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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Links about journalism, education, hashtags and paywalls

A quick roundup of pieces I don’t have time to break down in detail:

Journalism and education

Ken Doctor

In The newsonomics of  News U, Ken Doctor suggests that news organizations can expand their community news and information role and play a formal role in education in the community:

As the tablet makes mincemeat of the historic differences among newspapers, magazines, TV, and radio, we see another bright line ready to dim: that seeming line between what a news organization and what a college each do.

I’m not going to try to summarize Ken’s piece, but I encourage you to read it. I will respond to one of Ken’s suggestions for the news business:

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Warren Buffett buys the Omaha World-Herald: thoughts from a 10-year employee

I spent 10 years at the Omaha World-Herald, so I was interested and surprised at today’s news that Warren Buffett is buying the newspaper company.

Buffett’s company, Berkshire Hathaway, is going to pay $150 million in cash and take on $50 million of World-Herald debt, taking ownership of my former newspaper and several other Midwestern newspapers and a direct-mail company. This ends more than 30 years of ownership by employees and the Peter Kiewit Foundation.

I may have greater insight later than I do today, but here are some initial observations:

• This doesn’t say anything about Buffett’s optimism, or lack of optimism, for newspapers. As Jim Romenesko noted today, just two years ago, Buffett told his shareholders: “for most newspapers in the United States, we would not buy them at any price” because “they have the possibility of going to just unending losses.” Buffett is worth $39 billion, according to Forbes. This purchase cost about half of 1 percent of his net worth. He’s using the change he found in his sofa cushions to buy his hometown paper, a newspaper he has long expressed affection for. He also owns two other iconic Omaha businesses: Borsheim’s Jewelry and Nebraska Furniture Mart. As the Washington Post’s Steven Pearlstein told Romenesko: “It’s an emotional, personal buy.”

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Storytelling techniques from a memorable clip: about Sept. 10 (not 11), 2001

I spent much of the year after 9/11 writing about the impact of that terrorist attack. I was a national correspondent for the Omaha World-Herald. The nation’s only academic center for Afghanistan studies was at the University of Nebraska at Omaha, and I wrote dozens of stories about our city’s involvement with Afghanistan before and after the attack.

A story that stands out in my memory was part of our first anniversary package. I wrote about the day before the attack, 10 years ago today. Today, I’ll review that story, published Sept. 10, 2002, discussing the storytelling techniques involved.

A  cliché about reporting (and many aspects of life: I got 57,000 hits when I Googled to see where to attribute the phrase) is that you zig when others zag. On the first anniversary of 9/11, everyone was writing stories about that day a year earlier, just as journalists this week have been writing and broadcasting stories about that day 10 years ago. That was zagging. I wanted to zig, to write about something else. So I wrote about the day before:

The big change for many in the Omaha area that day was the closing of the westbound lanes on the Interstate 480 bridge across the Missouri River.

The next day everything changed.

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A plan to remain essential to consumers and businesses

This is my column for Monday’s Gazette:

Even investment wizard Warren Buffett is giving up on newspapers.

“For most newspapers in the United States, we would not buy them at any price,” the fabled billionaire told stockholders of his company, Berkshire Hathaway, Saturday at the annual meeting in Omaha. Buffett owns the Buffalo News and part of the Washington Post, so he’s speaking about his own investments. Newspapers, he said, “were only essential to advertisers as long as they were essential to the reader, and that is changing.”

On my blog last week, I published a vision for how media companies can become more essential than ever to our communities, A Blueprint for the Complete Community Connection.

The blueprint describes a company much different from the company this community has known for years, publishing The Gazette, broadcasting on KCRG-TV9 and serving a variety of niche audiences with other products.

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