A billionaire philanthropist buying into the woebegone American newspaper industry does make a good story and prompts the usual question: Why? Does he something others don’t?

As Buffett’s Berkshire Hathaway relieves Media General of its newspapers — “We’ve come to understand that most investors do not view the publishing sector as a place to generate the best returns on their capital,” Media General CEO Marshall N. Morton put it succinctly in April  – I think we can see this deal roughly in line with the spate of other newspaper deals that have gotten done in the last year or so.

Most of these deals do not rely that much on the actual value of the newspaper property. Rather than rely on other things — the value of underlying real estate has driven numerous of the deals – and the meager cash flow of the properties themselves is seen as a way to generate enough revenue to pay off low-interest, acquisition debt. In this deal, Buffett has taken more of a three-cushion billiards approach, much as the headlines announce “Berkshire Hathaway Bets Again on Newspapers with Media General Deal.” Each cushion rings up advantages for the company, even if the newspaper ownership itself is the most problematic.

Buffett is, at base, an opportunistic investor. See a business, or industry deep in the doldrums, and think you can leverage money out of a deal, one way or the other, and you’ve got an opportunity. The difference, if you are Berkshire Hathaway, you get a better deal than others, because of your financial capacity and willingness to take the long view. That’s what BH did with General Electric and Goldman Sachs, back when the world seemed to be ending in 2009. With that long-term position, he is perceived much more as an eagle than a vulture, yet he’s a predator nonetheless.

So, Berkshire Hathaway takes the newspapers off of Media General’s hands. At $142 million, he is buying 63 titles or about 21 actual “newspaper” properties. So that’s like buying a top-of-the-line house in each city, but you get a newspaper with with it. When the pool ball drops in the corner, BH Media needs to figure out a new game plan for those properties, one that I’ll bet will involve bringing a higher degree of technology application in cutting legacy costs faster and deeper.

It’s the early movements of the ball that make this deal more a feat of financial engineering than a newspaper deal. Three cushions provide investment relief:

• 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.

Now the new BH Media Group can move forward with its properties — where and how will the Omaha and Buffalo properties fit here?  – and unencumbered by debt or short-term pressures. If you are a long-term investor like Buffett, you can afford to give “newspaper” properties a breathing period.

He, as well as anyone knows that the future will be mainly digital, though it will slower to unfold in Lynchburg and Winston-Salem than in competitive major metro markets. He can be buoyed by the profound industry move to charging for digital access, after decrying free digital access: “Newspapers have been giving away their product at the same time they are selling it and that is not a great model. You’re competing with yourself… you shouldn’t be giving away a product you’re trying to sell. That’s key to the future of the newspaper. giving away a product free in one place that you charge for in another.” We now have enough evidence to believe that core newspaper readers will transition over their payments for “circulation” as they themselves move to tablets and other devices, if publishers approach the transition smartly.

The problem is print advertising is far deeper; it’s in an unending and accelerating spiral. No doubt he is buying — by bypassing Media General’s Tampa Tribune — profitable entities. Indeed, we may find out, looking back, that Buffett is just another greater fool, having believed his buy was close enough to the bottom to justify. Or we may see the code broken well enough on new business models, as the BH Media Group takes a long, hard look at the realities of John Paton’s Digital First Media initiatives, to manage downturn and change well enough to stay in the black. As that drama unfolds, it’s the profits from a Media General broadcast bet, loan interest and potential sales of real estate that buffett this deal from the harsh day-to-day reality of newspaper downturn.

The nation’s top investigative watchdogs convened last weekend to figure out how to better get the work of public interest, democracy-supporting news done, and I’ve covered that Logan Symposium 2012, over at Nieman Journalism Lab this morning.

Indeed, it was a power-packed — and collaborative — weekend, yet it got off to sputtering and almost jaw-dropping start.

Logan organizer Lowell Bergman, who heads UC Berkeley’s growing Investigative Reporting Program and is a longtime investigative producer and reporter (Frontline, CBS, New York Times+), led off with a Friday evening one-on-one interview with Dean Baquet, the New York Times’ managing editor. Baquet was subbing for Times editor Jill Abramson.

With a strong theme of collaboration — reporters sharing ideas and tips, TV and newspapers partnering, more is better than less — running through the conference’s schedule, Bergman tossed out an easy question for Baquet about collaboration.

“This is going to sound arrogant, but we need it less,” he said. You know, when someone starts off a sentence like that, he is usually right. Bergman gave Baquet a few more chances to explain himself….and sound less arrogant. Baquet whiffed, repeatedly.

His reasoning:

• The Times newsroom of 1200 is large enough to do what needs to be done, “unlike the Washington Post which has given up areas of coverage.”
• The Times seems like a more stable business now, with the fledgling success of its paywall — both making journalists feel their work is valued in the digital age and contributing to revenues. Baquet likened the paywall decision to the Times’ 1980 decision to launch a national edition, as milestones in the company’s strategy.
• “Reporters blanch at having two sets of editors.”

