Tag Archives: WPO

Google to offer Premium Advertising for Select News Sites

Posted on by

Eric Schmidt on Google’s New Plan for the News -from TheWrap

Sharon Waxman who writes Waxword for the Wrap… ugh, we get it we get it, has an interesting interview with Google CEO Eric Schmidt who reveals that in about 6 months Google will launch a premium ad service for “premium content”.  The pilot news outlets to get this treatment will be the NYtimes and WashingtonPost.

The participating news outlets won’t get direct revenue bumps but the theory is that they will enjoy greater traffic from search.

In my opinion and Google’s too, websites need to figure out a way to better connect with their audience to create a community and lessen the reliance on search for revenue generation.

Ridiculous Debt to Cash Flow Ratio Dooms Journal Register Company

Posted on by

Journal Register, Publisher, Files for Bankruptcy -Bloomberg

The publisher of the New Haven Register would cancel its stock and become a closely held company, owned by its lenders under a proposed reorganization plan filed in U.S. Bankruptcy Court in New York. It listed debt of as much as $1 billion and assets of between $100 million and $500 million in Chapter 11 documents.

Journal Register Company Files for Chapter 11 to Implement Pre-Negotiated Debt Restructuring; Expects Normal Operations to Continue Uninterupted -Journal Register Company Website

Saturday, 21 February 2009

Yardley, PA, February 21, 2009 – Journal Register Company (the “Company”) (PINKSHEETS: JRCO) today announced that the Company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to implement a pre-negotiated plan of reorganization (the “Plan”) with certain of its secured lenders designed to substantially reduce the Company’s debt.  The Company intends to continue to operate as usual, and does not anticipate any business interruption during the restructuring. -continue reading at the above link

There are many debt ratios which one can apply to measure a company’s ability to service debt, I’ll Just do the Cash Flow to Debt Ratio here.  This is more Alan Mutter‘s turf so ask him for those numbers (or verify mine).

JRCO’s operating cash flow for the year ended December 2007 was $54million

JRCO’s Total Debt for the year ended December 2007 was  $624.8million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 0.086 or 8.6%

As investopedia states: Under more typical circumstances, a high double-digit percentage ratio would be a sign of financial strength, while a low percentage ratio could be a negative sign that indicates too much debt or weak cash flow generation.

As a comparison: Lee Enterprises (LEE)

LEE’s operating cash flow for the year ended September 2008 was $128million

LEE’s Total Debt for the year ended September 2008 was  $1337million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 0.095 or 9.5%

As a comparison: The Washington Post (WPO)

WPO’s operating cash flow for the year ended December 2007 was $581million

WPO’s Total Debt for the year ended December 2007 was  $490million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 1.185 or 119% – ample cash flow to service debt.   Oh Journal Register, where did you go wrong?  How does a company with one tenth the cash flow of The Washington Post have over one and a quarter times its debt? Lee, you are next.

What Newspaper Websites Can Learn from Darren Rowse and ProBlogger – First Impressions

Posted on by

It’s really getting frustrating reading about newspapers getting bailed out by questionable individuals, newspapers suing each other over… linking? really? Linking?  uh… ok,  and just the overall death of newspapers as the major source of news and investigative journalism.  So lets focus on something positive like the title of this post: What Newspaper Websites Can Learn from Darren Rowse and ProBlogger – First Impressions.

If you don’t know Darren Rowse or ProBlogger and you run a news site or any blog really, it is imperative you start following his blog and take the time to dig through his archives.  Ok, enough of that.

First, watch the video below from ProBlogger regarding the “first impressions” that a blog (or any site) makes on their visitors and what it means for engagement. Then we’ll go through some main points. Continue reading →

Washington Post Launches New Blog / Wiki – Misses The Point

Posted on by

The Washington Post Company (WPO) launched it’s newest online venture WhoRunsGov.com today. From their about page:

Who Runs Gov offers a unique look at the world of Washington through its key players and personalities.  Our site will feature profiles of a select group of government officials, including members of the new presidential administration, legislators, senior Congressional aides and committee staff, and experts at think tanks and interest groups who influence how policy is made.

For our initial site launch, creating and editing profiles will be limited to our editorial staff; in its second phase, our site will evolve into a moderated wiki.

