.com. Those sites offer FBN a big leg-up over CNBC – never a leader in the online money space – if connected smartly. Is there a growing online money space? Yes, such ventures like FNN and CNNfn were too early, but that was then, and money, like other top categories benefits from the maturing of web business.

Though most everyone is pitching the launch as a TV battle, it’s clear that video, audio, text and photo assets are all merging – yes, finally converging – on websites near and far, with a fast-growing base of Internet-based advertising under them. Make no mistake this is not just a TV battle.

One useful data point: check out Comscore’s top 20 news websites, and you’ll see that the Fox News Channel leads all of them in duration – number of minutes spent on the site monthly – now at an eye-popping 48 minutes per unique visitor, in the September numbers just released. Fox has figured something out better than the competition here, or at least how to make its numbers look bigger.

(News) Time, Time, Time: What's Become of You

It used to be simple: today's paper and birdcage material. We published the paper, and never looked back, almost literally. The trusty librarians could dig through yellowed files, should we need to find something written some time back. But we relied more on our memories, or those growing stacks of papers in our offices and cubicles.

Pre-Internet, the readers did the same. Some newsprint lovers nursed stashes of old papers, some containing precious articles, some big stories worth keeping, some untapped treasures to be gotten to some day.

In the first 10 years of the Internet, that's begun to change, but slowly. News publishers early on recreated the doorstep/birdcage divide. Soon as they figured out they couldn't charge for today's content, they felt compelled to charge for something. Hence, archives. Walled-off and searchable, but through separate interfaces, at per-article and bundled costs. These products have created good revenue streams, but not major ones. That's what has led both Time Inc. and the New York Times to unbuckle their archive belts and open them up to the public.

As Dan Gillmor sagely pointed out as the Times announced the freeing of the archives (and the termination of Times Select), the Times seized the opportunity to become the publisher of record, instant world news, everywhere, a real platform for 21st century growth. Local news publishers are now scratching their own heads, wondering if they can become the publishers of record for their metro areas and communities, and whether they'll be similarly (though on a smaller scale) rewarded. There are many edges to that argument, and I won't go into them here.

But I do want to point to what I think is a set of breakthroughs in how we think about and access those yellowed pages (what colors do pixels turn?). It's a simple timeline, and I think we'll see it become mainstream, and as much a part of news consciousness as the empty search rectangle has become.

Consider three timelines, pioneering Topix', the BBC's and Google's.

Coming to a Site Near You: The Battle for Election Traffic

Summer's over, the super-primaries are threatening to consume us and that means one thing if you're a news website: better figure out a way to pull in lots of politico traffic, as sites as diverse as the brand-new Star Tribune "Politically Connected" (more below) and others are doing.

My friend Alan Mutter sent a broadside flying recently with his peek into, of all things, Aussie politics. But as Alan sages points out, Google's little experiment Down Under can be easily understood as a testing ground for a U.S. push. Kind of like trying out a Broadway-bound play in New Haven.

From Alan's recent (okay, I was out of the country, vacationing and blissfully disconnected) post:

The Google election project, an elegant mashup of Google’s arsenal of search, mapping, video, widget and other technologies, is a preview of how all but the most technologically recalcitrant consumers will expect to get political – and many other types of – news in the future. In addition to delivering a wealth of well-packaged election information and interactive tools, Google has created four content-pushing widgets and a number of ways for users to express their opinions via forums and home-brewed video.

In that view, we can see not just an election push, but one that helps us answer the question about Google's direction. The envious among us can say, "Sure, Google hit it lucky and big with search-related ads, but that's the only business that's really clicked, among its dozens of beta Labs projects." And it's true that the ad business is Google's huge driver. But, we can see in this election package and in a few other fledging projects (check out the new Topix-like timeline for finding articles, at the top of Labs now under "Experimental Search") how Google is relentlessly bringing it all together.

Want to roam the Aussie political landscape visually. Try the Google maplet, which provides an entry point to lots of articles and data.               
Want to munch through election data, making choices and seeing the info morph in front of you.
Want to hold candidates accountable for their votes and stands; use the specialized Google search to find out the info you need.

Lots more gadgets and ways into the info.

Take the tour here.

Lee's Job Requirements: Java and Mojo

Okay, to the question of just what does it take to succeed in journalism these days?

Lee's been leading the local newspaper markets in online growth lately, cited by some financial analysts as a "buy" for getting online right. Maybe, that has something to do with its recruiting. If you want to achieve those eye-popping double-digit revenue increase numbers, maybe you need the java of a Silicon Valley techie and the mojo of a non-stop sales whiz.

"The successful candidate will have a proven track record of driving online revenue....The Online Director is expected to make sales calls.....Exceptional computer skills including knowledge of basic Internet programming including Java and HTML," the ad reads in part.

We used to call such abilities "tweener skills". Now they look like the the price of admission for a job working online at a newspaper company.