Asked what he thought of the Times/local collaborations with Texas Tribune, Bay Citizen and the Chicago News Cooperative (the second and third having recently been terminated), his response: “We got some good coverage out it,” particularly Texas “for the 20 minutes that Rick Perry ran for President.”

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.

Now, most observers were quick to point out that Baquet himself had proven to be a good — and collaborative — colleague in his years in journalism in New Orleans, Washington, L.A. and New York. Still his words seemed out of place. Let’s maybe blame it on the cold pills he may have been taking to soothe an ailment.

Whatever, the pose seems dangerous.

It’s wonderful that the Times still pays 1200 people, but how much longer will it be able to? In the depth of the recession, it cut more than 100 positions and as recently as last fall had to offer newsroom buyouts. Its financial future is far from assured, with its print advertising woes a great weight going forward. It is not out of the woods; it may simply be seeing a clearing.

When times get tougher, and they may well soon, the Times will need friends. You know, those people who are with you in the good, and bad, times. Talking like the king of the hill doesn’t win friends. Beyond that, even the Times’ 1200 staffers only provide limited capacity, and in the total distribution era of news, capacity counts. That’s one of the things that has made the the local collaborations of the Times such an interesting experiment. Could it generate more journalistic capacity — quality journalism that met its standards, though it was done by non-Timesmen and Timeswomen — with the local partnerships?

We’re left wondering what the Times learned from those partnerships, and where it goes from here. We’re used to not feeling warm and cuddly about the Times; arrogance has often walked hand-in-hand with its great journalism.

Yet, journalism, inevitably is a humbling trade, and even the Times is better off, for itself and for all of us, remembering that.

By historical measure, it’s a strange move. A large newspaper company CEO is captain of his own ship, at a pinnacle of American company life and compensation. The Associated Press, on the other hand, has been something else indeed, a wire, about as unsexy as a news company can be. Retiring CEO Tom Curley came over to AP from his role as publisher of USA Today almost nine years ago. It’s been a helluva nine years of transformation, of turning the quite traditional company he inherited from long-time head Lou Boccardi into a modern news company. He got it part way there.

Now Pruitt takes the baton, as most reports paint a picture of night falling on one of America’s oldest industries. The Council of Economic Advisers has reported that the press is “America’s fastest-shrinking industry”, measured by jobs lost,” and the Financial Times headlined its recent newspaper round-up, “Bleak outlook for US newspapers.”

Why do it? Why trade in the sleepiness of California’s capital city (Sacramento is McClatchy’s headquarters) for the bright lights of Broadway, a long walk from AP’s NYC offices?

Number one on list may be McClatchy fatigue. Pruitt and his CFO, now-successor Pat Talamantes, have rowed the third-largest U.S. newspaper company oh-so-gingerly around the bankruptcy shoals that have grabbed more than dozen of their peers. They’ve had to make devastating cuts in staff and other expenses along with other companies, but get some points for greater efforts to keep newsroom size and spirit going in the face of that bleak reality. It’s important to note that McClatchy has found no special sauce in transforming itself for the digital age, performing on par, sometimes better, sometimes worse, than its peers. Pruitt is getting this job not on the basis on being a proven transformative player, but on being a known, highly respected news exec who understands the challenges of the times.

Almost exactly six years ago, Pruitt seemed like a big hope for higher-quality, newspaper journalism in the transitional print/digital age. On March 6, 2006, which seems like two eternities ago, McClatchy bought Knight-Ridder, then the second-largest newspaper company in the country, and my work home for 21 years through 2005.  Though Knight-Ridder’s quick demise was shocking, Pruitt’s commitment to journalism was reassuring. I remember the conference call the company did to tout the purchase, and the optimism and commitment in Pruitt’s voice:

“Opportunities like this come perhaps once in a company’s lifetime, and  we’re thrilled to have this chance to extend McClatchy journalism and our  proven newspaper operations to 20 high-quality newspapers in high-growth  markets. Our two companies operate in the finest traditions of American journalism,  devoted to independent, public interest reporting and the highest ethical  values. Combining the two creates a company particularly well-positioned to  lead the way in a changing media landscape. It’s truly a chance for McClatchy  to do more of what it does best.”

We hoped Pruitt would become a strong public leader for those values in this difficult age. Fending off bankruptcy, challenged by new non-family shareholders and consumed by month-to-month survival, that leadership went underground. There was little percentage in asserting journalistic values in that environment, it seemed.

So now: AP. Certainly, the company owns its own set of life-and-death challenges. The non-profit cooperative, owned by newspaper companies, is still somewhere betwixt and between a wire and a global media company.

One thing Pruitt trades in: a non-national company of diverse properties for a worldwide media play. In a word: Scale.

AP is one of the Digital Dozen companies I wrote about in the Newsonomics book. The digital business is all about scale: do something better than others and then take it out, at very low incremental costs, to the rest of the world. The Wall Street Journal, BBC, the New York Times, Bloomberg, Guardian and a half dozen others fit that definition; many will be the winners when we look back from 2020. Yet AP isn’t in that league.

