Newsonomics On the transformation of the news business Sun, 17 Apr 2016 16:33:23 +0000 en-US hourly 1 Yahoo: Who’s Ready To Take On A Legacy Digital-Native Media Turnaround? Sun, 17 Apr 2016 16:27:26 +0000 Read more »]]> Which picture would you like to see on the wall of digital media history alongside that all-time classic, Time Warner’s Jerry Levin half-smile as he brought new partner, AOL chief Steve Case, into the fold as the companies completed their $160 billion merger in 2000?





As Yahoo prepares to open its bidding envelopes on Monday, a day before its first quarter earnings call, we can savor the possibilities. Just as her $12.5-48 million parachute inflates (and other execs get newly positioned for payouts), Yahoo CEO Marissa Mayer could join up with Tim Armstrong at AOL. A Yahoo — AOL tie up has been seen as imminent since long before Mayer’s time, with last-minute twists undoing the match-up before it became reality. Or how about Yahoo and Time Inc. CEO Joe Ripp, smiling for the cameras. Perhaps, Mayer could soon be holding a press conference with one of the anonymous-to-the-public private equity CEOs, who may front the money to match up the 21-year-old Yahoo with an experienced, if insufficiently monied, partner.


First published at Politico Media

Follow Newsonomics on Twitter @kdoctor


At 21, Yahoo — or as we report it, the core Yahoo, devoid of those smart and lucky investments in Alibaba and Yahoo Japan — is up for sale. What you can buy: Yahoo News, Yahoo Finance, Yahoo Sports, Yahoo Mail and a diverse assortment of other media properties, though many have been axed (POLITICO: “The ax falls at Yahoo”) as the company prepared to go to market.

Legions of smart and talented people have spent long and short careers in Sunnyvale. Even as we assess its future, as it finally surrenders its independent status, its life cycle must be put in perspective.

Founded on Jan. 18, 1995, three years before Google and nine before Facebook, it’s been a wild ride of misguided management, astonishing misdirection and enough bad execution to consume a shelf full of HBRs. Long before search and then social changedeverything, Yahoo’s directory set a new standard. The wild World Wide Web had been tamed, organized as John Dewey might have done if he had been alive for the digital revolution.

It seemed super-cool, and led the way to our certain sense that Portals-Would-Eat-the-World. They munched mightily, and Yahoo’s competitors of the early days – Excite, Altavista, Infoseek, Lycos (nostalgia fans, check here; the list sends a shiver down my spine of deals negotiated) – all faded into history, most as parts of something else. I still recall the day that Lycos CEO Bob Davis explained the business-changing business model of his then-high flying portal. He drew a large rectangle on a large white board, and then put all his vertical (topical) products along the top. Down the side, all the “exclusive” ad placements in each of the verticals. Before me: Dozens of boxes, offering that exclusivity in each niche. He’d found a way to sell near-infinite multiple exclusivity, he said with a smile, and the future was his.

Yahoo employed similar tricks of the trade and lots more over the years. Our number one word associated with the company: eyeballs. For a long time, Yahoo amassed enough of them to merit the ! that founders David Filo and Jerry Yang had affixed as they trademarked their name, the plain “Yahoo” already TM’ed by companies hawking barbecue sauce, knives and “human-propelled watercraft.” The exclamation point survived the 2013 redesign, when Yahoo, as it approached the maturity of its 19thbirthday, decided it was time to grow up, and drop its funky logo. Its luck, though, hasn’t changed, and the exclamation point has just become self-satirical punctuation.

As Yahoo now approaches the deal of its lifetime, its string of failed deals surface, perhaps for the last time prominently. Through a succession of CEOs, its reverse Midas touch persisted, as it plunked billions and millions into dis-synergy: buying ($5.7 billion), Geo Cities ($3.7 billion) and Tumblr ($1.1 billion), among many smaller sinkholes. There’s no shortage of web pieces detailing Yahoo’s serial blunders; my favorite are in listicle form, and, of course, Recode co-founder Kara Swisher has filled the equivalent of several tomes on the topic, in her own-the-beat reporting. .

Now, as we approach the deal that apparently will end the independent Yahoo we’ve known, we must ask: What could possibly go wrong?

As the weekend, some 40 bidders prepare to spend long weekends finalizing bids for the Yahoo’s core assets. Next week, I’ll plumb some of the numbers that may drive the deal, but for now, let’s survey the deal playground on which the deal may get done.

Jurassic Park

Among the likeliest bidders for Yahoo’s core properties – those media, news and mail properties that form the portal — are these ancient-in-the-teeth behemoths. Conventional wisdom puts Verizon (founded as part of AT&T in 1875, and the reconfigured to Bell Atlantic in 1982) in the pole position. Then comes Daily Mail and General Trust (founded in 1922), Time Inc. (first birthed the same year as DMGT) and CBS (1927).

Not all legacy media companies look on Yahoo with so much affection. Both News Corp and Axel Springer, both on the hunt for acquisition, have passed on this opportunity.

Why? Five words: Legacy digital-native media turnaround. That capsulizes the challenge here. Yahoo may have revved its restart engines innumerable times, but still needs that turnaround. Turnarounds are expensive – in money and time – and many companies with access to the cash required think they can spend their money better elsewhere.

For Verizon, a buy would be still one more step moving into farther away from being the pipes company of its birth and cash flow generation.

One irony these would-be legacy buyers must ponder before they name their number: the market economics of the digital news media is taking another turn south (“Newsonomics: With new roadblocks for digital news sites, what happens next?”) with both legacy content producers and even the biggest digital news start-ups challenged by intense ad revenue competition.

The Multiverse

Yahoo is big. Able to claim an audience of 204 million unique U.S. visitors in February, it ranks third behind digital darlings Google and Facebook. That’s the big lure here, for the three main would-be buyers.

But big is relative, and gets to the central value question in this transaction. Is big as valuable today as it was 10 years ago? In the old portal metaphor, each could serve as its own universe, slicing and dicing up space on the site, as Lycos’ Bob Davis had demonstrated back before the Millennium. Yahoo, though, had had mighty issues monetizing its vast audience – similar problems increasingly experienced by both Time Inc. and DMGT’s Mail Online. In these scenarios, either Time Inc. or Mail Online would merge with Yahoo’s properties to create Something Really Big, though still sub-scale compared to Facebook and Google.

The Multiverse theory is the emergent one. In that one, it’s all about matching up endlessly multiple aggregations of discrete audiences, wherever they are found, through programmatic tech. In that worldview, no one else can get big enough to compete head-on with Google or Facebook.

The Rube Goldberg Machine

Eyeballs go in. Money comes out. It’s the simplest damn thing.

And that idea is behind the Verizon buy of Yahoo. The theory: AOL CEO Tim Armstrong has built one of the better ad machines out there, and has apparently satisfied his new bosses at the phone company with last year’s $4.4 billion acquisition of the Yahoo’s older cousin (AOL was founded in 1985).

Armstrong could take all that Yahoo traffic, merge it with AOL traffic, smoothly integrating verticals (Yahoo Finance and AOL Finance, Yahoo Sports and AOL Sports, etc.) and make more per digital page than Marissa Mayer could.

So for Verizon, it’s more than a size play; it’s a tech play. How much can Tim Armstrong really juice out of Yahoo audience? Take that projected number, and you’d know how much Verizon is really to pay for Yahoo.

Re-Write Land

Yahoo News? The two words together seemed confusing early on. Was the news written on that Yahoo portal by or just sent through Yahoo? Was it distributing newspaper- and magazine-written stories or employing people to write its own?

Over the years, Yahoo zigged and zagged on that question. It has hired both the tops in their fields (Katie Couric and David Pogue) for example and, at times, veteran and high-regarded newsies. Yet, the original content has always been an uncertain business, for Yahoo execs and for its many readers.

Now, as Yahoo’s media properties go elsewhere, will Yahoo’s distribution strength become its main go-forward asset; will more expensive content origination, already cut back, be a significant part of the mix?

The Midwest of the Internet

So, we know Yahoo is big, but exactly who is in its audience(s)?

My favorite description is one that’s probably half-right. In talking with deal-making cognoscenti, a couple offered one contrarian would be-buyer for Yahoo: Meredith. The company that started as Des Moines-based, Midwestern-pleasing magazine company continues to grow and grow. Ahead of the curve, it moved away from a print magazine branding to announcing itself as the leading’s women’s marketing company in the country, and then backed that up, as an early inventor of what we now know as branded content. Meredith figured out how to serve middle American, middle-class, largely between-the-coasts women to advertisers.

