Saturday, August 10, 2013

'Era of public newspaper company winding down'

"That logic falls most heavily on Gannett," according to the Poynter Institute's Rick Edmonds, who does an especially good job of sifting through the economics of The Washington Post's sale to Amazon founder Jeff Bezos. (And I'm not saying that just because I appear in his analysis.) Here's the top of it, which focuses on Gannett, but read it to the very end.

Before the Post spun off its newspaper holdings, Media General, Belo and Scripps had already. As noted in my first comment on the sale, you cannot justify to shareholders pouring money into a long and uncertain digital transition for newspaper organizations when other businesses (cable, broadcast and for-profit education for the Washington Post Co.) offer better return now and in the next several years.

That logic falls most heavily on Gannett, whose newspaper division is a drag on earnings and share price (though not a money loser like the Post). Gannett is much bigger, booking more than $700 million in revenue annually from freestanding digital businesses and expanding a big local broadcasting division with the recent acquisition of Belo’s stations.

Still, as Jim HopkinsGannett Blog has been reporting, the company is quietly cutting several hundred newsroom jobs this month as 2013 shapes up as yet another year of significant advertising revenue contraction. The downsizing scenario will likely play out at other public companies (and some private ones too) who are running out of things like buildings and land to sell and don’t have the deep pockets of a Jeff Bezos.

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