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Gannett, Gatehouse talking merger

Discussion in 'Journalism topics only' started by SoloFlyer, May 30, 2019.

Page 63 of 68
  1. LanceyHoward

    LanceyHoward Well-Known Member

    LanceyHoward, Jul 9, 2020
    #745
  2. Severian

    Severian Well-Known Member

    Severian, Jul 10, 2020
    #746
  3. DanOregon

    DanOregon Well-Known Member

    Are newspapers these days the equivalent of those foreclosed homes auctioned on the courthouse steps?
     
    DanOregon, Jul 10, 2020
    #747
  4. LanceyHoward

    LanceyHoward Well-Known Member

    Yeah. When Gannett goes down that will be 15% of U.S. daily papers.
     
    LanceyHoward, Jul 10, 2020
    #748
  5. Fredrick

    Fredrick Well-Known Member

    LOL. Let's say the new owners of McCutcheon want to sell the Lexington newspaper. As long as it carries no debt,, what is a newspaper worth nowadays? Not counting the physical building property, is a newspaper worth $1 million? $800,000? Maybe nonprofits could purchase individual newspapers.
     
    Fredrick, Jul 11, 2020
    #749
  6. LanceyHoward

    LanceyHoward Well-Known Member

    Good question. Lee sold their west coast papers right before the COVID for less than four million dollars. This included papers in Santa Maria, Hanford, Lompoc, Coos Bay and some smaller papers. I don't know how much real estate was included.

    Newspapers had been selling for about four times cash flow. So it seems that these papers had cash flow of around $1,000,000. Which is not a lot of cash flow for these papers, which are in decent sized towns.

    Lee said that in the second quarter they expected revenues to decline 24%. Which means papers are going to start going negative cash flow. There will be no buyers. And they will close or be merged into a larger paper.
     
    LanceyHoward, Jul 11, 2020
    #750
    Fredrick likes this.
  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    A single local newspaper in the typical place isn't worth much nowadays. It's difficult to make the business work.

    The thinking behind the fight for McClatchy's papers is that if you own a lot of newspapers, it gives you economies of scale across the entire business, which allows you to cut costs in a way that makes the entire operation viable in a way that the papers can't be individually. Alden already owns newspapers, and if it could do it at the right price, I suspect they'd scoop up every local newspaper out there and create massive scale. Chatham is already the majority owner of American Media, so it had the same idea in mind all along. They obviously feel confident they can make it work, which is why there is a mini bidding war going on, albeit with the starting point being a discount to where the chain would have been valued a decade ago.

    Whether they are onto something needs to be proven still, but it's not the most novel idea. There are two basic ways to make money in any business -- either sell a little at very high margins, or sell a lot at lower margins, using the economies of scale to contain costs. That's what they have in mind. It's a model that won't make for happy people on here, though, because it means doing things like centralizing copy editing and design, for example.
     
    The Big Ragu, Jul 11, 2020
    #751
    Fredrick likes this.
  8. LanceyHoward

    LanceyHoward Well-Known Member

    Alden and Chatham may be right and they will make money if they scale up. But I will point out that the smartest and richest kid in the room, Warren Buffet, just bailed out of the industry.
     
    LanceyHoward, Jul 11, 2020
    #752
  9. Twirling Time

    Twirling Time Well-Known Member

    One man's "bailed out of the industry" is another man's "selling assets while at their highest value."
     
    Twirling Time, Jul 11, 2020
    #753
  10. LanceyHoward

    LanceyHoward Well-Known Member

    True. But Buffet said the following last year: "Buffett said the newspaper industry gradually transitioned from “monopoly to franchise to competitive to toast”, largely because of declining advertising sales."

    And in 2018 he said "It is very difficult to see — with a lack of success in terms of important dollars rising from digital — it’s difficult to see how the print product survives over time.”
     
    LanceyHoward, Jul 11, 2020
    #754
  11. BTExpress

    BTExpress Well-Known Member

    Not anymore. All of McClatchy's design is done remotely, with a few stragglers yet to clean out their office workstations (deadline in Charlotte is July 31). Sixty-five people producing print products for 28 newspapers.
     
    BTExpress, Jul 11, 2020
    #755
  12. Fredrick

    Fredrick Well-Known Member

    Sorry to be dense. But assuming one of the two hedge funds wins the 28 papers, what do you think will happen with the design hub of McClatchy?
     
    Fredrick, Jul 12, 2020
    #756
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