There’s more bad news in store for newspaper-company stockholders following the Knight Ridder sale.
McClatchy is bound to find that the multiple it gets for the 12 big-city and no-growth-market papers it plans to sell will be lower than the less-than-steller multiple it paid for KR itself…. If it even manages to sell all of them.
McClatchy is all the more committed to a shrinking industry and this will continue to hit its share price. The cutbacks the surviving, adopted KR papers avoided for the moment will come eventually. And the orphans are sure to be doing their imitations of Oliver at dinnertime soon. Bad news and more bad news.
And I’ll argue that the same effect is waiting to haunt other big, one-size-fits-all media companies as they are saddled with big costs while smaller, nimbler, more effective, targeted, and efficient competitors eat at them. Newspapers are the cash cow in the coal mine.
PHIL MEYER: It will be a new business model. And the fact that newspapers can sell advertising online isn’t as comforting as it sounds, because they won’t be monopoly providers in the online environment.
What has made them so fantastically profitable is that newspapers have shaken down to pretty much one per market in most places. And that’s why they can command margins of 22 to 40 percent.
When they are competing with online technology, when they no longer have the monopoly afforded by the high capital cost of a printing process, it’s going to be much more difficult to be profitable.
I see some hybrid of print and online media eventually prevailing. But, you know, anybody who discusses the future of newspapers without mentioning Craig Newmark doesn’t fully understand the situation.
If Mobile WiMax is the way to go, NewsCorp may be out in front.