Though only about 20% of its revenues these days (down from 40% when Tom Curley arrived in 2003) are paid by member newspapers, those newspapers control the direction of the non-profit company. Understandably, member/owners haven’t wanted AP to directly compete with them in the digital, death-of-distance age, but they’ve often been far stronger in what they didn’t want AP to do, than in what they wanted it to do.

AP’s been essentially a B-to-B company, with one of its prime customer revenue bases eroding so quickly. AP has made up part of that deficit by selling national content to web portals and upped its broadcasting and global businesses, but, like its owners, it has had to cut. The company’s made smarter investments in mobile lately, revamping what had been ho-hum, if early-to-market, iPhone and iPad apps. Those products offer glimmers of hope that the power of AP, and its members, can be realized by consumers. Mobile is the only area in which AP is going direct to consumers, with the goal of being the go-to site for news in the U.S. That’s a tall goal, with lots of competition.

So what should be at the top of Gary Pruitt’s to-do list?:

• In one word: Leadership. Yes, a sky (print) is falling. Yet, we’ve never more needed strong, courageous leadership in the news industry. What journalists — and not just those employed by daily newspaper companies — do is hugely importantly to their democracies and their communities. Tom Curley tried to make those points; too often his comments were received as those of the Old Guard simply trying to hold on. It’s not easy to change the conversation, but before the public, Congress and the industry, Gary Pruitt must step forward with an optimistic, inclusive view of the future of the news business.
• Embrace Big Story storytelling: Check out the new Big Stories section on the new AP Mobile app. It only contains five topics now, but its larger principle is important. AP is probably the second-largest company, by staff, in the world, with about 2700 journalists, second to Reuters’ approximate 3000. It made its reputation of getting it first, globally. That’s still vitally important. Yet, its ability to move beyond a commodification of sorts — for publishers, taking AP’s first story, then come behind it with a deeper story — is essential if it’s going to climb the mountain of value and charge more. As AP escapes from the age of Last In, First Out into a web of greater contextual value to its business and consumer customers, the more it can claim a place in that Digital Dozen.
• Master advertising: McClatchy is an advertising company; AP’s not. AP, if it is to be global player, needs to develop and bring in-house — quickly — advertising chops. Yes, its content-buying customers will sell their own advertising, but AP needs capacity to do that same, and not be wholly dependent on those buyers to create — and share value.
• Leverage global connections: The world’s news agencies employ 10,000 or more journalists among them. Collectively — if they were working even more closely together — that would be the largest journalistic workforce on the planet. Finding ways to leverage more and more any journalistic synergies (technology can help here) is an opportunity AP’s competitors don’t have. Some of those news agencies have found more alternative funding sources than others, though all are struggling with their core businesses. Learning from them is essential.
• Play paywall pool: With Lee’s embrace of paywalls, we’re now seeing pay systems become the default at U.S. dailies. Paywalls aren’t only a digital circulation revenue move; they reconfigure customer relationship and should force re-thinking of product portfolio. Consequently, figuring out where AP fits into the new paywalled world (and as more than in-front-of-the-wall, bulk-up-the-free content) has suddenly increased in priority.

• 390,000 digital subscribers overall.
• Growth rate of 20% fourth quarter over third quarter.

Those are the public numbers. We’re left to extrapolate the dollars. My extrapolation is that the run-rate for the Times’ new digital revenue is about $86 million a year. We take the 390,000 digital subscriber number and assign an average revenue per digital customer of $221 a year. At its four-week (or 13X a year) billing rate, that’s a little less than $17 every four weeks. Full all-access (tablet + smartphone + online) costs $35 each period, tablet access $20, smartphone, $15. So let’s take the differing price points, rolling intro offers (99 cents for the first month), special deals and cancellations into account. Let’s believe that it’s the lowest price point digital product (online + smartphone) for $15 each four weeks generates the majority of buys. Let’s then use a $17 average.

That produces $86 million a year, or more than eight times what the Times took in annually from Times Select; time to bury that ghost. If we compare it to some other Times’ yardsticks, it takes on more meaning:

• It’s 12% of the New York Times overall circulation revenue for the year. That puts the annual circulation number in positive territory — up 3% for the year, and a lively 8% for the fourth quarter – reversing the 2010 trend.
• It’s $100 million less (about $186M for New York Times itself) than the amount of digital advertising revenue for the year. So it’s important, but the digital ad number still is more decisive in making up for the print revenue decline. Despite 10% digital ad growth for the News Media group (without About properties), the NYT property still saw a 3% decline in ad revenue for the year. One more way to look at it: the Times took in $22 million less in advertising overall in 2011, so new digital circulation revenue exceeded that decline by 4X.
• It’s 1.1% of the Times’ 33 million U.S. unique visitors, once we take out international buyers. That one percent seems like a tiny number, but it’s 34% of its print circulation. Anyhow, “total unique visitors” are getting to be close to an irrelevant number. Paid readers who also consume a majority or strong plurality of page views are the customers the Times’ care about.
• It’s four times ousted CEO Janet Robinson’s good-bye payout. That’s small consolidation to outraged staffers, dealing with their own 1% issue.
• It’s four times the dividend family members are hoping to see reinstated. The dividend paid out $20.8 million in 2008. Even they need to be kept happy to keep the Times out of public play, there are few new dollars to assuage them.