Much of Yahoo’s audience now matches that positioning, several insiders have told me. Yahoo’s readership skews older, more female and more between-the-coasts than many major web brands, they say. Of course, that metaphor may only go far. Yahoo Finance and Yahoo Sports serve as the two highest-ranking Yahoo properties up for sale, and both those topics tend to skew male.

(Yahoo Mail, that legacy of a legacy, akin to AOL’s mail and Internet service businesses, certainly skews older – and generates a large amount of that traffic that makes Yahoo a third-place player, though it monetizes poorly.)

While Meredith is an unlikely suitor (having just announced its merger with Media General, and casting its future more greatly in regional TV), still, it’s a tantalizing idea: Declare a concentration on half the American population – and then execute like crazy.

Planet Convergence

I know it’s a pipedream, but wouldn’t be great for Verizon and Time Inc. to team up to buy Yahoo. Then, Yahoo could be finally betrothed to AOL and AOL and Time could be reunited one more time. It would also make quite a new iconic photo.

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Digital First Media’s Real Price for Southern California Papers: A Paltry $16 Million Sat, 16 Apr 2016 04:55:40 +0000 Read more »]]> After besting Tribune Publishing to win the Orange County Register and (Riverside) Press-Enterprise out of bankruptcy (“It’s official: Digital First Media defeats Tribune in bid for southern California newspapers”), Digital First Media has flipped the real estate that was included in the transaction. And O.C. speculators would be proud of the deal.

On Monday, the Orange County Business Journal revealed that DFM had sold the 14.3 acres surrounding the daily newspaper’s operations at 625 N. Grand Ave. in Santa Ana to developer Mike Harrah. The price: $34 million.

Net it out, and consider that DFM paid only $15.8 million for the two newspaper titles, matching my estimate of their value in February. While there’s a certain logic to that low, low price – earnings at the combined operations have been just above or below zero – it’s still an astounding number for two papers with significant circulations. The Register sells 228,000 papers on Sunday; Riverside sells 111,000.

It’s even more astoundingly low when you consider all of the Sturm und Drang over the newspapers these last couple of years.


First published at Politico Media

Follow Newsonomics on Twitter @kdoctor


The eyeballs stayed fixated on the papers when Freedom declared bankruptcy and Tribune Publishing CEO Jack Griffin made such a priority of buying the two papers that he had to complete a last-minute deal with a Chicago entrepreneur to amass the cash to take to bankruptcy court. That deal cost Griffin his job – and precipitated a massive executive turnover– within weeks of being signed. Then, in short order, Tribune emerged as the high bidder for the two papers and real estate, but the Department of Justice’s Antitrust stepped in – and stopped the sale to Tribune. Private equity-owned Digital First Media positioned itself perfectly as the second bidder, finally winning the properties for $5 million less than Tribune had offered to pay.

And all of this turns out to have been for two regional print newspapers worth a little more than $15 million, apart from the real estate.

In fact, with the low value of the newspapers themselves, much of the pre-auction maneuvering had focused on that 14 acres of dirt. Buyer Mike Harrah has been well described by the L.A. Times: “Some real estate developers like to avoid calling attention to themselves. Mike Harrah isn’t one of them. He stands 6 foot 6, weighs about 275 pounds and sports a signature ZZ Top beard.

“He’s flown his own Cobra attack helicopter in stunts for Hollywood movies and boasts on his website about ‘driving his dragsters at 240 miles per hour.’

“A YouTube video shows him in wrap-around sunglasses riding at breakneck speed in a personal watercraft, gray beard ruffling in the wind — all set to a heavy metal soundtrack.”

Harrah had been best positioned for this real estate – which he intends to develop into the familiar mix of uses: housing, retail and a hotel.

Two years ago, he’d bought the Register’s five-story headquarters for $24 million. While Freedom management tried to sell Harrah the remaining adjacent real estate – and pay off its many debts, pre-bankruptcy – local zoning tightened up, and no deal could be reached.

One would-be buyer, who toured the properties, had told me confidentially that Harrah was the only eventual real estate buyer. Why? The property Harrah bought in 2014 and the property he bought Monday were nearly inextricably intertwined, in their “borders.” That would have made use of the just-acquired property more difficult for a buyer other than Harrah.

As the auction date arrived, would-be developers trash-talked down the “real” value of the real estate. In the end, Harrah gets the land for a little less than it had been valued at a couple of years ago.

The sale also means the Register is likely to abandon the building that long served as its well-known HQ, as Orange County grew and grew and grew, from a Disney-fed series of podunk towns (“The train for Anaheim, Azusa and Cucamonga will be delayed,” in one of the most famous lines from comedian Jack Benny’s show) into a major metro area.


There’s the Fourth Estate, and there’s real estate. One’s always been ascendant in Orange County – and now most of the country.

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Americans Triple Their Political News Intake in 2016 Sat, 16 Apr 2016 04:00:21 +0000 Read more »]]> News media have been big winners in the Presidential election so far. Ravenous for news of each twist and turn of the campaign, Americans have almost tripled the amount of time they are spending consuming digitally distributed political news.

Three years ago – in the far less political year of 2013 — political news accounted for 816 million monthly minutes of usage, according to Comscore. In February, 2016, it accounted for 2.364 billion minutes – almost a tripling. February has been a high-water mark, but political news hit one billion minutes in June of 2015 and has grown steadily since.

POLITICO pointed out (“New media players seek to make their mark on the 2016 campaign”) how the Gawkers, Mics and FiveThirtyEights were salivating at the political traffic of these Trumpoid times. While all those plying the political news trade have enjoyed a boom, it is the three cable TV news channels that can point to outsize success.

Today, CNN Politics, Fox News Politics and MSNBC TV grab 58% of all time spent on political news, as measured by Comscore. One year ago, that number stood at only 36%. So, in addition to their big TV ratings and advertising success, add in digital abundance.


First published at Politico Media

Follow Newsonomics on Twitter@kdoctor


It’s important to note that Comscore’s calculations don’t include all the major political news players.

“It’s at the discretion of publishers as to what level of reporting detail they want to break out. Some publishers do very detailed content channel breakouts, others do not,” Comscore’s Andrew Lipsman told me. So The New York Times and The Washington Post, for instance, are not specifically included in Comscore’s “News/Information – Politics” category. Still, the data is directionally valuable, and we can conclude that those not included have also enjoyed big traffic benefits.

Those top three cable TV networks — CNN Politics, Fox News Politics and MSNBC TV, in order — head up the most time spent on political news. Also, included in the Top 10, in order: POLITICO, HuffPost Politics, RealClearPolitics, Yahoo Politics,, sites and Politics.

In fact, those top 10 could claim 90% of total time spent on political news — again as measured by those publishers participating — in February, 2016. One year earlier, the same top 10 received only 67% of all time spent. It’s clear that these sites’ non-stop focus on political news has paid off in traffic. One big question: How well has it paid off in ad revenue, especially since much of the growth is on the smartphone, which many publishers have had a hard time monetizing?

Further, Comscore data shows that “those outside the Top 10 have seen engagement levels remain more or less consistent over time, whereas the Top 10 is where the category growth is coming from,” said Lipsman.

On the web, disproportionate benefit accrues, as always, to the biggest players.

Further, let’s consider that the boom could precede a bust.

As the 2016 concludes — finally — with an election, how much appetite will there be for political news in election-less 2017? News sites will have tough comparables to meet, and they likely won’t, paralleling the boom-and-bust cycle the TV industry sees in election/non-election years. The current reckoning we now see in digital news startups (“Newsonomics: With new roadblocks for digital news sites, what happens next?”) will likely only be made worse by a slackening of political news interest.

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Newsonomics: With New Roadblocks for Digital News Sites, What Happens Next? Thu, 14 Apr 2016 19:00:57 +0000 Read more »]]> At BuzzFeed, a 32 percent miss in 2015 revenue and a halving of its 2016 revenue target, according to the Financial Times.

At Mashable, a massive layoff after the company failed to sell itself.

At Yahoo, an upcoming sale of its news-producing assets, portending great uncertainty for journalists employed there.

At Medium, a new way forward focused more on curation and licensing its platform for publishers and less on original content creation.

The list of cutbacks — at The Huffington Post, at Gawker, at Al Jazeera, at International Business Times, and at Salon among others — keeps growing. And each round poses new questions for a news business struggling to find a way forward in this millennium. After all, even if the old world of news faded (like its readers) into older age, at least we could point to the cohort of digital-native outlets with a bit of optimism.


