edithhopegardenjournal

The announcement that the Seattle Post-Intelligencer is being put up for sale—a legally required step before shutting down the paper because it is in a joint operating agreement—has stunned many of its journalists. Their reactions, in news stories and their own blogs, reflect the continuing state of denial that their profession exists within a news business affected by financial and economic forces. Or, at least, their belief that it should be immune from them. It should comes as no surprise that Hearst Corp. is seeking to end publication of the P-I. Its joint operation with Seattle Times has been an unhappy marriage and it has not been financially effective for many years. Changes made in the agreement in recent years have been insufficient to turn the operation around and the paper and JOA operation have continued to be a financial drain on its participants. A similar offer-for-sale-before-shutting-down process is underway in Denver, where the Rocky Mountain News is likely to cease p...

There is one upside to all the advertising disappearing from newspapers……Consumers can now really see what they are paying for. Opps, that’s a BIG downside. With the effects of economic downturn clearly hitting retailers everywhere, they have slashed their advertising budgets and are advertising as little as possible. For the first time in my lifetime it means you can turn several pages in many newspapers without seeing an advertisement. When I read the Boston Globe on Tuesday (January 7), it essentially had 2 pages of ads in the 10-page A section, 3 pages of ads in the 16-page B section, and 1 page in the 8-page C section. It had no ads on page 1 (although it has been announced they will start doing so soon) and the daily classified section is no longer being published on weekdays. What was left was editorial content. Unfortunately, what was there wasn’t pretty. In reading the paper I realized that about half the stories were from news agencies and services and that I had read many of...

First it was record companies suing Napster and peer-to-peer file sharers, and then it was media companies such as Viacom, Universal Music Group, and Agence France Presse suiting Google, YouTube, and Facebook for distributing content whose rights they owned. Now GateHouse Media has filed suit against another newspaper firm, the New York Times Co., for publishing content from its websites and papers on Boston.com. That media companies are suing each other is a sure sign of the maturation of online distribution and that money is starting to flow—albeit slowly and at levels far below that of traditional media, which still account for more than two-thirds of all consumer and advertiser expenditures But the lawsuits really point out the weakness of revenue distribution for use of intellectual property online. In publishing, well-developed systems for trading rights and collecting payments exist. In radio, systems for tracking songs played and ensuring artists, composers, arrangers, and musi...

The churning flood of economic developments and the desperate measures of governments to lay financial sandbags to control the torrent present not one, but three calamities for media managers. Those that escape one may well be swept away by another. Most media can survive the collapse of credit markets because media firms have high cash flows are typically require less short term credit than manufacturing and retail firms. Because most can acquire their most important resources without accessing credit lines or issuing commercial paper, banks struggling to keep their heads above water are not a major short-term concern. However, those media firms with large debts due in the short-term that were hoping to refinance face significant hurdles. Some will be rapidly shedding media properties in order to stay afloat. The more immediate problem for some publicly owned firms is the financial damage caused by the dramatic drop in share prices following the credit market collapse. Because a numbe...

Many observers tend to conceive any changes in media businesses as trends that are irreversible or to combine them with other changes to make sweeping generalizations about industry conditions. The results are often wrong and distract observers from asking deeper more appropriate questions about longer-term developments and how media companies use the resources they have. To understand changes one needs to consider developments separately to determine their origin and expected duration. This allows one to determine what are the result of external trends and what are the result of company choices. Only then can one begin combining them with other observations. Thus, one needs to consider whether the ratings increase for AMC is due to people spending more watching cable channels or an effect of the AMC's investments in quality programming and the popularity of programs such as Mad Men? If it is the former, one can enjoy benefits with little effort or extra investment; if it is the la...

Voices in and around the newspaper industry would have us believe the industry is falling apart and taking its last gaps. Investors are fleeing newspaper companies, publishers are decrying the lack of newspaper advertising growth, debt challenges are plaguing many companies, and there are layoffs and buyouts everywhere. If one rationally looks at the industry, however, one sees that it is fundamentally sound, but that a unique, financially golden period in its history is ending. It is that change which is creating the bulk of the turmoil in the industry, but the biggest problem is that those working in the industry have short memories about the newspaper business and don't remember it any other way. The generation leading newspapers and newspaper companies today has only experienced a period in which extraordinary growth of advertising increased newspaper revenue across the nation. That growth, combined with the development of local monopolies, created a period that enriched papers...

The privatization of Clear Channel Communications ends a 2-year effort to buyout the leading radio and outdoor advertising firm. The $17.9 billion buyout by Bain Capital and Thomas H. Lee Partners allows the new owners the opportunity to pursue strategies with less influence from unpredictable investors pursuing short-term interests. The sale comes amid heavy competition in terrestrial and satellite radio, but provides the new owners more flexibility in deciding how to best operate the 900 radio stations, radio programming services, and subsidy that owns one million outdoor ad locations. The sale is just one more in a growing trend for private equity purchases of media firms. Their interest in media companies stems from the fact that the market value of many does not reflect the underlying cash flows and asset values or the mid- to long-term prospects of the firms. The valuation challenge of media occurs in good part because advertising expenditures are not evenly distributed throughou...