So, overall, the Times digital circulation seems to be an increasingly important part of the next-gen publishing model, but not an earth-shaking one. I think much of the story — and import — here is behind the scenes. As we look at the mechanics of selling digital access, we see a business model with birthing pangs, and one that may lead to anticipated and unanticipated healthy development. In talking with Paul Smurl, VP of paid products for the Times, this week, I picked up some related datapoints that help us understand what this first year may lead to:

• 70%+ % of the Times’ print subscribers have now “authenticated.” That’s hugely important. Several years ago, the Times began exhorting its print subscribers — through direct mail and e-mail — to sign up for online access to the Times, laying the ground work, intentionally and unintentionally, for the model of All Access that it introduced a year ago. In August, 2010 the Times had only 50% of Times subscribers registered. That didn’t mean that only 50% read the Times online. It meant that a significant portion didn’t read the Times online and that those who did, but didn’t register, didn’t associate much value with their print subscription payment. Why register, when anyone can go to nytimes.com and read for free?

Now, with three-quarters of print subscribers registered, the Times has climbed a major mountain. Paying customers increasingly see value in both print and digital. The Times can begin, as it has to link up print subscriber profiles (address, demographics, buying history, and more) with digital usage (what read on which device when and lots more). So through these initiatives, the Times is moving — as every smart publisher must — toward a single view of its reader customer. That view then informs the Times’ ability to better target advertising and to sell readers more digital and print stuff, like the New York Times Store. (And it’s all about stuff, as George Carlin timelessly reminds us.)

• Look beyond subscription sales. Hearst, Rodale, Conde Nast and other magazine publishers have led the way in producing new ebook specials. The future here — think of mining the NYT database — is game-changing. Smurl says he thinks of it as “SKU management,” a new discipline for a new publisher. Look for the Times to start with specials around events like the Olympics and the Oscars, feeling its way along as it figures out “cover price,” sponsorship and ad potentials.
• Compare old and new world costs of acquisition: It costs a lot for a newspaper to sign up a new subscriber. I’ve heard estimates from $50 to $200 per new customer. The cost of acquiring a digital customer can be as little as near-zero to a small fraction of the print cost. Here, we begin to get into the positives of the digital press shift; picking up new customers costs far less. CFO Jim Follo noted on this morning’s call that costs for the company will not decrease this (the first time in four years), and part of the reason is increased spending on digital marketing. The Times is pouring the limited cash it has in going to digital subs.
• Churn is less with digital than print customers: Skeptics opined that people might sign up, but then flee after sampling the paid digital product. The opposite appears true: Smurl says digital churn is less than print churn. Add together the low cost of digital acquisition and the lower churn, and you have a formula for much digital marketing experimentation in 2012 and beyond. Who is the Times trying targeting to buy? “Like-mindeds,” in Smurl’s parlance, those with curiosity, societal engagement — and education and income to match.
• About 12% of digital buyers live outside the U.S.: That’s a growing number. It’s an indication that the Times is becoming a global news medium. Of course, that’s always been true, in Internet times, but largely meaningless. It’s been hard to sell advertising outside the U.S. (other than the Times-owned International Herald Tribune’s traditional business) and, of course, there was no way to make money from digital readers. Now that’s changed. With only 5% of the world’s population (last week I focused on this upside in “The Newsonomics of the Global Media Imperative“), the Times has huge growth potential beyond its core market. By 2016, I wouldn’t be surprised if 25% of the Times’ digital subscribers — many with no access to print, remember — are non-U.S.
• Exploiting Sunday: It took about 12 seconds for Times’ readers to figure out the new subscription math, when the company when digital-paid last year. When they did the math and saw they could get the four-pound Sunday paper and “all-digital-access” for $60 less than “all-digital-access” by itself, they took the newsprint. Which stabilized Sunday sales, and the Sunday ad base. Then the Times was able to announce a near-historic fact in October: Sunday home delivery subscriptions had actually increased year-over-year, a positive point in an industry used to parsing negatives. Now, Sunday is emerging a key point of strategic planning. Keep the Sunday paper strong for at least several more years — and quite likely longer — and the Times gains a fighting chance to find a print/digital hybrid model to sustain its journalism.

In addition to his day job, Smurl has been busy over the last year talking to newspaper publishers, near and far, about going paid. Dozens of people have filed into the Times to see what they can learn, and apply. In addition to the tricks of the trade, Smurl finds itself offering quasi-spiritual advice. “You can’t be apologetic about charging,” he tells his often down-hearted visitors. “Sometimes it’s as much a motivational session as anything else,” he says. Today’s motivational lesson heard all around the media world is summed up neatly in four words: 390,000 paying digital subscribers.