First published at Harvard’s Nieman Journalism Lab

Follow Newsonomics on Twitter @kdoctor


I feared this day would come — the new digital news companies bumping into a wall. Remember the Pew study that found that more than 5,000 new, fairly decently paying journalism jobs had been created by digital news startups?

I often contrasted that increase with the great losses suffered by the local and regional newspaper industry. Those losses now stand at more than 25,000 across the country, with more jobs lost (though unreported by parent companies due to publisher edict and editorial fear) every week.

Now, if the new news companies join their legacy peers in searching for sustainable business models — just as would-be Yahoo suitors talk about the company as “legacy digital media turnaround” — we’re entering new territory.

Is this the apex of the new news? It may be — at least for a while.

Is what we’re seeing a real cratering? No. BuzzFeed investor Ken Lerer is correct on this; all the whispered schadenfreude reflects BuzzFeed envy as much as anything. (And, Buzzfeed has disputed the FT’s 2016 reporting, while its 2015 miss has been confirmed by Recode’s Peter Kafka.)

By any measure, though, it is a significant recalibration. If people expect these companies to have figured out how to replace the legacy news companies and navigate this new world, they’ve got to think again. There is no secret sauce in news publishing. If people expect these companies to have figured out how to replace the legacy news companies and navigate this new world, they’ve got to think again. There is no secret sauce in news publishing.

What we have gained: a wealth of new national news and analysis, often spirited, occasionally groundbreaking, and instructive to a news craft that needs shaking up. Most of that remains in place, and we can hope it will continue to do so.

But overall, we’re seeing the economics of text-based (not print, but text) content turning more generally dismal. Well-funded startups like Vox Media and Mic have all been talking up video, or even TV itself.

Vox has said it wants its eight brands to be thought of as eight networks, in part spurred by Facebook’s big video distribution push. The big prize here, described today by Lindsay Nelson, Vox Media’s global head of brand strategy, at London’s FT Digital Media 2016 conference is mobile video. She made a major point: The ad rates for mobile video are now matching those for desktop video.

Mic CEO Chris Altchek told me that he believes more than half of its content would be in video form by mid-2016. The newly reconfigured, slimmed-down Mashable will focus on — guess what — video. In its case, CEO Pete Cashmore’s “pivot” is to commercial video more than editorial video, but it’s still the pictures business that seems the new shiny object.

Why? It’s not primarily that customers are demanding more video. It’s that video ad rates continue to hold up far better than for ads placed alongside all those tiresome words. If the advertisers demand more video inventory, then the content side must produce more video.

Certainly, this age of almost-convergence is a wonderful one for consumers. We get to have our useful video packaged with our useful stories, and toggle back and forth. But in the world being born, video content trumps text, and more mere scribes, of all ages and of all digital skill levels, are finding themselves unwanted. The ad tail is wagging the new digital news dog, at a quickening pace.

Take the trend to a logical progression. If VR moves into the mainstream of news delivery, how many digital news companies will dial down the text and the video and make VR a format of choice for delivering the news?

The big point: While convergence should allow journalists the luxury of using the best tool — words, video, audio, interactives — for the right storytelling job, it’s video driving the business and the jobs, more and more.

Now, let’s put this turndown in digital news startups in perspective. The new U.S. digital news economy, looked at with some envy by Europeans who care about the news business, is now mature. It happened quickly; less than two handfuls of companies have followed the digital dictum of “Get Big Fast,” fueled by enthusiastic venture funding. Now those funders are newly cautious.

“It’s definitely a trend, claims taken” one major new media investor told me this week. “Next phase: consolidation.” Axel Springer has been a big player globally, and especially in the U.S., where it can count investments in 15 digital media companies (including Mic and Ozy) in addition to its $400 million buy of Business Insider last year. That consolidation is taking many forms. I noted it last summer when Vox Media added Recode to its stable. Further, NBC Universal’s investment of $200 million each in BuzzFeed and Vox signaled maturity. The old guys hedged, buying into the new guys.

Now, all that audience growth must turn into money, into some kind of sustainable profit over time. Almost universally, those running these newer companies say, when asked about their profitability: “We could be profitable if we wanted to be.” That sounds silly, but it offers the ring of truth. Translation: If we stopped plowing all this money into international expansion or video build-out, we could turn nicely into the black.

But there are now other factors at work.

Big is relative. Yes, the digital startups have gotten big by publisher standards — but they’re small compared to Google and Facebook. Those companies have formed an effective duopoly, taking in more than 40 percent of the still-fast-growing digital ad business in the U.S. (and probably more in Europe). The two companies are built for mass, and their size means that even ad rates driven down by programmatic buying can be made up by sheer scale.

Against that scale (and against their targeting technology that moves farther ahead of the competition day by day), all original content publishers — legacy and newer — suffer. That’s part of what we’re seeing in the BuzzFeed slowing and general worries about how much ad monetization can be wrung out of the big newer media audiences.

Let’s note two other factors. First, this slowdown in new digital news media comes amid the best American economy in a long time. These companies have been built for growth in good times; what further happens when the next recession inevitably comes?

Secondly, this year’s three-ring American political circus has greatly benefited all these sites that have paid hyper-attention to all things Trump. As Politico’s Joe Pompeo laid out in February, the new media players have made the most of their opportunity.

Reader data supports that 2016 boom. While the size of the U.S. digital audience is essentially static (up two points year over year) the amount of time spent on political news has ballooned.

Three years ago, political news accounted for 816 million monthly minutes of usage, according to Comscore. In February, it accounted for 2.36 billion minutes — almost a tripling. February was a high-water mark, but political news hit one billion minutes in June 2015 and has grown steadily since.

Over that time period, total minutes spent on digital — thanks to smartphones — increased markedly, but political news minutes greatly exceeded even that growth.

Let’s face it. This extraordinary political news year won’t last, likely replaced by a relatively boring second Clinton administration. News fatigue, anyone? As that political time spent shrinks, who and what will replace it?

Which brings us back to legacy media. Watching the new guys’ growth had left me wondering how they would fare when the world got tougher. We’re now seeing that play out in real time.

I have hoped that legacy news media DNA — newspaper companies understanding their long-term role in supplying the democracy’s news, even in hard times — would act as a counterweight to the whims of venture-backed news companies.

On a national/global level, if not a regional one, that seems to be the case. The Digital Dozen — those national/global companies I’ve identified, like The New York Times, The Wall Street Journal, The Washington Post, Bloomberg, AP, Reuters, The Guardian, Axel Springer, the BBC, and more — are most mindful and respecting of that heritage and mission, even as they struggle mightily. They, too, are testing more video, but they try not to let the new overwhelm their essential reasons for being. It’s a slog — a tough one to work through and a tough one to report on. The news mission touchstone looms larger in importance, as we see digital news companies retrench.

In part, we’ll see what kind of next mating of old and new media now moves forward. Is Business Insider now better positioned as a part of deep-pocketed, longterm-looking Axel Springer, than it would have been as independent? Will BuzzFeed and Vox Media (which recently merged some ad sales with investor NBCU under the rubric of Concert) be buffered by their old media partners?

It’s impossible to say exactly what’s next in news. These big “startups” have lots of life in them, and we’ll see how they reckon with difficulty. In the meantime, what’s new is old, in part, and that’s a fresh revelation in these digital times.


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What Are They Thinking: The Millennial Gold Rush Goes Local, In Charlotte Sun, 03 Apr 2016 17:39:30 +0000 Read more »]]> Everyone in publishing now loves the Millennials, as well-funded startups from Mic (“What Are They Thinking: Chris Altchek’s three magic words for Mic: video-centric millennials company”) to Buzzfeed to Vice and Vox target the next generation.

While media attention is riveted on national news sites targeting Millennials with heat-seeking videos, let’s consider America’s favorite cohort outside of New York City and south of New Jersey. Gannett, the country’s largest daily newspaper publisher, signaled its interest in March when it bought a minority interest in digital entrepreneur Jim Brady’s Spirited Media. That company operates Billy Penn in Philadelphia and plans to launch in another city by summer’s end.

Bloomberg CEO Justin Smith is among those seeing the big Millennial opportunity for legacy media, as well. It’s Millennials + mobile + social that opens a huge new business opportunity, he told me last year. (“Bloomberg’s Justin Smith Sees a Window in Shakeup of Digital Reader Habits“).

In addition, I’ve talked recently to other investors seeing – and strategizing around — the same opportunity. As they do, they are all beginning to notice the newest millenial-targeting kid on the block, Charlotte Agenda.

