Buyers are still in line, so don’t underrate print media’s value
Print media has never been at a lower point of general business disregard. Its cultural standing as a vox populi adviser and barometer is, after the Trump election, in tatters. It has all but been forsaken by advertisers, its main source of revenue. And its stated effort to save itself through digital transformation so far shows little success.
And yet there are buyers for print media. Quite a few of them.
Last week, a group, including the media-smitten billionaires Edgar Bronfman Jr. and Len Blavatnik, offered ailing Time Inc. a 30% premium for its shares — only to be rebuffed by manage- ment. The Washington Post, which Amazon founder Jeff Bezos bought, quixotically in most views, for $250 million in 2013, is now, even despite the Post’s lack of profits, considered by many to be a deal of the century.
Gannett, the parent company of USA TODAY, for many months this year pursued Tronc, formally Tribune Publishing company, raising its offer in several rounds of bidding, and ultimately losing the deal in part because Tronc’s management, itself recent buyers into the company, believed that despite a languishing share price, its group of big-city newspaper brands has unrealized upside.say the least, some people might seem to know more than others. Or, in that investor term of art, they might appear to be smoking something.
TROLLING FOR BARGAINS
One way to look at this is as a bottomed-out moment. Print media is now cheap enough for new money to take a chance on. After all, many newspapers and magazines are still profitable. The huge margins of the past may be gone, but reasonable profits still exist. The problem with that view, however, is that revenues continue to
fall, often more precipitously than expected, and, many argue, prices, however lower, still don’t reflect the worst-case reality. It isn’t a fire sale yet.
There is, of course, a new-money hubris which says we can manage better than the guys before. Even if we are managing decline — even if print does eventually go belly up — we can cut costs and squeeze out enough profits on legacy revenue to get a decent return on our investment.
Or, more optimistically, and perhaps with no less hubris, we can improve efficiencies to such an extent that we can reach a new self-sustaining economic model. After all, who does not believe that Time Inc., after decades and decades of adding ever-more layers of fat, and with less than a decade of paring, can’t be slimmed down even more?
INVESTMENT WORKS
And yet, if The Washington Post, transformed from years of alsoran irrelevancy back to its place as, against The New York Times, the upstart best paper in the country, is now the standard of print rejuvenation, the message there is the opposite one:
The path to rebirth is to invest as though money means very little to you. Curiously, it may be that seeming lack of concern for economic realities on the part of Jeff Bezos which is helping to inspire would-be print buyers. Would Bezos, with his Midas touch, be pouring all that dough into a sink hole? He must know something!
In some sense, this still reflects the digital dream. That’s the logic that says even though digital is a long way from replacing print revenue, someday digital has to pay off. How could it not? And if people have been saying that for 20 years, well, give it 25. The Tronc investors have made digital hopefulness, despite quite some wide ridicule, their raison d’être. Time Inc., after its spin-off in 2014 from Time Warner, put digital at the center of its business plan, so far without notable success. And now, its prospective buyers seem to suggest, despite digital’s falling ad rates and in- creasing traffic costs, that this could be their magic formula for reanimating the business.
REAL NEWS HAS REAL VALUE
In fact, all of these relative rationalizations may be cover for something that is much harder to express. The bet here may be more from the gut, one pointedly reinforced by the Trump election — with its fake news scares, social media tumult and enmity for the media. It’s a business perception that sees no reasonable path to making new, powerful and trusted news brands.
The brands that now exist, with long histories of influence, respect and audience loyalty, are what we have. No new meaningful news brands are going to emerge from the scattered random interests of digital traffic. Indeed, the point of the brands that have powerfully emerged — Google, Facebook, Twitter — is that
they have no meaning. The world of infinite aggregation is an ever more flattened world.
Hence the standing of Time magazine, and Fortune, and
Sports Illustrated and The Washington Post and the Chicago Tribune and the Los Angeles Times. While these brands may have been diminished, and seem awfully hoary for the coolest Millennials, no new brands have risen to truly challenge their pride of place.
There has been no cultural replacement. If you buy them, you own a portion of what’s left of news trust and identity.
That is, of course, not an uncomplicated business proposition, understanding that value exists but not knowing how to unlock it. Still, it isn’t an entirely silly business bet, buying authority, aware that there is certain demand for it, and confident that it isn’t going to be replicated.