Thursday, February 21, 2013

Why Gannett won't be bidding for the Boston Globe

A day after the New York Times Co. announced plans to put The Boston Globe up for sale, there's plenty of speculation about possible bidders -- including Boston-connected moguls such as Mitt Romney and former General Electric CEO Jack Welch.

But Gannett isn't on anyone's list. Larger chains are reducing their newspaper holdings, the Poynter Institute's Rick Edmonds told the Globe, making it more likely a buyer would emerge from the Boston area. Although Edmonds only called out GCI by name, other big chains absent from today's speculation on potential buyers include McClatchy Co. and Lee Enterprises, plus Tribune Co. and Journal Register, both of which are just now emerging from bankruptcy.

One exception might be News Corp., which is about to spin off its newspaper holdings including The Wall Street Journal and a group of small New England dailies. CEO Rupert Murdoch has a soft spot for print that might make him a more emotion-driven bidder. Another exception could be Omaha billionaire Warren Buffett, who has recently been adding papers to his portfolio.

GCI's investments recently have been relatively small, and focused on digital ventures that complement existing businesses, such as in sports media.

New York Times watchdog Ira Stoll lists 25 potential buyers on his Smarter Times blog; GCI isn't among them. The competing Boston Herald has a shorter list. And the Globe story includes some of the same names floated by Stoll and the Herald.

The Globe's weekday circulation is 230,351; Sunday is 372,541, according to the Sept. 30 ABC report. Those figures are less than half what they were in 1993, when the NYT Co. paid $1.1 billion for the Globe plus other businesses.

Today, after the industrywide depression, the Globe and its sister daily, the Worcester Telegram & Gazette, might fetch only $100 million to $150 million, according to industry consultant Ken Doctor. And that's assuming pension obligations aren't part of the deal.

Warnings in '93 prescient
But that would be a significant improvement over the puny $35 million offered four years ago, when the NYT Co. last entertained bids.

Even in 1993, when the deal was announced, some Wall Street analysts wondered whether it made sense for the NYT Co. to invest so heavily in the newspaper business, which was already growing slowly even as it still produced substantial profits, the NYT reported at the time.

Sulzberger
But the late Arthur Sulzberger Sr., the NYT Co.'s board chairman at the time, told his paper he believed analysts who predicted the death of the newspaper business were wrong. He said the Globe could become an attractive part of the company's offerings to advertisers and that there could be joint advertising sales.

Even if newsprint is eventually replaced by electronic delivery of information, Sulzberger said, businesses like the Times and the Globe would remain viable because of their information-gathering abilities.

Viable, yes. But nowhere near as profitable.

5 comments:

  1. Other than Berkshire, no public company is going to go anywhere near it. And nobody else is, except as an ego trip -- assuming there's somebody willing to overlook history. Under any circumstances, $35 million would be a stretch at this point.

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  2. Remember the Philly fiasco. Buyers kept thinking they were getting a deal because they paid hundreds of millions less than the last guy. And still . . .

    One big problem is, it's damn expensive to operate in the Northeast. High cost of labor, high cost of delivery, high taxes.

    Also, there's little influence in Boston. If you want influence ala Murdoch, you want NYC or DC or LA. And Murdoch probably still has a bad taste over having to sell The Herald. Remember, the whole (pretty much ignored) rule of can't-own-a-newspaper-and-a-TV-station-in-the-same-market was Ted Kennedy's revenge on Murdoch.

    There's plenty of money in Boston. Someone will take in on. Heck, it would make a terrific teaching tool for Harvard Business School. Let THOSE geniuses figure it out.

    ReplyDelete
  3. The Globe has too many smart editors and reporters who would never meld with the lunatics and third rate talent at Gannett. And the Globe encourages open debate and bottom up ideas, neither is tolerated at any Gannett property I've ever worked at.

    ReplyDelete
  4. Charles Everett2/25/2013 9:34 AM

    The newspaper/TV cross-ownership ban was in place before News Corp. entered the U.S.

    Besides, any mention of Rupert Murdoch raises a red flag. There's a not-so-trivial matter called bribery and phone hacking.

    ReplyDelete
  5. thanks for sharing..

    ReplyDelete

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