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.

Read Full Post »

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:

Read Full Post »

Aaron Kushner (newspapers’ Harold Hill) is in Trouble with a capital T

You kinda love Harold Hill when you watch “The Music Man,” even though you know he’s a hustler. But the “think system” only works on stage or screen with an audience of adoring and forgiving parents. However charming he was, Hill was still a hustler. And the think system doesn’t work in the news business. You have to be able to play or you’re in trouble with a capital T.

Aaron Kushner was a hustler* who blew into Orange County, California in 2012, as though it were River City, Iowa, and he had some band instruments — er, newspapers — to sell. I kinda rooted for him, but I also kinda knew the Orange County Register and Freedom Communications had trouble in their future.

When Kushner bought the Orange County Register and announced a bold, expensive print-first initiative, I thought it would probably crash and burn quickly, but I wanted it to succeed.

Read Full Post »

Reflections on the Long Beach newspaper ‘war’

I love competition, so I enjoy a newspaper war (even if it was just an overhyped skirmish). And I mourn the death of any newspaper, even if it was really just a zoned edition.

So I’ll salute the Long Beach Register at its demise. I admit I thought it had already died, but it cut back in June from six days a week to one. And now it’s finished.

My heart in this “war,” though, was with the other Long Beach daily, the Press-Telegram, colleagues for nearly three years in my days with Digital First Media.

Journalists love to write about each other, and Aaron Kushner’s bold (if foolhardy) adventures in Southern California drew attention from when he first bought the Orange County Register and proclaimed his strategy to double down on print, digital revolution be damned.

I was skeptical from the first and might have said so on social media, and did say so privately, but I refrained from blogging about Kushner. I didn’t want to blog phony optimism, but I was hoping Kushner would succeed, for the sake of all the journalists he was hiring (including friends of mine). Others hailed Kushner’s strategy as bold, showing embarrassingly little skepticism, as Clay Shirky noted this year in a withering commentary.

But it was a foolish strategy. Newspapers haven’t figured out the right digital strategy yet, but pretending that print isn’t dying isn’t going to work. And Kushner compounded his blunder by buying the Riverside Press-Enterprise and then launching daily “Registers” for Long Beach and Los Angeles (the LA Register launched after Long Beach but crashed earlier).

Read Full Post »

Orange County Register and the Coloradoan are adding to their news staffs

I am pleased to see that I am wrong about newsrooms with paywalls or a print focus adding staff:

• The Orange County Register is expanding with its print-first focus, Nieman Lab reports.
• Josh Awtry, editor of the Coloradoan in Fort Collins, Colo., told me in an exchange of Facebook messages that he has added 2.5 reporters as part of the Gannett newspaper’s paywall strategy: “It’s tough to say exactly which positions were new and which were restructured, since it was in conjunction with a huge staff org chart rebuild. In the end, though, we increased net funding by 2.5 positions (that we funneled into reporter jobs) as a measure of wanting to show readers that, if we were going to demand premium prices, we were serious about providing a premium set of products.”

In my post about Dean Starkman’s views on the Digital First strategy, I said I was not aware of such hiring. I’m glad to see that some of these newsrooms are hiring. I remain skeptical that either a print-first approach or a paywall will be successful strategies over the long term. But I’m always glad to see news organizations investing in journalists and good journalism. I wish them both prosperity.

Also, Mathew Ingram of GigaOm continues the discussion of Starkman’s insistence that paywalls somehow provide stronger incentives for quality, noting that he “selects evidence that supports that argument and ignores any that contradicts it.”

Read Full Post »