Media spinoffs leave newspapers to twist in the wind
If you like the news — that is, reading it, knowing about it, appreciating the folks that try to bring it to you, and not, you know, what’s in the news on any given day — then perhaps you have felt a nervous excitement in recent months as giant media conglomerates have started spinning off, selling off or turning loose their newspaper and magazine publishing groups.
The vast, integrated media monoliths were, after all, run as businesses first, all hot to maximize profits and that thirsty demon, shareholder value, and only got to the challenge of reporting that news stuff in a growingly complex, faster-and-faster-paced world as a sort of nostalgic afterthought.
Now, free at last from the bloated, cash-hungry shackles of cable television and sports team ownership, news organizations could again turn their attentions and their revenues, meager though they might be, to, you know, the news.
And then you woke up:
Time Warner unloaded its magazine division, Time Inc. Meantime, Tribune spun off its newspapers, as has News Corporation, with EW Scripps, Journal Communications, and now Gannett planning to follow suit soon. The Grahams sold the Washington Post and kept their education and TV businesses. The New York Times Company has done the reverse in recent years, selling About.com and its Red Sox stake to focus on its namesake paper.
There will be no cross-subsidization for these newspapers and magazines, much less synergy. Indeed, some executives couldn’t resist milking their erstwhile cash cows one last time on the way out.
Tribune Media is the worst of the bunch in that respect. It loaded up its struggling newspapers with debt to pay itself a special $325 million dividend, kept their real estate, and then spun them off without their stake in lucrative digital classified businesses. These are moves straight from the private-equity asset-stripping playbook—something akin to kicking grandpa out of the house when he gets sick and then running up his credit cards.
Time Warner saddled Time Inc. with $1.3 billion in debt, about half of which went to that there special dividend thing. Gannet didn’t leave any debt, they just bled their papers dry beforehand. Journal Publishing Group, spun off from Murdoch’s News Corp., will actually get a $10 million parting gift — chicken feed, really, but a pot of gold compared to the Trib scam.
But here’s the real kicker: Most of these spinoffs will be spinning without their lucrative digital classified departments. It is the digital classified biz that was one of the small saving graces in the past decade as traditional print ad and classified revenue dried up.
So, what does that leave the lowly news organization? Pay walls, web ads and the online equivalent of museum gift shops?
That’s an actual question.
Or, do newspapers become, sort of like what the Washington Post might turn out to be — the quaint (and perhaps nefarious) hobby of folks who made fortunes in more Wall Street-friendly fields?
As Charles Foster Kane said, “I think it would be fun to run a newspaper.” And it all worked out great for citizen Kane, right?
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