Ted Williams’ Charlotte Agenda aims to satisfy 18-34-year-olds and is apparently doing a pretty good job of it.


First published at Politico Media

Follow Newsonomics on Twitter @kdoctor


As Charlotte Agenda approaches its one-year anniversary on April 8, 31-year-old publisher and co-founder Williams says the self-funded start-up is on track to produce a cool million dollars of revenue in 2017. This year, he says, the site’s sponsors will generate between $600,000 and $800,000 in revenue, bringing the site to profitability.

Behind Williams’ numbers: 25 sponsors, listed midway down on the home page. Who doesn’t want to target Millennials these days, and the list shows it: Bank of America, Allen Tate Realtor (the largest firm in the city), UNC Charlotte, Carolinas Health Care System, Uber and the three locations of Bojangles Famous Chicken ‘n Biscuits.

Williams says he has capped the number of sponsors on the site, at any one point, at 25. They sign contracts, with roughly 20% committed for one year and 60% for six months, says Williams. Ten rank as “premium sponsors,” given their level of spend.

The sponsors get a growing, and increasingly engaged local Millennials audience. Note the name of the site: Charlotte Agenda. With a good mix of things to do and nightlife, which we’d expect out of young demo product, I’ve seen a growing amount of local political and development coverage. Agenda, perhaps, as in personal calendar and civic issue.

The site’s tagline is also instructive: “A user’s guide to Charlotte.” That notion of usefulness and utility, and not just reading, acts on at least twin understandings. The no-brainer: it’s an active population. Equally, though, it is the smartphone, the ultimate utilitarian information appliance that Charlotte Agenda has recognized as its prime delivery vehicle. Sixty-two percent of its audience comes in via the smartphone. An additional six percent uses a tablet; only 32% is desktop-driven.

The self-funded operation is small, now consisting of five full-time and one part-time staffers. Yet, its Writers Page names more than three dozen contributing writers. In a mid-metro area like Charlotte, there are lots of people who can write – well – for not much money.

Charlotte Agenda offers a good high/low mix on the news and on city life. On Thursday, editor-in-chief Andrew Dunn (second from left, below) published a story on Gov. Pat McGrory’s increasingly fraught relationship with his hometown of Charlotte (where he served seven terms as mayor) led the page. It took a local look at the story much in the national news, as Republican governors are being asked to peel back anti-discrimination laws. The headline asked a good question, “Can Pat McCrory’s relationship with his hometown ever be repaired?” and accompanying gif of McCrory’s awkward hug with another Charlotte politician showed the tension.

You can see, below, the range of stories Charlotte Agenda offers. They are written conversationally, with an intimate knowledge of Charlotte and heavy on city life. For Williams, it is about the news of the day, but doing it in ways that more befit the more causal sensibilities of Millennials.




Twenty-seven-year-old Cristina Wilson (far left, below) heads the growing business operations. Williams’ co-founder 30-year-old Katie Levans (far right, below) serves as Creative Director & Co-Founder. Williams (second from right, below), who turns 32 in July, is the self-described “old guy” in the group.

charlotte-agenda-team-1 copy

As it approaches its one-year anniversary, the site counts, internally, 275,000 Monthly Unique Visitors and one million monthly page views, or four views per visitor.

The business is being built on engagement, taking these forms, according to Williams:

—A daily newsletter list of 13,000, with an open rate of 58%,

—An Instagram following of 37,000. CA found Instagram to be an under-utilized channel for news in Charlotte, and now considers it a top distribution priority. As a start-up, CA used poor man’s analytics; Williams sent out a survey to his users. One big surprise: Almost 70% of his Millennials audience said they were on Instagram.

“We break a lot of our scoops on Instagram, especially do it at nighttime before people go to sleep,” says Williams. “You get a photo, you can break some great news, and then the conversation in the comment threads is just excellent.

“We think there’s a large audience that looks at things after dinner, like that 8:00 to 10:00pm time. It’s really freaking powerful, and I think a great long-term asset.”

—A fledgling membership program. Eighty percent of the 325 signed members have opted for an annual payment of $60; the rest pay $5 a month. Early notice and access to events, a T-shirt and goodwill are the lures. Members can also pen “op-eds.”

Williams learned some basics via a short start-up career, first with a Washington D.C. health site Health Central, which was later sold. When his girlfriend took a job in Charlotte, he moved with her and worked on the digital side of a local ad agency. Then, he worked for the McClatchy-owned Charlotte Observer for two years, as Director of Digital Strategy & New Initiatives.

But the fit wasn’t there.

“Everyone is having task force meetings like, oh, ‘You can’t link, should we do it or not’? Then it breaks out to a sub-task force, then someone writes a paper and it sits somewhere, and someone is like ‘Revenue is down.” Williams says he wanted to experiment more, following the readers as they used other platforms. “Our audience is there, and I think it’s an important complement to what we do, and it’s what people like.”

Williams says he admires the work of the Observer, while noting why he thinks it is so hard for old media to crossover.

“It’s the way the culture works. You know there’s not a lot of transformational leadership. There’s a lot of safety.”

At the Observer, Williams developed CharlotteFive – a mobile-first, Millennials-seeking digital-only product.

Today, that product survives, produced by two editor/reporters and, like CA, a stable of freelancers. In monthly visitors, it comes it at about half of Charlotte Agenda; on average, its visitors take in two pages, compared to CA’s 4.

“What’s really interesting to me about both of these sites is that they’re both drawing big audiences,” Observer top editor Rick Thames told me.

“In some cases, I’m sure the audiences are crossing over and probably reading both, but I also find people in the city that are reading one or they’re reading the other. One thing I think we learn from this is that there’s the younger, under thirty audience there is prepared to actually read something on a regular basis, day after day in a city the size of Charlotte, and there’s enough audience there, that two sites are flourishing at the moment.”

The most popular story on CharlotteFive? It was headlined “Who’s Sharon Anyway and Why Did They Name All These Roads After Her?” and talked about all the roads with Sharon in their names, and it drew 34,000 page views. Says Thames, “It’s a kind of story that would be of interest to anybody who hadn’t spent much time in Charlotte and was still kind of scratching their head over it.”

Thames sees that the experiment is both about content and design, which is un-newspaper-like. “The presentation has just been interesting….There are a lot of people under 50 or under 60 who feel under 30 and so I think we’re drawing some of them as well. But really, most people don’t necessarily know that it’s about the Charlotte Observer. We don’t hide it but it’s just not there as a big banner or anything.”

Ted Williams is more concerned about harnessing the platforms of the day than he is about Charlotte Observer competition.

What’s ahead in Year Two?

For one thing, Williams says he underestimated the power of Facebook.

“I had been spending too much time on Facebook. Now I spend a lot of time thinking about it, not a lot of times doing stuff about it, but damn if Facebook isn’t just incredible. They’re so smart. They’re like annihilating everyone. I just respect everything that they do. Just looking at what they’ve done with Instagram, the patience that they’ve had at monetizing that product, rolling it out and making it easy to buy.

“They are making a ton of money, and everyone needs them.”

Is this the future of the local news business? Consider it a future at this point.

It’s important not to make too much of the small experiments like Charlotte Agenda. After all, it’s a small business that produces a comparatively number of stories a day, staffed by a handful of not terribly well paid people. Its audience is still small.

Yet, what makes this a story worth following is that it one of creating something from nothing. In a decade of unending local news loss, Ted Williams puts a small stake in the ground, waxes optimistic about the need to inform a new generation about local news and earnestly constructs tents of a business model around his passion.

It’s tiny, of course, but directionally important. That’s why Gannett is investing in Billy Penn, and its soon-to-be-born sister. Both Billy Penn and Charlotte Agenda embrace the elements – mobile first, conversational, a jaunty mix of high and low, events-led engagement strategy, a focus on sponsorship – that clearly form building blocks of growing local digital media businesses. The big question: How big can the house be built, with what kind of journalistic capacity?

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Newsonomics: Fixing the Financials at Tribune Publishing Mon, 28 Mar 2016 05:01:33 +0000 Read more »]]> If you think keeping track of Tribune Publishing’s many ups and downs has been hard for media observers, consider the issues within the company. For the second year in a row, TPUB’s annual 10-K filing has had to note “material weaknesses in the Company’s internal control over financial reporting.” In fact, it reported more instances of such “material weaknesses” in 2015 than in 2014.

This year, the identified flaws cover key parts of Tribune’s business. Those include its highly profitable preprint business (“insert volume forecasts and variance analysis for preprint advertising”), circulation rates (“documentation of approval of”) and the broad area of compensation expense (“including sales commissions and bonus plans”).