2. Didn’t CNN’s coverage of the Iowa Caucuses illustrate our screens future? John King has been the King of the Screens, and we can remember when his magic-touch screen seemed wildly innovative. Now in the touch-screen era, it was all screens all night — save Wolf Blitzer’s classic utterance of “OMG” in seeing Romney go up by a single vote — and CNN newbie Erin Burnett brought the right slapstick spirit to the uncertain screencraft. She whooshed one image off one screen on to the next one, sometimes successfully. CNN’s use of data, even as limited as it was for this election, showed how much we’ve moved beyond the world of still print infographics. The marriage of analytics and screens from tablets to livingroom monitors is forever changing how we take in information.

3. If AOL crumbles in one direction or another, what’s the future for smart cookie Arianna Huffington, who has parlayed personality and business model into an enviable perch in American journalism? Who might pick up HuffPo, one of the easiest-to-define business lines in journalism? How much will its relatively low rate of ad return (“The Newsonomics of ARPU” deter buyers? With the emergence of a broad international strategy (10 new editions) – “We’re now re-expanding back into a list of countries”, said CEO Tim Armstrong Tuesday – it becomes a more interesting play.

4. With Alibaba hot on the Yahoo tail, how much should we wonder about the future of big aggregators stocking up on a professional journalists? AJR estimated that Yahoo has hired about 200 journalists and AOL 250 (not counting the Patchers). Those hundreds have produced some pretty good journalism, particularly with sports scoops, and have proven that the term “as first reported by Yahoo,” isn’t a joke. The question of Chinese ownership is a knotty one (interesting Fortune take on American hypocrisy, here), but we have to ask questions about how free a journalistic corps would be under Jack Ma leadership. It might be well and good to uncover U.S. football corruption, and that’s a growth sport itself, but what about wider public policy coverage? For AOL journalists, the questions are even gauzier. With AOL’s deepening financial questions and investor pressure to cut back on non-profit-producing business lines, how long will there jobs be maintained, under current or potential new management/ownership?

5. Won’t be 2012 be the age of All-Access perfecting? Time Inc is among those getting its tablet act together well, with Time Magazine a fairly slick tablet app. In December, the company made a foray at convincing print subscribers that connecting the print sub with digital access is a good idea. The sign-on process is fairly straightforward, and seems to hold session to session, unlike some others. Yet, subscribing to more than one Time Inc. product — Time Magazine and Sunset, for instance — has to be done twice. Expect that kind of obstacle to be eliminated going forward. All-Access will be real all access, made easier for consumers. And All-Access is even trickling down very local as the Monterey (Ca.) County Weekly heralds its all-access availability through public radio sponsorship. Getting All-Access right — pricing, real tablet- and smartphone-appropriate apps, customer ease, giving subscribers cross-title benefits — is one of the biggest tasks for news and magazine publishers this year.

6. How could a single person be empowered to send a message on behalf of the New York Times to eight million people? The Times’ your subscription-is-ending embarrassment email showed the company at its worst in detecting and handling a crisis. My larger question is how, in any scenario, a single person has the unchecked power to send a message to eight million people on behalf of a big brand? The culture of checking and doublechecking (yes, the sorry Judith Miller tragedy aside) is so deeply ingrained in Times’ DNA. Why isn’t it part of the wider culture, especially in the one-click age?

7. What’s more local than language? The Times profiled Wordnik Sunday. It’s an innovative modern language company making the most of digital technology to surface new and real meaning of our living language in this fast-changing age. Noted in the story is that the Times and News Corp’s Smart Money are using Wordnik for glossaries? As local media look for ways to really be more local, knowing and presenting more about place is essential. So what about using something like Wordnik to create local language guides? It’s a small idea, perhaps, but one showing how even local media need to make more use of digital tools if they are to make future claims of relevance to local audiences.

8.Hasn’t Gail Collins turned out to be a just-right-for-the-times replacement for Frank Rich? Rich’s rich prose and panoramic view often left us breathless in its sweep, and well deserved a Pulitzer. Yet Collins — a New Yorker who recently pointed out that “John McCain came in fourth in 2008, with the support of 15,500 Iowans. This is approximately the number of people who live on my block” – has brought a Hee-Haw sensibility perfectly suited to the Wonderlandia of the Republican primary scene.

9. With a call-out to Ken Kesey, isn’t 2012 the year when you’re either on the cloud … of off it?

The New York Times is slimming down to bulk up. It is no longer a newspaper company, with a strong national newspaper, a Boston cousin in the Globe and regional newspaper interests. It is a global news company whose future is mostly digital, and it will live or die on that adventure. It is a company that now sees 63% of its revenues (last from the third quarter) coming from the Times print and digital operations. Over the past several years, the Times — despite its many trials (selling its flagship building, participating in Carlos Slim usury, before paying back the 14% $250 million loan to the Mexican magnate) — has outperformed financially both the regional group and the Globe .

That only makes sense. Borrowing lessons from Google, Microsoft, Yahoo and many others, the global Times is about scale. You can pay a Times reporter to write a story that can reach some of the Times ‘ 50 million global monthly unique visitors, three-fifths of them in the U.S. Or you can pay a Gainesville or Tuscaloosa reporter a little less to write a story that can reach a hundreth of that total. Do the math, and the future bet is on the company with the big global news brand and the reach.

