Orange County Register deal underscores how much of newspapers’ value is in real estate

My old company has essentially proven a point I have made at least twice in this blog: that many newspapers’ value now is mostly the value of the real estate they own.

A Ken Doctor report today does the math: Less than a month after buying the Orange County Register and Riverside Press Press-Enterprise for $51.2 million, Digital First Media, where I worked from 2011 to 2014, sold 14.3 acres of land surrounding the Register’s Santa Ana office for $34 million, two-thirds of the sale price. The developer who bought the land had purchased the Register’s building two years ago.

In posts about the Boston Globe purchase in 2013 and the Omaha World-Herald sale in 2011, I previously speculated that real estate value probably accounted for most, if not all, of the purchase prices.

I am too busy, and don’t know enough about finance and real estate, to undertake an analysis of recent newspaper sales and what the core value is after you subtract the value of real estate. But I agree with Doctor that this value is “astoundingly low.” And it’s nowhere near the first time that’s happened.

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Student media need to lead, not follow, pros: My keynote address at Future of Student Media Summit

“It’s time for student media to lead rather than follow.” –@stevebuttry pic.twitter.com/1ZgjbHE5sI

— Margaret Mary Hicks (@mmhicks19) April 8, 2016

I was the keynote speaker last night for the Future of Student Media Summit hosted by the Post, the student print and digital news operation at Ohio University.

Below is the blog version of the prepared part of my session, interspersed with tweets from the participants and hyperlinked. It’s not exactly what I said because I wasn’t reading a script. At the end of the post, I’ll explain how I prepared the speech and post and why they’re not identical.

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Another newspaper reinvention? I remain optimistic, despite …

I had a twofold reaction to Thursday’s news that the Boston Globe was trying to reinvent itself:

1. Another fucking newspaper reinvention? How many times have we heard this?
2. I hope it succeeds. Someone has to.

If you don’t want to read my whining/ranting about previous reinvention failures, skip to the “why I’m optimistic” heading, where I share my optimism for the Globe’s project. I am optimistic, but I need to share that frustration, too.

Why I’m frustrated

In both reactions, my thoughts turned to the American Press Institute. The current incarnation of API is helping the Globe, and I’ll address that in the optimistic section. And I was heavily involved in an initiative by an earlier version of API to lead reinvention of the newspaper business.

A decade ago, API developed a blueprint for newspaper reinvention (we called it a “Blueprint for Transformation”). Seriously, we published that advice in 2006, the year newspaper ad revenues first started to drop, by a tiny 1.7 percent. Ad revenue has dropped every year since, often by double-digit percentages and the Newspaper Association of America hasn’t even bothered to report the figures for 2014 and 2015. Those annual reports usually came out in April, and the most recent revenue report on the NAA website was published April 18, 2014.

I worked for API on the Newspaper Next project, and my colleagues and I presented those principles and techniques of reinvention more than a hundred times to newspaper audiences around the globe, from one-hour overviews for press associations to two-day workshops for specific newspapers and large newspaper companies. We produced at least three N2 reports, one of which I wrote.

Newspaper executives who proclaimed themselves eager to reinvent their organizations applauded our message and spent thousands of dollars (we charged $11,000 plus expenses for a one-day workshop) sharing the message with their staffs and executive teams. But their cultural and organizational inertia was so powerful that they took only tentative partial steps that didn’t come close to reinvention.

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‘Spotlight:’ an Oscar winner and an example for journalism

So of course the movie that wins Best Picture after print deadlines is the newspaper movie. Here’s to “Spotlight”! https://t.co/XsmRAk9adZ

— Steve Buttry (@stevebuttry) February 29, 2016

If you were a journalist and you stayed up to the end of the Oscars ceremony, you had to feel uplifted by the Best-Picture Oscar for “Spotlight.” After seeing the film in November, I wrote two posts on the movie about the Boston Globe’s investigative reporting on sexual abuse by priests. Those links are at the end of this post, but first a few fresh thoughts on the “Spotlight” win:

• As I noted on Twitter after the win, many East Coast newspapers (and probably even some in Central Time) have deadlines too early to get the newspaper movie’s win into their morning editions today. (The Advocate, our local paper here, did get the Best-Picture results in a story on Page 5A and a page-one reefer.) I sure hope the Globe was able to hold its print edition long enough to trumpet the news to its print readers.
• While the much-deserved praise for the Globe’s journalism is welcome balm to a weary profession and industry, equally big news for the Globe the past few months has been its difficulty delivering the print edition to subscribers. Cost-cutting at many newspaper companies has prompted outsourcing of functions such as delivery and customer service. And often that goes badly. The Globe’s delivery issues have drawn the most attention, but I know dozens of newspapers that have dealt with similar problems, alienating loyal print readers while still struggling to make money with weak digital products.
• However much disruption the media business endures, we need to maintain our commitment to investigative journalism. Like the Globe, news organizations need to tell untold stories and hold the powerful accountable.
• Sunday night was a great night of recognition for sexual abuse survivors, who usually struggle privately and silently. Joe Biden’s introduction and Lady Gaga’s stirring rendition of “Til It Happens to You” were probably the highlight of the show, even though the song didn’t win an Oscar.