From this year’s report, in Item 9A of the 62-page filing: “Management, including our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of the company’s internal control over financial reporting as of December 27, 2015…. Management has concluded that the Company’s internal control over financial reporting was not effective as of December 27, 2015 due to material weaknesses in the Company’s internal control over financial reporting described below.”

The filing notes that “The material weaknesses described above could result in misstatements of the accounts and disclosures that would result in a material misstatement of the annual or interim consolidated and combined financial statements that would not be prevented or detected.”

First published at Politico Media

Follow Newsonomics on Twitter @kdoctor

I shared the document with several industry executives who have financial oversight responsibilities. Their confidential responses: Sounds like trouble, with the citing of “material” — meaning significant — issues the most notable.

One executive called out the preprint issues: “If their preprint forecasts were off and inconsistent with actuals and no variance analysis was done, theoretically customers could be over charged on distribution or at a minimum, producing too many preprint quantities unknowingly.” Preprints – those Sunday ad circulars from Best Buy, Home Depot and other Big Box stores — now amount to much of the Sunday paper profit. Matching the advertiser preprint numbers to actual circulation, then, is key.

Which, of course, leads to the key question: Are the numbers reported by TPUB on the money? Will there be any restatement of financials given the issues noted?

Tribune Publishing, though, looks at the issues as procedural ones, and emphasizes auditor PWC’s “clean audit.” In other words: The company doesn’t expect to have to change its numbers.

“The Company is confident in the numbers stated in our 10-K,” Tribune Publishing spokesperson Dana Meyer told me. “There are process deficiencies that are being remediated and retested in 2016.”

In the filing, Tribune Publishing says it has taken a number of steps to remediate the issues, including the appointment of a compliance officer and a change in procedures.

In detail, the company has pledged to fix the problems by “year end 2015.” Among the work noted:

• the Company appointed an executive over the Corporate Compliance function to lead management’s efforts related to effective control design, documentation and implementation, as well as remediate ineffective controls;

• the volume forecasting process related to preprint advertisements has been centralized in order to ensure proper management of the process and consistent execution between business units, and;

• [the company will] evaluate and modify the Company’s processes and controls over advertising insert variance analyses to identify and address any control gaps and to ensure the appropriate controls are in place to address the associated risks;

• the Company has formalized the process for single copy rate changes to ensure compliance with contractual rates and maintenance of supporting documentation.

• [the company will] modify processes to ensure supporting documentation for all circulation rate changes is properly maintained;

That’s management’s work. Given that the Board of Directors, now headed by chair Michael Ferro, too, shares responsibility for financial accuracy, it, too, has set out new work.

“In addition, under the direction of the Audit Committee of the Company’s Board of Directors, management will continue to develop and implement policies and procedures to improve the overall effectiveness of internal control over financial reporting.”

Further, the report notes that financial reporting irregularities were found, and reported, one year earlier, and that those have been repaired. They, too, included a single “material weakness,” and involved issues of financial reconciliation, and “critical accounting policies and review controls.”

Why all the miscues, and why would there be more in 2015 than in 2014? Blame the split of Tribune Publishing from parent Tribune Company, in summer 2014, say insiders. The split, they say, made the accounting switch-over problematic, with a number of procedures getting tangled up. While many newspaper publishers have been subject to similar splits in the last five years, though, I can’t recall another that’s had this kind of issue.

Tribune Publishing has also seen more executive change than many other split companies. Relevant here: current Chief Financial Officer Sandy Martin serves as the second executive in that position since replacing founding CFO John Bode, who unexpectedly parted with company in April, 2015. Martin was unavailable to talk about the 10-K concerns, as was chairman Michael Ferro.

Financial reporting has bedeviled Tribune Publishing before.

Last fall, the company endured much bad press as its own California executives said they were directed by Tribune head office to revise downward their financial numbers, wrongly, to make them more negative. Soon after, Tribune Publishing lowered its own earnings projections, a move that shook investor confidence; TPUB’s share price never recovered from that series of events.

At this point, the PWC-approved clean audit seems to clear a path forward, though the galloping change at the company (“Tribune’s New Ferro Era Begins, With Massive Leadership Change“) may provide future surprises.

Clearly, the company should feel the pressure to right its financial ship. As the filing sums up, “If we do not complete our remediation in a timely manner or if the remediation measures that we have implemented and intend to implement are inadequate to address our existing material weaknesses or to identify or prevent additional material weaknesses, there will continue to be an increased risk of future material misstatements in our annual or interim financial statements.”

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Newsonomics: In Southern California’s Newspaper Chaos, Is Anyone Really Speaking For The Readers? Sun, 20 Mar 2016 02:23:39 +0000 Read more »]]> William Baer, assistant attorney general in charge of the Department of Justice’s antitrust division, had already bluntly told all involved in the Freedom Communications newspaper bankruptcy auction that Tribune Publishing should stay out of the bidding. He sent an email two days before the auction was to begin.

Baer said that Tribune’s attempt to buy Freedom’s Orange County Register and (Riverside) Press-Enterprise raised “serious issues.” “If Freedom selects Tribune as its purchaser,” he wrote, “the division will exercise its antitrust law enforcement responsibilities to ensure that the transaction does not deprive newspaper readers and advertisers in these areas of the benefits of competition.”

So, of course, Freedom’s representatives went ahead on Thursday morning and chose Tribune Publishing’s $56 million offer for the two papers and the valuable real estate nested around the Register. That prompted Baer to file an antitrust lawsuit against Tribune on Thursday, accompanied by a 21-page memorandum detailing his concerns about “monopoly.” (I’ve detailed the week’s madness most recently here.)

All attention now turns to Monday’s bankruptcy court hearing, as Tribune decides whether to press on with its bid, given the suit. Also in court will be Digital First Media, which will make a renewed effort to convince U.S. Bankruptcy Court Judge Mark Wallace to let it take the bankrupt newspapers, with its $45 million to $50 million bid payment partially assuaging Freedom’s long list of creditors.

(UPDATE: Now, on Saturday, March 19, Freedom Communications has changed its recommendation to the court. DFM’s back-up bid, of about $53 million, is now likely to go ahead Monday and win the two papers. The action followed intensive court action Friday, as Tribune Publishing contested in federal court — and a judge issued a temporary restraining order against Tribune completing the acquisition, thus effectively ending Tribune’s effort to make the sale work.)

It’s hard to believe I’ve been covering the Southern California newspaper meltdown for at least seven years now. Sam Zell, who had taken control of the Tribune Company in an investing coup (which curiously foreshadowed Michael Ferro’s similar seizure of Tribune control this January), took Tribune into bankruptcy in December 2008. It was to be the five-year bankruptcy from hell, a classic among the more than a dozen daily newspaper companies we saw post-recession. Given the current straits of newspaper financials, we may soon see that set of bankruptcies as a mere prologue.


First published at Harvard’s Nieman Lab

Follow Newsonomics on Twitter @kdoctor


As Southern California, a region of more than 18 million people, moves toward one kind of newspaper consolidation or another, we can see it as a ground zero of the mess daily newspapering has become. Freedom Communications now emerges from bankruptcy for the second time; the Tribune and its L.A. Times have been through one round, as has Digital First Media. Everyone involved in this week’s circus can call itself bankruptcy-experienced. Further, we’ve witnessed a remarkable cascade of characters involved in the L.A. tragicomedies. Consider the larger-than-life characters traipsing through the newspaper landscape. One-time Freedom CEO Aaron Kushner reprised a Music Man role in his entertaining flameout. Tribune contributed not only Zell, but then, in rapid fire-order, CEO Jack Griffin, who just found himself executed in the Michael Ferro coup — with Ferro’s swaggering tenure itself promising more larger-than-life drama ahead. And we can’t forget what looked briefly like the dawning of a would-be golden age of newspaper re-engagement, led by L.A. Times publisher Austin Beutner, until he, too, succumbed to internal politics.

Everyone is shell-shocked. Count among them the remaining newspaper staffers, the communities that have seen great whipsawing and greater reduction of coverage, and the individual readers. As in many cities, the civic-minded readers try to hold on, keeping their subscriptions up, much as they decry the constant decline in the kind, excellence and volume of the news they get, in print or on their phones.

Against that understanding, I’m trying to make sense of the DOJ antitrust action. On the one hand, I’m totally sympathetic. Readers have been screwed, and it seems like the feds are trying to stand up for them. On the other, newspaper readers are today likely only to see their news coverage further diminished as likely collateral damage of DOJ’s attempt to represent the citizenry.