The regional news companies, important as they are to their communities, have been but a business distraction. The Times has tried to sell them before, pulling back as market conditions forced it to do. Now Halifax Media Group seems set to complete its deal, which we’d have to believe is in final form given its inclusion of the NYTRNG papers on its website (courtesy of Romenesko), now taken down. Halifax is part of new generation of newspaper property buyers, believing they can make a go of these distressed properties, through more consolidation of jobs and other efficiencies. (“Now at Fire Sale Prices, a Few Newspapers…and Maybe More,” Newsonomics, Dec. 2, 2011)

For the Times now, and going forward, the competition is CNN, the BBC, News Corp, ABC, NBC, the Guardian, Bloomberg, Reuters and several others. Who indeed will be among the most trusted names in the (digital) news business?

The spasms of change at the Times come ironically after one of the most relatively successful years for the company. Yes, profits are still tough to come by — a measly $33 million in the last quarter — but the company pulled off a digital pay scheme that has established a modest beachhead. It begins to provide the Times a second digital revenue stream, in addition to advertising. Circulation revenues grew 3.4% for the last period, as the Times’ new digital All-Access push circulation had netted 324,000 “digital” subscribers of one kind or another and enabled the first Sunday home delivery print increase since 2006. It has positioned itself well with apps for emerging tablet and smartphone platforms, moving quickly into the Apple Newsstand, for instance. It is aiming for ubiquity and is in the lead of the newspaper pack, with the Journal nipping and biting along the way.

Yet, ominously, print advertising revenues decreased 10.4 percent and digital advertising revenues decreased 4.5 percent in the last quarter. 2012 looks like another down year, in high single digits. In fact, there’s an array of numbers that offer a quite uneven path to success next year, as I described in the Newsonomics of 2012′s Magic Formula, last week.

Consequently, the company is barely keeping even, and will likely have to accelerate cuts next year to stay profitable. So the plow must be sped. With less than a quarter of its revenues now driven by digital, the Times has to move quicker. It may balance (smartly as its done with its Sunday print/digital pricing) package print and digital, but it is has to grab mind share and market share in all the emerging digital spaces, tablet, smartphone, connected TV and web.

Expect the new CEO, most likely from the outside to be focused on three A’s: audience, advertising and analytics. Arrange those three in a virtuous circle, and you have an efficient spinning of the new digital economy. That’s clearly what Time Inc has in mind as it hired Laura Lang from the ad world.

The new CEO must also drive a faster kind of decision-making at the Times Company, a company now seeing both CEO Robinson and digital head Martin Nisenholtz leaving at the same time, the latter by retirement. Famously balkanized, with numerous power centers, the company has been both innovative and plodding. That’s an odd combo, but one fitting its prudent-above-all news culture. With one distraction removed (and now we wonder about the Boston Globe, its own pay scheme innovation underway, and how long it will remain a Times Company property), the new CEO aces a tough terrain. Given that the company, even post NYTRNG sale, is 90%+ newspaper-based, it suffers in its ability to grow. News Corp, CNN, Reuters and Bloomberg all are part of large, diversified companies that can buffer them from the permanent print ad downturn. As Janet Robinson found, the path forward is an extremely narrow one.

So what do we make of the three recently announced sales? In each case, there’s a strong, willful buyer, bucking conventional business sense to bull ahead into 2012.

In Omaha, we’ve got Warren Buffett, the man who said just two years ago: “For most newspapers in the United States, we would not buy them at any price. They have the possibility of nearly unending losses. … I do not see anything on the horizon that sees that erosion coming to an end.” Unfortunately, the owner of the Buffalo News, investor in and long-time (now retired) board member of the Washington Post Company, is right. The erosion was deepest — almost 20% in the depth of the recession — but the bleeding in higher single digits has continued since then and it will continue into 2012. The U.S. industry is literally half the size, in revenue, that it was five years ago.

So is the Oracle of Omaha’s vision now blurred? Doubt it.

Buffett is an American hero, generously giving away more than half his fortune through the Gates Foundation and making the common sense point that those Americans who are among our wealthiest can, and should, afford to help out their countrymen in the time of great distress (witness just today’s New York Times’ story on the intense, and long-lasting, pain of permanent unemployment). His company, Berkshire Hathaway, is buying out the employee-owned Omaha World-Herald for $200 million, including debt assumption. Why? Warren Buffett understands the link between news and democracy, especially in his home state of Nebraska, where the paper sets a lot of the agenda with its coverage. You’ve got to believe that the World-Herald’s management, facing the same dismal picture as all metro publishers, looked for the whitest knight around, and turned to Buffett.

In Chicago, a buyout group led by two business leaders,  Michael Ferro Jr.and  John Canning Jr., is in talks to buy the Sun-Times group, which bought the paper out of bankruptcy (alas, Chicago doesn’t win the prize for city with most bankrupt dailies; that goes to L.A., which has had three) two years ago.  The reported price: $11 million plus assumption of debt. Both Ferro and Canning have been deeply involved with the Chicago News Cooperative, former Trib and L.A. Times editor Jim O’Shea’s effort to provide independent, high-quality news in Chicago.