• As much as journalists love a good movie about our craft, Hollywood usually doesn’t. This was the first journalism movie to take home the Best Picture statue since “Gentleman’s Agreement” in 1947.

Here are my two posts from last year after I watched “Spotlight”:

‘Spotlight’: a generation-later echo of ‘All the President’s Men’

Responding to ‘Spotlight’: Advice for investigating sexual abuse by clergy

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Responding to ‘Spotlight’: Advice for investigating sexual abuse by clergy

Headline from a 2002 story for the Omaha World-Herald

I can’t imagine how uncomfortable it would be for survivors of sexual abuse by priests to watch “Spotlight.” It was plenty uncomfortable for me as a reporter who merely had the unpleasant job of interviewing survivors and telling their stories.

I saw “Spotlight” last weekend and comment on the movie in a separate post. My point here will be to share lessons I learned in my own experience covering sexual abuse by priests and other religious leaders both before and after the 2002 Boston Globe stories that inspired “Spotlight.”

I don’t mean by any of this to compare my work to the heroic work of the Globe’s Spotlight team. While I was writing about sexual abuse by an abusive priest, and an archdiocese moving a pedophile from church to church, more than three years before the Globe’s story, I didn’t nail the story of institutional cover-up that they did. Much of my later reporting was prompted by the national public response to the Globe’s reporting.

I hope that “Spotlight” doesn’t generate a similar outpouring of stories of abuse. I hope that they’ve all been told and that the Catholic church has rid itself of the sin and crime that it was hiding.

First an overview of my experience in covering religious sexual abuse: Starting in the 1990s, I investigated sexual abuse by at least nine Catholic priests that I can recall, plus at least one Protestant minister, a leader of a Christian cult and a group-home counselor at a Catholic youth services organization. In most cases, I interviewed multiple survivors of abuse by the powerful men I investigated. I’m sure I talked to at least 20 survivors of sexual abuse by clergy and the counselor, usually in person but a few times by phone. Other survivors that I learned about would not talk to me. I interviewed two accused molesters.

I almost certainly am forgetting other clergy that I investigated. The stories run together in my memory, and I don’t have time or interest to dig through my old stories to refresh and clarify some of the most disgusting memories of my career. Watching the movie and writing this blog post were disturbing enough.

I am not going to name priests, victims or specific organizations here. To do so would require research to update their status, and I don’t want to do that, both because of the time it would take and because all the stories are more than a decade old. I don’t want to track down and bother the courageous survivors who were my sources then. My interviews disturbed many of them at the time, and I have no interest in inflicting new pain by publishing their names again or updating their current situations.

This blog post is illustrated with headlines from the stories I wrote about these cases more than a decade ago. In a couple of instances, I have cut off the last word or two of a headline to leave out the priest’s name.

Here are my lessons about covering abuse by clergy and others with power over children and adolescents (shared in the hope this topic never again needs to be as big a story as it was back then):

Find other victims of the same predator

A key to proving patterns of abuse is finding multiple victims of one abuser. A pedophile invariably has a pattern of abuse: techniques for “grooming” a potential victim before the abuse starts; introducing sex to the relationship by use of pornography or sex talk or nudity in a seemingly non-sexual way, such as showering on campouts or in locker rooms; similar ways of starting and accelerating the molestation; favorite sexual activities; silencing the victim with rewards, conspiratorial secrecy, shaming and/or intimidation.

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‘Spotlight’: a generation-later echo of ‘All the President’s Men’

“Spotlight” may become this generation’s “All the President’s Men,” a riveting movie based on real-life journalism that uncovered abuse of power.

The similarities, both in the journalistic stories and in the movies, are plentiful and probably not coincidental. The Washington Post’s investigation of the Watergate break-in and its cover-up has inspired investigative reporting ever since. The Globe editors and reporters who investigated the Catholic sexual abuse scandal walked in the footsteps of Bob Woodward, Carl Bernstein, Ben Bradlee and other Washington Post journalists of the Watergate era.