From the DOJ suit:

Competition for readers of English-language local daily newspapers in Riverside [and Orange] County would be substantially reduced or eliminated and newspaper readers in Riverside [and Orange] County would be likely to pay higher prices and receive lower levels of quality and service.

Given the nature of antitrust, much of the action is based on pricing. If TPUB proceeded with the acquisition, it would become an essential daily-newspaper monopoly from Ventura County to the Mexican border, a north-south stretch of about 180 miles. The DOJ believes that advertisers — those still finding value and customers in print — would be priced up. Further, subscriptions could be priced up as well, given the narrowing of choice.

I have no doubt that there’s some substance to those concerns, but both seem tangential to the big question sitting smack in the middle of the auction: Is it healthy for a community — or in L.A.’s case, at least four big cities (and dozens of smaller self-identifying communities) — to be served by one news company? Predictably, the DOJ action has elicited howls of anachronism from those well versed in digital media. How silly is it, as newspapers gurgle for dear life, to still consider them “monopolies”? Surely, they say, the days of monopoly are long gone, thanks to the web.

They’re not wrong, of course. The Internet printing press is an amazing thing. But figure that a Tribune/Freedom combination, including daily journalists in San Diego, Orange County, Riverside, and greater L.A., would number something less than 1,000. That’s still a huge number — and one that still sets much of the news agenda of the nation’s second largest region. So, the DOJ may be using an old tool — opposing pricing domination through monopoly — to attempt to address a real contemporary issue.

That wouldn’t be surprising: The law and regulators have never been able to keep up with fast-paced change of digital competition, which has allowed first Google and now Facebook to become incredibly market-dominating forces in our time. But the old rules don’t apply to the new players — which markets are they really in? regulators puzzle — just to the old players.

So how potentially dangerous is it to have one company, like Tribune Publishing (with its own future and leadership values newly unknown) directing close to 1,000 journalists in southern California? Consider that newspaper editors still decide what’s news, what their reporters will cover — and what they don’t. That point was newly driven home to me a couple of weeks ago, as Digital First Media’s Bay Area News Group (which itself dominates Northern California, having consolidated all the region’s major dailies with the exception of the San Francisco Chronicle) announced a “rebranding.” In a story headlined “Bay Area News Group announces newspaper re-branding,” the paper described how it would move to two daily editions, changing some long-time daily nameplates like the Oakland Tribune into weeklies. The “story” was all sweetness and light, focused on, you guessed it, better serving readers.

In fact, readers may see a few improvements, but one big fact was omitted: BANG is cutting as much as 20 percent of its newsroom workforce, first offering buyouts to those over 60 with 20 years of experience. In total, somewhere between 33 and 43 newsroom jobs will be gone. How did the story miss that fact? It instead said:

The initiatives announced Tuesday will include a modest reduction in staffing in certain areas, some of it through buyouts in the newsroom, and expansion in others. Ryan said BANG will continue to be the region’s dominant local news organization when the changes are complete?

BANG papers missed the truth because a reporter didn’t write the story. Instead, the business side of the paper apparently wrote it, but published it in article form. What would have been a basic violation of the daily news trade is now commonplace — and uncontested. As I cover the trade, more and more journalists are fearful of covering their own companies fairly. That’s bad enough, but it portends a much larger issue. One news organization, without much print-based competition, can more easily succumb to all kinds of political and financial pressures, in deciding its coverage, or lack thereof.

Quite ironically, the chief beneficiary of the DOJ’s hard line will probably be Digital First Media, through its local Los Angeles News Group subsidiary.

During the lively discussion I had Thursday morning with astute L.A. and news industry observer Larry Mantle on his KPCC program AirTalk, the long-time host brought up this key question: Won’t the DOJ’s action make it more likely that the newspaper company that has hollowed out many of its local newspaper newsrooms, from Long Beach to Pasadena to San Bernadino, will get the Register and the




The answer, unmistakably: Yes. Only three newspaper bidders showed up to buy Freedom newspapers. The first, led by Freedom’s management group, owns a less-than-stellar record of newspaper management itself, and besides has now been pushed out of the auction for other reasons. That leaves Tribune Publishing, with the big DOJ target on its back, and Digital First Media, controlled by private equity company Alden Global Capital. While Alden is the only one of the competing bidders with deep pockets, it’s not attempting to buy the papers in order to invest in them. In fact, as we watched Alden’s attempt to sell DFM last year and the cuts that followed, I identified the company strategy of “milking its properties,” a phenomenon now spreading across the country (“Do newspaper companies have a strategy beyond milking papers for profit?”) As with Tribune’s interest, DFM’s Freedom buy is all about regional cost consolidation, and improving profits, even as staff gets cut back further and further. Some have asked, then, who to root for in this fractious auction process. That’s a bit like asking Republican voters which of their 2016 candidates they feel great about.

Even with Tribune’s aims at regional consolidation, the standards of the L.A. Times — over the years, even through cuts — still trump those of DFM’s papers most of the time. But, in applying this fairly blunt antitrust tool, the feds most likely will deliver the readers and advertisers of Orange County and Riverside to DFM. While the Department of Justice may be aiming to represent readers’ interests in southern California, the journalistic result will likely be disappointing. Then again, given the trajectory of change, newspaper ownership change may be the new weather of southern California: If you don’t like it, just wait a year or two for new owners and managers to arrive.

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Feds Sue Tribune Hours After It ‘Wins’ Bid for Freedom Communications Sat, 19 Mar 2016 23:24:58 +0000 Read more »]]> What started as a marathon has turned into an obstacle course. In today’s wee hours, just before dawn, Tribune Publishing was named as the “winner” in the Orange County Register bankruptcy auction. Tribune’s winning bid of $56 million in cash – topping high-end estimates of the combined value of the Register, its sister Press-Enterprise and attendant real estate – seemed to signal an end to the big question of who would next own the paper.

But then within half a day, the next shoe dropped, in a bankruptcy arc that has been heavily contentious, a new suit arrived – from the Department of Justice. By early afternoon Pacific Time Thursday, the DOJ’s Anti-Trust unit sent a reminder, both to Tribune Publishing and all those involved in the bankruptcy process: It filed an antitrust lawsuit to stop Tribune from acquiring Freedom Communications. That suit followed by only three days an urgent email from the Justice Department’s Anti-Trust Division director, William Baer, assistant attorney general in charge of the antitrust division. That Monday email had raised serious questions (“Tribune, the Register auction and DOJ’s scarlet letter”) about Tribune’s domination of the southern California market should it win the auction, it seemed like the buying terrain had changed overnight.

Baer’s suit today used the M word, monopoly:

“If Tribune acquires Freedom, along with its Press-Enterprise and Register newspapers, it would obtain a monopoly in newspapers in Riverside County,” the suit says. “Thus, competition for readers of English-language local daily newspapers in Riverside County would be substantially reduced or eliminated and newspaper readers in Riverside County would be likely to pay higher prices and receive lower levels of quality and service….. If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange and Riverside Counties will suffer.”

First published at Politico Media

Follow Newsonomics @kdoctor

Today’s events only reinforce the quite fragile nature of Tribune Publishing’s early morning win, as all the parties head to a Monday date in federal bankruptcy court. On Monday, a judge is expected to certify an auction winner – Tribune Publishing or one of its competitors.

The Tribune “win” had come at the end of an extremely long day. At 10 a.m. on Wednesday, three bidders (“Trash-Talking in the O.C., with Two Newspapers Hanging in the Balance”) had met in the offices of Freedom Communications attorney Alan Friedman. This wasn’t a raise-your-paddle bankruptcy auction. Bidders and attorneys representing them and the company’s creditors spent the day and evening arguing about the terms of the auction, as the highly complicated bankruptcy. Finally, around 5 a.m. today, Tribune emerged with the winning, highest bid.

Tribune Publishing had been positioning itself for this acquisition for more than a year, as a cash-strapped Freedom Communications prepared itself to go into bankruptcy and then finally to file in November, 2015. If that represented a marathon of strategy, it’s that just-erected obstacle of anti-trust that most piques business interest.

Tribune’s offer of $56 million seems to have surpassed the initial offer of rival Digital First Media, owner of the competing Los Angeles News Group, by more than $10 million. (Given the complexity of assets and liabilities, it’s tough to get an apples-to-apples comparison of would-be buying price, but the $10 million difference is in the neighborhood.) Yet, the decision on whether DFM’s $45 million – or more, if it raises its offer – is a better bird in the hand than the Tribune’s more complicated $56 million now goes to court.