Meanwhile, last week, the San Diego Union-Tribune’s most recent sale (we need flow charts to follow the now-rapid movement of some properties) was announced. Local businessman and developer Doug Manchester are buying the paper, and its underlying real estate, for about $110 million from Platinum Equity (“San Diego’s Union Tribune: Out of the Private Equity Pot and Into Local Political Fire“). John Lynch, the CEO-to-be once the sale closes, wasted no time in laying out the paper’s quasi-journalistic instincts:

“Lynch said he wants the paper to be pro-business. The sports page to be pro-Chargers stadium. And reporters to become stars.

“It’s news information, but it’s also show biz,” Lynch said. “You get people to tune in and read your site or the paper when there’s an ‘Oh wow’ in the paper.”

He wants that sports page to be an advocate for a new football stadium “and call out those who don’t as obstructionists.”

“To my way of thinking,” Lynch said, “that’s a shovel-ready job for thousands…”

“We’d like to be a cheerleader for all that’s good about San Diego,” Lynch said. “Our motivation, both of us, was to do something good for San Diego.”

Expect the newest U-T to support the new owner’s business and (conservative) political interests, and do so with relative national impunity. When Sam Zell talked about bringing some pizzaz to the Tribune, he won lots of coverage. But that was the Tribune, with a half-dozen substantial metros. This is San Diego, though the second-largest city in our largest state, off in a corner of the country far away from media watchers.

Reporters with whom I’ve talked rightly ask if these three deals in the making are a trend. Yes, of sorts, we’d have to say.

First, let’s consider how little money is changing hands in these deals. We could say that Warren Buffett’s $200 million offer is generous; that’s almost twice what the San Diego quasi-monopoly daily is selling for. If someone had told you 10 years ago that the World-Herald would sell for twice the Union-Tribune, you would have laughed them out of the room. U-T owner Helen Copley was courted by the royalty of Old Guard ownership, from Knight-Ridder and Tribune among others, letting her know they were ready to open their wallets to the tune of well over $500 million when the will to sell struck her. It never did and when she died, her family sold, to pay taxes and in panic, in the depth of the recession to Platinum Equity, which swooped in and is now making some decent profit ($80 million+) on the deal.

Important to the trend/no-trend question is price. These are fire-sale prices, mere pocket change to the 1%. So for reasons of altruism, preserving local voice and journalism or bolstering one’s own personal or business agenda, the price is right.

Given that, will we see more sales to motivated, individual (yes, we know Berkshire Hathaway bought the World Herald, not Buffett, but we also know who made the decision) buyers? Probably.

If and when the squabbling Tribune debtholders and bondholders ever release the hostage company out of bankruptcy, several Tribune cities have would-be owners queued up, if management wants to sell. When will the new Digital First get its properties in sufficient financial order, so that owner Alden Global Capital can begin to make its exit? At what point do companies like Gannett, Gatehouse and CNHI start to let it be known that individual properties may be bought? That’s an unknowable question at this point, but with ad revenue headed further down next year, selling something to somebody — it is appears there are buyers here and there — becomes a more intriguing option.

Interestingly, we’ve heard little from would-be “community trust” buyer groups. There was much talk of community-oriented, non-profits, with some support from the Newspaper Guild, a couple of years ago. Maybe, it’s fatigue, felt by everyone in and around the business, save apparently a few bright-eyed businessmen. In the tumult of the last two years, the voices have gotten quiet. The intriguing start-up models of MinnPost, Texas Tribune, Voice of San Diego, CNC and Bay Citizen don’t seem to have ignited a wildfire of imitation across the country. Only AOL — with HuffPost city sites announcing rapidly and Patch outposts in place — seems to making a substantial local play.

It’s an odd environment out there, with all kinds of characters still to come out of the woodwork.

The San Diego Union-Tribune moves back to private ownership, after Platinum Equity swooped in during a seeming bottom of newspaper recession — 2009 — and turned its $35 million investment into a sale for $110 million. Nice cash pick-up for Platinum, a classic vulture move, sprucing up the carcass turned loose finally — and way too late by the Copley family.

Now $110 million isn’t a lot of money for what was once one of the most coveted newspaper properties, one that could have fetched ten times that if the Copleys timed their sale better. And the seeming tripling of “value” in two years has left a lot of people confused about what newspaper properties may be worth today.