I don’t see how this site can succeed in the face of competition from local competitors like Politico, national competitors like TalkingPointsMemo and international competitors like Wikipedia.org.  These three (and many more) are established and have great communities surrounding them.  Additionally, the mere presence of whorunsgov.com dilutes the already smallish pool of advertisers looking to get on politics sites.  Continue reading →

Newspapers hoping to Cash in on Obama Inauguration

Posted on by

When Barack Obama won the presidential nomination back on November 4, 2008 the demand for November 5th newspapers was astronomical and seemed to catch newspaper publishers off guard. This time around, the newspapers are prepared, but will the demand be as high?  I’m sure it will be high, but will it be as high as the November 5, 2008 newspapers?

In this report, Newspapers to Cash in on Obama Inauguration Demand, Bloomberg lists many papers that are ramping up production in hopes of making a quick buck.  We’ll know in a few hours what the demand is.  Can newspapers hit the lotto twice with Obama?  Yes we can?  Forget the newspapers, The cool kids will be wearing these shirts:

..

UPDATE:

refute the following illogical statement: “Newspapers will never die, you can’t make a scrap book out of interactive products…” -thread on ask.metafilter.com

Media Stocks Near 52 Week Lows. Any Buying Opportunities?

Posted on by

The world is going to hell in a hand basket, the economy is in the dumper, movie stars are dying, and there is a heated election process going on in the free world. One would think this is a glorious time to be operating as a news organization, but the market told us otherwise today.

Publicly traded shares of The New York Times sank to a 52 week low today at $14.17 which I believe is the lowest this stock has gone since December of 1996. If anyone out there thinks this company can figure out how to monetize their potential, then this is a big buying opportunity right now. Me? I don’t own any NYT, nor do I plan on buying any.  I will change my mind however if i see the Times create new viable revenue streams.

The Washington Post Company is more diversified in its holdings and thus better able to handle the newspaper market declines at this point.  Their shares are trading at 52 week lows as well around $725.  What I like about WPO is that their Kaplan division has taken over as their main revenue stream and is performing well globally.   If you are interested in going long with media stocks, this is a buy.

I firmly believe newspapers serve a need in people’s daily lives it is just a matter of re-aligning the business model with a new paradigm.  When considering pure play Newspapers, there are just too many other buying opportunities out there with better fundamentals. And keep in mind that the financial sector rebounded 50% within 6 months of the 1990 bottom.

McClatchy On The Front Page… is it a signal or a sign?

Posted on by

Usually when stories appear on the front page of a large distinguished newspaper like the NY Times or the Wall Street Journal, it is because the content of that story is of political or economic importance. On Wednesday December 26th, 2007 McClatchy Co. was on the cover of the Journal and the front page of the business section in the Times. Why now? Is it a signal? We already knew newspaper circulation figures were down and publicly traded newspaper stocks are getting beat up. What’s the story here? Is this just another case of newspapers covering newspapers (ad nauseam)? As I reported earlier this year, after the mid year media review, the investment community was quite concerned about McClatchy’s purchase of Knight Ridder and the overall stock performance of the company. Several months later and the company is in worse shape now, or at least their stock price is; ” since the beginning of 2006, Mr. Pruitt’s company has lost $1.46 billion and seen its stock price plunge 78%, exceeding the carnage at most newspaper companies.”(WSJ) So do we extrapolate this info to all other newspaper companies or is this just a story about McClatchy? (As a side note, individual company brands are often associated with their industry brand. You can be the best seal-clubber in the world, but you’re still a seal-clubber, get it?)

The five year chart below depicts the company’s problems.

go to finance.yahoo.com for more

So what does this all mean? Are we now seeing what Warren Buffett famously stated in 2006, that newspapers appear to have entered a period of “protracted decline”.

Buffett:  It may be that no one has followed the newspaper business as closely as we (Charlie Munger and Warren Buffett) have for as long as we have—50 years or more. It’s been interesting to watch newspaper owners and investors resist seeing what’s going on right in front of them. It used to be you couldn’t make a mistake managing a newspaper. It took no management skill—like TV stations. Your nephew could run one.” From Hypergene MediaBlog

Is this the decline? I’m sure this is part of the bigger story, that is, a paradigm shift in information streams. A re-arranging of media mediums is afoot and the only one winning is the new guy (digital) right now.