On Monday, as the bankruptcy judge reviews Freedom’s choice of Tribune as the victor it will have to ascertain how the creditors are best served by that bid. Until that DOJ letter and the suit arrived, the question had seemed more straightforward – based solely on the highest bid.

Could the court approve the Tribune buy and transfer of the property, by the March 31 target date, given the DOJ suit? It could, but it could also force Tribune to put the new asset – the newspapers (if not the real estate, which account for the majority of the value here) – into a kind of escrow or trust until the DOJ action is resolved. Given that the DOJ action would likely take months to play out, and maybe more time if there are courtroom appeals, the driving impulse for the deal would be at the very least postponed, if not lost. As I’ve repeatedly noted, for both Tribune and DFM, this isn’t an acquisition of optimism and growth, it’s all about cost consolidation. And time is as important as money.

If Tribune can’t – because of the DOJ challenge – achieve those consolidation synergies with certainty, it’s unclear why it would proceed. In addition, Tribune will have to pay out an immediate deposit of $5.6 million on its winning bid. If it paid out $56 million by March 31, that would leave the company with less than $25 million in cash, a small amount for a company of its size. Over the weekend, before the Monday court date, Tribune must assess its own legal chances and its financial wherewithal – and be mindful of big shareholders wary of taking on more “deal risk.”

Given all the recent concatenations of change (“Ferro Era Begins with Massive Exec Shuffle”) at Tribune Publishing as investor Michael Ferro has seized control and radically reoriented management, TPUB’ strategy, this company reassessment should be careful. Newly minted CEO Justin Dearborn told investors on March 2 that the company wouldn’t “overpay” for Freedom. Aside from the deal risk introduced by the DOJ action, the high price of the sale has got to raise questions. How accretive – boosting annual earnings – would the acquisition be, given its pricing and accompanying financial issues?

Overall, we see the tightening financial vise on all these newspaper operations. Tribune operates close to the line, and has been unable to obtain new financing at reasonable rates. Freedom Communications, in bankruptcy, operates month-to-month on a barely profitable basis. Digital First Media, controlled by PE company Alden Global Financial, has deep pockets – but it’s filling them more, rather than investing in products and staffing. That’s the backdrop of these theatrics and they remind us that whatever happens this week or next will likely be followed by still more changes in ownership and management.

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Tribune, the Register Auction and DOJ’s Scarlet Letter Fri, 18 Mar 2016 23:35:13 +0000 Read more »]]> For those who have been following the ongoing tragicomedy of California’s dying newspaper industry, today, March 16, marks a climax.

And as with all amazing stories, the moments leading up to that climax have made it a nail-biter.

The real action is mundane enough: Today is the day that final bids arrive at the office of a bankruptcy attorney representing the Orange County Register and the Riverside Press-Enterprise. The flailing newspaper company is seen as a potential linchpin in the survival strategies of two bidders, both themselves serially troubled in recent years: Tribune Publishing, publisher of The Los Angeles Times, Chicago Tribune and Baltimore Sun, and Digital First Media, publisher of more than 100 newspapers from Brattleboro, Vt. to San Francisco including the St. Paul Pioneer Press, Bay Area News and the Denver Post.

Tribune, previously the odds-on favorite, recently convulsed in a leadership coup brought on as a direct result of its energetic efforts to win the bidding (POLITICO: “Top Tribune executives said to be on the way out in house-cleaning”); but in just the last 48 hours an intervention by the Feds looks like it has flipped the odds against Tribune.

First published at Politico Media

Follow Newsonomics on Twitter @kdoctor

On Monday, the Justice Department’s Anti-Trust Division’s March 14-dated letter arrived, via email, in the offices of the bankrupt Freedom Communications offices.

The DOJ letter itself seemed a bolt out of the legal blue, of curious provenance and dagger-like timing, aimed at the heart of Tribune Publishing’s bid to buy the papers.

Tribune had positioned itself, for more than a year, to buy the two papers, and cinch up the biggest swath of daily newspaper monopoly in the country (“Trash-talking in the O.C., with two newspapers hanging in the balance”). Along the way, it had considered the possibility of an anti-trust challenge – and then largely dismissed it as unlikely to come forward or be successful, sources tell me.

The DOJ challenge, though, minced no words: “We wish to inform you that, based on our review to date, the (antitrust) division believes the acquisition of the Freedom assets by Tribune poses a serious risk of harming newspaper readers and advertisers in Orange County and Riverside County,” wrote William Baer, Assistant Attorney General in charge of the Antitrust Division. Baer sent the letter to Alan Friedman, Freedom’s bankruptcy attorney. DOJ seems to have reached the conclusion that the Tribune bid violates the law, and pledges to challenge it: “If Freedom selects Tribune as its purchaser, the division will exercise its antitrust law enforcement responsibilities to ensure that the transaction does not deprive newspaper readers and advertisers in these areas of the benefits of competition.” (Full letter, here)

Arriving just 48 hours ahead of the deadline for final bidding for the newspapers and attendant real estate, the letter seems to greatly minimize the chances of Tribune Publishing winning – and keeping – the papers.

In fact, all eyes will be on the door of the Freedom attorney’s office today, as bidders arrive to put in their markers. Will Tribune Publishing even show up to further contest the leading, “stalking horse” bid of Digital First Media?

Within the last week, DFM, which owns the Los Angeles Newspaper Group, bid $45.5 million for the papers and real estate, to take the lead position in the auction. DFM, with the aggressive bid, surprised its rivals, Tribune and Freedom’s own management group, led by Freedom CEO Rich Mirman.

How the story unfurls from here is anyone’s guess. On Monday, a court hearing has been set to approve the winning bid; the bankruptcy court has intended to close the sale on March 31, as a gaggle of secured and unsecured creditors salve their wounded pocketbooks with whatever funds the sale generates and the bankruptcy court allocates.

Tribune had already contested DFM’s winning stalking horse bid, with a hearing on that matter scheduled for as early as Monday as well. Now, the company must decide – in light of the anti-trust letter – whether to go forward. The letter doesn’t prevent it from bidding, but

creates longer odds on it first winning the auction, and, if it does, then successfully contesting the Department of Justice action.

As Register reporter Jon Lansner pointed out Tuesday, “Court papers detailing the Freedom bidding procedures say the winning bid would reflect ‘the risks and timing associated with consummating such bid’ as well as ‘the ability to obtain appropriate regulatory approvals.’”

In other words, Tribune’s bid – even if financially better than DFM’s or the Freedom group’s – is much riskier. The whole thrust of the bankruptcy auction is to settle claims, as finances allow, and close the book permanently on the serial errors of Freedom’s former management.

For Michael Ferro and Jack Griffin, the latest development comes wrapped in great irony. Griffin, needing funding to buy the California newspapers, had turned to the only source of it he could find, Ferro. Ferro plunked down $44 million for a 16% stake, and then promptly ousted Griffin and much of his top management (“CEO Jack Griffin is out at Tribune”).

With the chances of that $44 million being used to actually buy the papers greatly diminished, Griffin’s (and TPUB’s) risky move now seems doubly problematic. In effect, the former CEO seems to have made a deal that he didn’t need to consummate – and paid for it with his job, though he did take home a $2 million severance.

Digital First Media, now an odds-on suitor for the papers, proclaims its love of L.A. newspapers while simultaneously making deep cuts to its large newsrooms in the Bay Area and losing its respected top editor in Denver.

Though DFM, and its Los Angeles News Group, run very lean news operations, the number of local news reporters it would employ – including its LANG, San Bernardino Daily Bulletin, Register and Press-Enterprise properties – would begin to rival the local news reporting strength of Tribune’s Los Angeles Times.

At the same time, we must note that the number of employed daily journalists in southern California (and nationally) is indeed fluid. While Tribunecut more than 80 L.A. Times journalists in November, DFM’s cuts are more recent. Just Tuesday, Greg Moore, editor of DFM’s Denver Post, resigned, in part due to serial cuts imposed on the Post by DFM owner Alden Global Capital. The Bay Area News Group (BANG, LANG’s Northern California cousin) just moved to eliminate between 33 and 43 newsroom jobs, as it reshuffles area paper nameplates, press routines and copydesk positions. That will amount to as much as 20% of existing BANG journalistic staff, though a small number of new staffers may be added back.

Clearly, then, the surge of interest in buying the Register and Press-Enterprise can’t be interpreted as a vote of confidence in newspaper futures. Simply, the interest centers around cost-savings. That’s what’s driven both Tribune’s interest and DFM’s. Consolidation is the name of the game today.

