Sporting News/AOL Fanhouse

Not seeing a blue font here...

 

that's astounding

what the heck are they spending money on?

 

775 sites. Also, it's not $50 million in losses - the $50 million was a lump investment by AOL when they bought the company for a couple million. Some Patches are already making a profit, although most aren't, and except for (presumably) the upper management, it's a bit tough to pinpoint how much of that money is already spent. The "hiring freeze" as someone put it has been planned for several months, since they wanted to launch as many as possible before Jan. 1, so I don't think it's tied in to this deal.

 

Has the expansion stopped, then?

 

Sounds like you have had a big helping of the Patch Kool-Aid. The $50 million investment was tied to start-up costs in 2010. Simple math shows how much money Patch is burning through currently. Let's go with your figure of 775 sites up and running in 2011. Each site has a local editor making about 40K. Figure another 12K in company costs for benefits. Then throw in another 50K or so for freelancers. That's 102K per site times 775.

If my math is correct, that's nearly $80 million a year in salaries -- at the local editorial level alone -- and doesn't include the regional editors, directors, and all the people on the sales and marketing side. For the sake of argument, let's just round up the editorial costs for the entire operation to $100 million in salaries in 2011.

My guess is that Patch will easily exceed $50 million in losses in 2011, as it will take quite a while for advertising to catch up with the editorial costs.

There will be some shuffling at Patch at the end of this year as Armstrong and his team review results over a 12-month period. Some under performing sites will be shut down, others may be beefed up and there can still be more expansion. But by the end of 2012 the advertising revenue must show significant strength or you'll see Gannett-style cuts heading into 2013.

 

Well, Garry is apparently quite happy:

@SN_GarryD The sun is shining and Sporting News just got bigger. Today is a good day.

 

Let's see... Lisa Olson, Greg Couch, David Whitley and 60+ other great journalists get to worry about their jobs for the next two months while it's a good day for Garry Howard. I think that tells you everything you need to know about how fucked-up this business is.

 

Fixed.

 

Well, that's not what I meant, anyway. Just OK with those who have screwed up so many things about this business feeling some of the pain they've dealt to others. Also, given the technology, seems only a matter of time for many newsprint operations.

If we're going to go that big-picture and focus on existence of jobs, period, then we need to shut up about salary cuts and scaled-back benefits to our peers because at least those keep the jobs alive.

 

I thought Patch's premise was to serve area neglected by newspapers. There is not a good reason for Patch to expand to the Twin Cities with almost every town covered by a weekly, some by two. There's also a Patch for St. Cloud, which seems too big for one Patch site. In Pennsylvania, I see areas covered by newspapers as well.

 

Actually, I can't really blame him for this. He's happy for what HIS company is gaining, which is generally how things go. It's not like he could write "We're getting bigger. Sorry all you guys we stepped on to make it happen!"

I mean, we remember how he handled the layoffs at his OWN paper, right?