As someone working in the newspaper industry and keenly interested in its viability, I can only hope that we are near a bottom. We must now more than ever go where our customers are going, provide them with an unparalleled, quality experience, and things will work themselves out. It is imperative we harness the buying power of the well established customers and markets. Revamp your websites often, and get all manner or digital mediums involved; audio, video, mobile. Monetize these with your printed product for highest impact…

Contrarian investors should be snatching up newspaper publishing stocks right now. Why? The companies are NOW SUPPOSEDLY doing the right things to align their operations with the market. From what I heard at the mid year media review, they actually are. The American economy is at zero growth, can we have negative growth? Possibly, but at that point you may have other things on your mind like converting your dollars into Euros or Swiss Francs. Zero is a good starting point to go up. Crude oil is overpriced and for seemingly no reason. Expect energy costs to decline by the end of 2008. Lastly, the Domestic Auto and Housing markets are in recession. When these turn around they will positively impact newspapers bottom line. It is an election year, and that usually means more ad spending. So load up now and ride the coaster back up! Things are bound to get better. Right?! (frantic grin)

What should you buy? Buffett (through Berkshire Hathaway) still holds a significant interest in the Washington Post Company. So just because newspapers are having it bad right now, doesn’t mean he’s unloaded his stock. He’s holding on. But also think of this. Buffett avoids companies which behave as commodities. He owns Coke, not joes cola. He owns Geico, not bob’s insurance. He owns Fruit of the Loom, not tom’s underwear… you see the trend? These are formidable brands with established strongholds in their areas. There are high barriers to entry when attempting to knock these companies off their pedestals. Buffett famously said at an MBA lecture, “give me 10 billion dollars to challenge Coca-Cola, I can’t do it. That’s a good company. I’m buying Coke”. So do yourself a favor. If you are going to buy a beat up newspaper, make it one that stands out, a name people know and trust.

signs? signals? only time will tell. I can’t wait to see!

2007 NAA Mid-Year Media Review: Newspapers Report Audience Up, Circulation Down . Internet Continues Growing Strongly.

Posted on by

The 2007 NAA Mid-Year Media Review produced mostly somber notes this year. At some point each company complained of weak trends such as auto and housing markets as well as weakness in the American retail economy as a whole. I’ll give a rough breakdown of what was said in the order which the companies presented. Links to the complete presentations (their investor pages) appear by clicking the company name where available. Enjoy!

Journal Communications
Their 2007 operating priorities for their publishing division:
1. Targeted local online initiatives
2. Non-traditional revenue growth
3. Cost control
4. Expand community newspaper footprint in target geographies

Their revised second quarter 2007 outlook was bleak:
-Publishing revenues flat to down
-Radio revenue flat to down slightly
-Television revenue down

Part of their cost control effort is web width reduction as was the case for many other newspapers which are all barreling over each other to get to 48inch webs. I asked if they expected newsprint manufacturers to cut output or raise prices to offset their losses and the response was that because of the Abitibi merger and weakness in the market that in fact prices should go down further for newsprint. Also costs associated with the cut down are expected to be recouped within one year and annualized savings from the new web width is expected to be 4%.

BELO
-joined with a consortium of other papers to pursue online initiatives with Yahoo. Many of the companies presenting are involved with Yahoo (and to a lesser extent Google, Careerbuilder, and MSN) to increase their content sharing and advertising reach.
-a headcount reduction is expected to result in $10 million annualized savings.
-a more refined distribution perimeter is expected to save an additional $10 million.
-the company pension plan has been frozen and retirement focus shifted to 401(k) plans.

Looking to the future, Belo is increasing its video presence on their news sites and also looking to outsource as much as practical.

Journal Register Company
Their large presence in Michigan hurt them as the unemployment rate in the area is number 1 and foreclosures are at number 4 in the nation. A bright spot is their online revenue growth rate of 64% however that reflects just 4% of total revenue. The company is seeking to increase online revenue to 6% of total by year end 2007. Cost cutting is another move to keep expenses inline with revenue. The company completed plant consolidations in Ohio.

-Yahoo! HotJobs partnership
-launch new multimedia content platform news sites

Media General
-realized online revenue growth of 40 to 45%
-traditional print revenue was 0 to -3%
-hiring has been frozen most areas except sales
-align expenses with revenue

This presentation really focused on innovative things the company was doing to prepare for the future. Some thoughtful ideas:
-online streaming news and weather video
-photo sharing
-hyper local coverage and products
-making the print edition quicker to read and easier to use
-aggressive use of audience research and branding campaigns
-joined Yahoo!HotJobs newspaper consortium

Meredith Corporation
This company does not print any traditional newspapers or have newspaper websites however they do own some powerful brands which they are successfully expanding online and elsewhere. Brands like Better Homes and Gardens which they still print as a magazine and publish online now has a companion video site at Better.tv featuring video only content and advertising. I really like what they’ve done with that site. It really utilizes the broadband internet connections coming into 75% of people’s homes right now and integrates advertising into their content for more effective ROI which advertisers desire.