While that buying motive remains clear, the impetus behind the Department of Justice letter remains less clear. The DOJ is alleging that both advertisers (in the rates they would be charged) and the readers (presumably in their narrowed choice of news matter) would be harmed by Tribune’s domination of a market encompassing about 20 million people, from San Diego to northern L.A. County. Fair point, and one worthy of good debate in this, the digital age.

But, the immediate question: How did DOJ come to send that letter, and to send it with its maximum-effect, two day-before-auction timing? Who, we can ask, adding to the screenplay-worthy series of Southern California newspapering events, may have had the juice to prompt DOJ to squeeze Tribune at this opportune time?

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Trash-Talking in the O.C., With Two Newspapers Hanging in the Balance Thu, 10 Mar 2016 03:20:21 +0000 Read more »]]> Nothing is easy when it comes to newspapering in southern California. Two bids for the Orange County Register, and associated properties, are now in to a bankruptcy court, and my sources indicate they are on the “puny” side.

That may not be surprising, considering the current dismal state of newspaper economics and the local context: each of the L.A.-area dailies has been part of at least one bankruptcy, and the Register itself, through parent Freedom Communications, is just emerging from a second with this process.

The drama of that emergence is set to begin soon (“Santa Ana showdown: Tribune’s bid for Southern California”), and the conclusion worthy of national attention. The bankruptcy court should decide the victor by month’s end, with the auction as early as March 21.

By April Fool’s Day, we could have a closing, on the sale of both the Register and its step-sister, the neighboring Riverside Press Enterprise (acquired by high-flying then-CEO Aaron Kushner in something of a shotgun marriage).


First published at Politico Media

Follow Newsonomics on Twitter @kdoctor


In the run-up to that auction, the theatrics haven’t disappointed.

Tribune Publishing – a prime bidder for the papers – has generated most of them. CEO Jack Griffin had needed funding to buy the papers, and, a month ago, turned to Chicago investor Michael Ferro to supply it. Ferro invested $44.4 million in the Tribune Publishing, to that end. Though the announcement was triumphal for Griffin, he soon saw the table turned. Ferro ousted Griffin two and a half weeks later, and then sacked much of Tribune’s top management ( “Michael Ferro Cleans the House That Jack Built”).

As bidders have positioned themselves for the bankruptcy auction, we’ve seen an unusual level of trash-talking about the assets and the deal. Would-be buyers have been denigrating the value of the two main assets at stake, the two papers and the perhaps-valuable real estate surrounding the Register. Usually, would-be buyers talk up value, sling around the S-word (synergy), and paint a picture of the upside. In this case, in recent weeks, the parties, publicly and privately, have thrown lots of cold water on the would-be deal.

Consequently, we’ve heard more about potential downsides. Those include: “environmental contamination,” a “toxic” pension fund, an uncooperative city government, antitrust concerns and, the most familiar one, deal risk.

As bidders weigh reality and fantasy here, they have begun to put in offers.

How low might those opening bids be? Tribune Publishing may have the higher initial bid, somewhere in the low to middle $30 million range, while Digital First Media, owner of the local Los Angeles News Group, may have come in $5-10 million below that, I’m told. Both are only opening bids; the court has yet to pick a “stalking horse” bidder to set a minimum for the auction, and it may not set one.

Tribune remains, through the drama, the papers’ logical buyer, given the stomach-churning economics of the industry. The buy would not be motivated by revenue. It is the cost savings, expected to be in the $8 to $12 million-plus annual range, that drives the deal, adding to TPUB earnings. The Register sits plum between Tribune’s L.A. Times and its San Diego Union-Tribune, bought last spring. Lots of cost consolidation would be pursued.

For Digital First Media, owned by private-equity player Alden Global Capital, a buy of the Register is both a bargaining chip, and a bit of a defensive play. Alden almost sold itself last spring and intends to dispose of its holdings when the price is right. Owning both the Register and the Press-Enterprise, and combining those operations with its own Los Angeles News Group (L.A. Daily News, Long Beach Press-Telegram, Pasadena Star-News and six other properties) offers two benefits. Short-term, an expanded LANG believes it can achieve cost synergies in the same neighborhood, or more, as Tribune’s $10-12M. Mid-term, as Alden sells, a bigger L.A. group should have more value than its current smaller group. Finally, the Register now prints at least three of the LANG titles. If rival Tribune owned that press as well, the cost of doing business for LANG might well increase, given the paucity of local press capacity.

The third bidder, an in-house one led by current Freedom Communications management and its CEO Rich Mirman, says it would take on the pension obligations. If this group buys, it could operate the papers’ independently, but is more likely to sell to either Tribune or LANG – at a premium.

So what are the issues the buyers are talking about—either because they are real concerns or because they are levers that can be pulled to justify a lower bid?

• The 14.3 acres of real estate. While once “worth” $40-45 million, buyers have now talked it down to as little as $14 million– if the local governments make its conversion from industrial (that $14M valuation) to residential too costly or cumbersome. Developer Mike Harrah, publicly associated with Rich Mirman’s own bidding group, and the likeliest would-be developer of the property, last week mentioned the risk of “environmental contamination,” as he expressed deal doubts. We could be seeing a lot of developer positioning and/or a real reckoning of value.

• “Toxic” pension funds. In November, the Wall Street Journal reported that Freedom Communications pension plan was underfunded by $155 million. More lately, we’ve heard allusions to something “toxic” in the assets held by the fund. Again, here, there’s more speculation than fact, but the pension bogeyman may scare away bidders or lower bid price. TPUB took on the Union-Tribune’s pension funds – the last agreed upon part of that spring, 2015 buy – but doesn’t want to take on Freedom’s. Given it’s a public company, its accounting for the pension funds wouldn’t do its balance sheet any good. Alden, a private company, could take then on without that issue, but doesn’t want to. Rich Mirman’s group says it would take on the pension responsibility, but presumably would pay less in cash accordingly.

When all is said and done, the bankruptcy court, which will decide which plan — cash-only or cash plus assumption of pension obligations — will most benefit creditors. (It may also make it harder to figure out a true public sales price.) At this point, it’s getting increasingly hard to see how Freedom’s many creditors will get their money out.

• Anti-Trust concerns. Tribune must assess how likely a deal could get hung up by anti-trust authorities. Clearly, newspaper monopoly isn’t what it used to be. Still, one newspaper-based company dominating a region of 20 million people would be unprecedented. Two anti-trust arguments could be tested, one along the ad dominance question and the other of one company owning the great majority of the newspaper printing press capacity in the region. The U.S. Attorney General’s Antitrust Division could open an investigation. Perhaps, more problematically, the state of California, under the anti-trust Cartwright Act, seen by some observers as being stronger than federal statute, could be applied. Either act might be ultimately winnable by Tribune, but at what cost to a company with little margin to spare in time or money?

• The value of the newspapers themselves. Given all the chaos in and around Freedom Communications, these papers by themselves aren’t worth much. I’ve estimated perhaps $15 million. As standalones, they have little value. In a bright-white sign of the times, it is only in their combination with others that there is value in the millions.

What is playing out here, as bidders talk smack? Is it game theory, with a few laughs thrown in? Or are the cold feet real, given the sober acknowledgment that it’s tough to find anyone who has recently bought a paper and found it to be a profitable investment?

The market has been positioning for the Register sale for many months. What’s new, in the last month, is the sudden change in leadership at Tribune Publishing. Former CEO Jack Griffin had made in-market acquisition of additional properties a top priority. So the question, all have recently wondered: Is the new leadership of Tribune Publishing as intent on buying the Register as was Griffin?

Apparently so. Michael Ferro began to pay assiduous attention to the L.A. Times, from mere days after his TPUB investment, and has spent notable time in the Southland since. While he has prided himself on being a Chicago guy, L.A. is apparently to his immediate liking. His Oscars attendance (which was followed by a similar, high-profile participation in the formal, Washington D.C. Gridiron Dinner Saturday night) caused a stir. Most tellingly, though, Chicagoan looks like he’s becoming a Los Angeleno, even if it’s part-time residency.

As the L.A. Times itself reported Monday, “[CEO Justin] Dearborn is moving his family to Los Angeles and Ferro has already bought a house in the city, which, technically, makes them local owners.” Further, there’s much new internal TPUB talk about building up the L.A.-based corporate staff. So for long-time observers of the Tribune’s Chicago-L.A. dance (first choreographed in 2000 when Tribune bought the Times Mirror Company for $8 billion), what came around is going around yet again.

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