Continuing efforts to sell Digital First Media: observations from a distance

Anything I have to say about Digital First Media today is speculation or observation but I will speculate and observe.

(I’ll explain in some detail at the end of this post what I used to know about DFM operations and strategy, and what I don’t know now.)

A tough sell

My first observation: Selling this scattered company and its diverse properties has probably been much more difficult than anyone thought last year when executives decided to pursue a sale. My first knowledge of plans to sell the company was that they would likely sell it in pieces. I think the difficulty of that job led to an effort to sell it in one piece, as Ken Doctor reported last year. That led to a pending $400 million purchase by Apollo Global Management. Ken’s speculation – more informed than mine, but probably not coming from DFM sources – is that the deal fell through over price.

I think DFM CEO John Paton, Chief Operating Officer Steve Rossi (who will become CEO take over the company’s reins in July) and whoever is making decisions for Alden Global Capital, the hedge fund that owns DFM, have decided that some individual parts of the company will attract higher value separately. I think they’ve decided the higher values of some individual pieces will be worth the trouble of operating and eventually selling or shutting down the properties that would be more difficult to sell, or possibly operating a reduced company after selling the most attractive parts.

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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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Social media (mostly Twitter) resources for journalists

Here are resources to help journalists using Twitter and other social media.

For the last few months, as I’ve been visiting Journal Register Co. newsrooms and blogging more tips for journalists using social media, I have been meaning to update my Twitter resources for journalists (now more than a year old). After today’s news that a new Journal Register subsidiary, Digital First Media, will start managing MediaNews Group, I suddenly got messages that I was being followed by lots of MediaNews journalists, particularly from the St. Paul Pioneer Press.

I don’t know yet what my specific role will be in working with MediaNews, but I think it’s safe to say I will remain a leader in social media news for JRC, with likely roles in leading social media use for Digital First and/or MediaNews. So maybe I should introduce myself to my new colleagues with a list of resources for journalists using social media.

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Journal Register’s Digital First Media will manage MediaNews

Everyone in the news business knows at some level, even if they’re having trouble admitting it, that the future is digital.

I’ve spent much of the past 15 years fighting legacy-media issues, mostly in the newspaper business but also for a couple companies in the TV business. I had great experiences, but hit brick walls when resistance to change blinded the companies to new approaches, new ideas or new revenue streams.

So I jumped earlier this year at the chance to work for a company that unabashedly proclaimed itself “Digital First,” led by a CEO, John Paton, who sought my advice, shared my vision of the future and asked me to help him achieve that vision.

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