Parallels between the journalism stories and the movies abound (and I’m sure I’m forgetting a few):

• Both films depicted interviews with people scared to talk about what they knew.
• Both movies depicted successful working of powerful sources with inside information.
• Both depicted the value of teamwork, including conflict and different personalities, in successful reporting, both at the reporter and editor levels.
• Court records provided key information in both stories.
• Each film includes a riveting scene of a fearful reporter running in the dark.
• The two movies used similar cinematic techniques and scenes to depict the tedious use of directories and old newspaper stories to track down important details and make connections.
• Both films effectively portrayed the difficulty of persuading reluctant sources to talk and the painstaking task of tracking down sources and getting turned down by those who won’t talk.
• The movies both deal with the complicated personal connections that play into journalism, however much we strive for objectivity.
• Both stories included a Ben Bradlee as a key character: Senior as the executive editor of the Washington Post, portrayed by Jason Robards in an Oscar-winning performance and Junior as deputy managing editor of the Globe, portrayed by John Slattery.
• Both movies accurately portrayed the rumpled look of many journalists, the newsroom banter, the look of newsrooms of their times. (As much as we hate clichés in copy, we become easy clichés on the wide screen.)
• Both films accurately portrayed the tension between editors and reporters, each pushing from different perspectives to perfect the story.

The most important parallel between “All the President’s Men” and “Spotlight” is that each portrays one of its generation’s best journalism investigations, each shining a light on shameful cover-ups of criminal activity, each succeeding in bringing down powerful figures.

Companion post: In a separate post, I share advice from my own experience covering sexual abuse by priests.

#SpotlightMovie is now playing in more theaters. Give it a watch if you haven’t already? https://t.co/zIzpa3fgMH pic.twitter.com/xSizOtMGrA

— Mark Ruffalo (@MarkRuffalo) November 20, 2015

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Thoughts on the DFM sale and newspaper values

If reports are correct, my former company, Digital First Media, is going to sell to Apollo Global Management for about $400 million.

I’m not going to pretend I can analyze what that means for DFM, my many former colleagues there or for the news business. I hope for the sake of my many friends remaining in the company’s newsrooms across the country that the Apollo’s management will find a path to prosperity that doesn’t involve endlessly cutting staff. I hope the company will genuinely pursue the kind of digital creativity that the future demands and will have the staying power to let good ideas flourish.

Since seeing initial reports about the pending deal, I’ve wondered about the meaning of the $400 million sale price, reached in a long “auction” process that sought the best deal(s) to sell the company as a whole or in pieces.

The reported price tag is a breathtaking fall from what newspapers used to be worth, even in the past few years. I hope this means Apollo’s strategy isn’t to keep cutting staff to maintain profits. DFM doesn’t have much left to cut, and values have dropped as newspapers have been cutting. The best way to maximize this $400 million investment will be to build value by developing new revenue streams.

Comparisons of sales prices of media companies can be misleading. One sale might include more real estate, while another might include more debt or pension obligations. Successful subsidiaries can add value to a company. In a sale such as the DFM deal, which is essentially between two private equity companies, full terms may never be disclosed. You might not be comparing apples and oranges, but apples and lawn mowers.

I was not involved in the sale at all, other than losing my job last year as the company was preparing for the sale. But I understood DFM enough to know this was an extraordinarily complicated deal, with an array of factors that make it unique:

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Boston Globe lost 97 percent of its value in 20 years

In the past 20 years, a great American newspaper has lost 96 97 percent of its value.

The New York Times bought the Boston Globe in 1993 for $1.1 billion. The Times today announced the sale of the Globe and related New England properties to John W. Henry, principal owner of the Boston Red Sox, for $70 million.

I used the Bureau of Labor Statistics’ inflation calculator to figure that $1.1 billion in 1993 is worth $1,777,540,000 today. And $70 million is less than 4 percent of that.

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New revenues hold much greater promise than paywalls

I am no less tired of paywall arguments than I was when I sort of swore off them for a while in December. But I agreed to be on a paywall panel tomorrow at the International Journalism Festival in Perugia, Italy. So maybe it’s time to update my observations about paywalls.

My basic view about paywalls hasn’t changed since I wrote any of the pieces I cite at the end of this post. All those pieces and this one come down to this: The potential revenue paywalls will yield isn’t worth the damage they cause. And they cause twofold damage:

1. They divert energy and investment from development of forward-looking revenue streams with far greater potential.
2. They limit your audience, especially among the young adults on which any business of the future must be based.

My update is simply to share some new information that underscores (again) those points. But I’ll add this point in the international context: I don’t pretend to understand the market dynamics or cultural factors that might influence the success of paywalls in other nations. My views apply strongly to the U.S. market and culture and to a large extent as well to the Canadian market and culture. My experience and expertise beyond those countries is minimal.

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