Future Growth Strategies:
-increase online presence and develop new revenue streams
-strengthen core publishing business
-capture margin upside in broadcasting
-increase internet derived revenues of total operations from 3.5% to 10% by 2010

The McGraw-Hill Companies
Here is another large media company with no newspaper holdings and ironically enough probably the best performer in the bunch. Compounded annual growth rate between 1996 and 2006 is close to 25% and the company has returned $6.8 billion to share holders in that time.

-education segment growing strongly
-financial segment growing strongly
-information and media segment soft

Citing softness in advertising their BusinessWeek ad pages are down 12.6% for the last 24 issues. The company is looking to transition their print publications to the internet for greater margin expansion. The company’s strong results in education and finance are buoying the decline in traditional print.

DAY TWO

LEE ENTERPRISES
Yet another company with a growing audience yet declining circulation numbers, which they called “circulation erosion”. I liked that they have made it a top priority to nurture employee development and achievement by providing their employees with an online development program.

2007 initiatives:
-Yahoo!HotJobs partnership (do you see a trend here? I might be interested in yahoo stock with all these revenue streams flowing in.)
-accelerate online innovation
-emphasize strong local news
-Grow revenue creatively and rapidly (they have hired a strong sales oriented management team to drive revenues up)
-Exercise careful cost controls

They are confident that no competitor can “match us for our local content” or match them for their audience reach.

THE McCLATCHY COMPANY
If you recall McClatchy bought out Knight Ridder last year and then sold off the properties it did not want. The move was a terrible one in hind sight because the timing of their purchase was not at the market bottom. The company stock has fallen some 50% since the acquisitions till now.

The near term forecast is unfavorable. Also, they own 15% of CareerBuilder and are unhappy about their relationship with the online job posting site. Neither McClatchy nor CareerBuilder would comment as to what happened however McClatchy is partnering with Yahoo and Google.

THE NEW YORK TIMES COMPANY
They gave a thorough and boring presentation. But the numbers weren’t horrible such as:
-$30 million revenue from new products
-digital revenue is now ~10% of all revenue (was 8% last year, 6% year before)
-reduced costs in the last two years by $120 million and another $30 million coming with the completion of their Edison NJ plant closure in Q2 2008.
-Overall advertising was weak however luxury goods (something they do well) experienced solid gains.
-Partnership with Microsoft for NYT Mobil
-70% of NYT print subscribers have been so for 2 years or more

The New York Times will also be leasing at least 5 floors in their new building and moving non core tasks to less expensive real estate locations around the area.

GANNETT
Susan Clark-Johnson, president of the newspaper division was rather up beat about the future of their newspaper business. She cited a culture change concerning the evolving role of print media and its partnering with multimedia formats to maximize the total experience.

-Hyper local focus
-Bullish on digital video
-Aggressively training editors and journalists on video equipment
-Aggressively training sales to provide multimedia Ad solutions
-Partnering with MSN and CareerBuilder

The future is with Ad partnerships, hyper local content such as floridatoday.com’s little league pages, and niche markets like IndyMoms.com.

THE WASHINGTON POST COMPANY
Wow, I wish you could have been here to see CEO Donald E. Graham give this incredibly brief and candid presentation. While all the other companies ran close to or over their one hour time limits Mr. Graham was done in about twenty five minutes. The Q&A session consisted of him saying things like, “well… that’s not how we do things at the Washington Post” and “who wants to play poker?”.

Highs:
-Post Points
-Idea sharing between Slate and WashingtonPost.com
-Kaplan revenue growth 22%
-Cable One doing well

Some things to think about; WashingtonPost.com revenues were 14.5% of Post print ad revenues. Their newspaper segment expensed $47 million to buy out 193 people. Their fastest growing revenue stream is Kaplan with close to $1.7 billion in 2006. As Mr. Graham states in his letter to shareholders, “It was a poor year… for the business we are named for”.