Law 3 – Local: Remap and Reload

At first glance, the question of whether professors and journalists are in the same business seems almost absurd, doesn’t it? We know what a college is, and we know what a newspaper is. One’s got ivy-covered walls, demands on-site instruction, costs tens of thousands of dollars a year, and grants certificates of completion, or degrees. The other is a physical, throwaway product that until lately cost a quarter a day and now can go at the top end — in print — for $650 a year. No prizes are awarded for reading daily — or for 50 years.

Online, though, these historic differences seem to fade rather quickly. We read to learn, whether it’s a course on European history or the latest twists and turns of current European economic drama. Greek tragedies of two different era. We read to understand and make sense of things.

It’s the early movements of the ball that make this deal more a feat of financial engineering than a newspaper deal:

Lend Media General $400 million, and extend a $45 line of credit, at 10.5% interest. That allows Media General to escape shorter-term financial pressures, and gives BH a good profit along the way.
Gain warrants that are convertible to about 19.9 percent of Media General’s outstanding shares. The new Media General is mainly a broadcast company, a sector with its share of issues, but with lots more projectable upside than the newspaper industry. So it’s gotten — as Buffett earlier got in General Motors and other “bail out” deals — a better deal than your average investor, as Media General re-charts its future.
Takes title to all the real estate these newspaper companies sit on.

Let’s start with this basic principle: People won’t pay you for content if you don’t ask them to. That’s an inside-the-industry joke, but one with too much reality to sustain much laughter. It took the industry a long time to start testing offers and price points, as The Wall Street Journal and Walter Hussman’s Arkansas Democrat-Gazette provided lone wolf examples.
The corollary to that principle? If you don’t start to charge consumers — Warren Buffett on newspaper pricing: “You shouldn’t be giving away a product that you’re trying to sell.” — then you can’t learn how consumers respond to pricing. Once you start pricing, you can start learning, and adjust.

The Times as the center of the world approach seemed a bit odd Friday night. One audience questioner, hearing the comments, did ask with a tone of incredulity, “Surely, you can’t cover the whole country with 1200 people?” Baquet did allow that there are big issues in the non-national press, “The dirty little secret of newspapers is that many aren’t that good. For every Philadelphia Inquirer, there is a dipshit paper.” Which is kind of a problem if there are only two serious national newspapers in the country and 1400-plus non-national ones. As he I talked with participants over the weekend, the take was unanimous: Baquet hadn’t been merely arrogant, but extraordinarily and doubly so, given the conference’s reason for being.

let’s call it the newsonomics of small things, with a nod to Mr. Jobs and to Meinolf Ellers’ realization. Let’s focus on Small Things as opposed to Big Things — meaning traditional advertising and circulation, the long-in-the-tooth double-digit contributors to newspaper company revenues.

It would be great to replace those-end-of-lifecycle business lines with other Big Things, but those are few and far between. Google developed the Next Big Thing of paid search advertising, and continues to dominate that $40 billion global industry, with 76 percent market share in the Americas and 94 percent in EMEA, according to Covario, an large, independent search marketing agency. AT&T and Verizon replaced their cycle-ending landline business by going Triple Play, adding broadband and cable to their revenue lines. Facebook cornered the market on a little segment called global social connectivity. Newspapers have been searching in vain for two decades for such Big Things and have come up short.

So let’s touch on six Small Things — each now a small egg, at best a single digit contributor to overall revenue. Then let’s toss in a couple of Wild Things, fliers of businesses that might work.