My sense: The supposed tripling only tells that the Copleys panicked in selling so low two years ago, or that the details of the real-estate-influenced deal are obscuring actual news to news value. Whatever, here’s what we know about the deal:

• The Union-Tribune, like all other metro dailies, is seeing an interrupted trail of print advertising woes. I’ve written recently how most metro forecasts put print ads down another 5-12% in 2012. That means the Union-Tribune, like all other metros, is now taking in less print ad revenue than it was when it was sold two years ago.
• Any current or future profitability scenarios have got to be based more on increased cost control than ad revenue increase. The Union-Tribune deserves some credit for being a leader  in Groupon-like local deals, having created a highly successful program, th0ugh, digital ad increases — while a long-term solution — are still an inadequate band-aid for print losses. Fact of life: The only way to maintain 2011 profitability for the Union-Tribune’s new owners will be to continue to cut expenses, including people, or subsidize shortfalls.
• Private equity’s endgame — and think Alden Global Capital’s growing Digital First play — is to get out. Whether it’s real makeover (the Journal Register Company) or lipstick on a pig, the idea is to get local news enterprises into such a state where someone will pay top (of the moment) dollar, and move on. (And now, it’s an odd moment of loss, as some San Diego community members lament the mild progress Platinum has brought to some of the UT’s journalism.) Platinum has now moved on; when will Alden? Last week, I mentioned a vision of local (Digital First-run) newspaper editor who talked about the potential of the community reclaiming its newspaper:

“If Alden [invested strongly in his company as it is in a number of chains] ever wants to sell, I think I can put together a group of 40 families willing to step and invest. They wouldn’t do it to make a big profit, though maybe they could make some, but they’d do it maintain a community voice.”

A family-owned (or families-owned) newspaper future? Back to a future?

Our editor can keep his model safely tucked in his desk drawer for now. We need several things to happen to test the idea: (a) willing sellers; (b) models of community investment and ownership, which could be adapted from other enterprises; (c) a taste of Silicon Valley fervor”.

In fact, the world, as we now know it, intrudes. In the Union-Tribune’s case, it’s Doug Manchester, a strong right-wing advocate and major land developer who is buying the paper. That’s the sense it makes. As the silliness of our current politics distracts America, as a nation and in too many communities, from the common work of building our future, this silliness can well infect daily newspapers. Will Manchester honor long-held separations between impartial news reporting and opinion?

Don’t hold your breath. Manchester’s new CEO-to-be  John Lynch, sounded something Sam Zell — with conservative, pro-development, anti-tax and anti-gay rights positions added – in talking about the coming sale, as quoted in the Voice of San Diego (and that’s a fledgling institution whose importance now grows):

“Lynch said he wants the paper to be pro-business. The sports page to be pro-Chargers stadium. And reporters to become stars.

“It’s news information, but it’s also show biz,” Lynch said. “You get people to tune in and read your site or the paper when there’s an ‘Oh wow’ in the paper.”

He wants that sports page to be an advocate for a new football stadium “and call out those who don’t as obstructionists.”

“To my way of thinking,” Lynch said, “that’s a shovel-ready job for thousands.”

More changes will be evident after the deal closes between Nov. 30 and Dec. 15. Lynch said they want a stronger editorial page and to attract younger readers. Lynch hopes to bring other media into the building. He wants to be a newspaper industry precedent-setter.

“You change now or you die,” Lynch said…

“We’d like to be a cheerleader for all that’s good about San Diego,” Lynch said. “Our motivation, both of us, was to do something good for San Diego.”

We can see where this is going. The ideologically inclined see the bully pulpit value of these declining economic assets — assets still owning significant community sway and agenda-setting abilities — and pick them up. Traditional journalistic standards are simply collateral damage in a world of too much change. Who knows the difference; same masthead, right?

It’s a lot easier for a single, monied advocate, regardless of political stripe, to buy a cheap property than it is to put together a group of 40 to reclaim it for a “community.”

In San Diego, we’ve moved from an old-fogy, often clueless, newspaper family (the Copleys) to on-so-private equity and now onto more overtly political ownership. The saga of dailies is taking some odd turns, and I fear this is a new chapter we will soon see written in other cities.

Important Details: Newsy is an unusual project. It’s a for-profit enterprise, housed at a university. It’s an aggregation product in the largely single-title environment of the tablet.  And it’s a digital product that is tablet first, smartphone second and, the web, a distant third.

Newsy now produces 25 to 30 video stories each day, seven days a week, on an 18-hour cycle. Its stories are unusual. They run two and a half to four minutes in length, anchored by a staffers. Newsy benefits from the its partnership with the UniEssentially, they are summaries of the day’s news, drawing from both video (NBC, CNN, Fox News, BBC and more) and text (newspapers) sources. The sources are prominently featured, in short video clips and paragraphs displayed behind the speaking anchor.

Usage of clips is covered by Fair Use law, just as text aggregators, such as Google, built their businesses, says Spencer.

President Jim Spencer, a veteran of MSNBC and AskJeeves, moved his fledgling operation to Columbia, Mo, home of the University of Missouri, receiving economic development incentives from the City of Columbia (REDI) and substantial tax credits from the Missouri State Department of Economic Development.  Newsy benefits from its partnership with the literally across-the-street University of Missouri, providing hands-on instruction to students and then hiring the cream of each year’s crop. He credits the lower-cost location and enthusiasm of the student/University community with helping to rapid growing the business.

“They [the students] intrinsically get it,” Spencer told Outsell, talking about their grasping of the new product form. “They’ll stay up two days in a row working on an initiative.” On the development path: personalization in various forms, and new Mandarin- and Spanish-language versions.

Key to Newsy’s strategy is the engagement mobile news providers are finding with delivery to the new tablet devices. On its iPad product, Newsy has found that more than 45% of sessions are greater than three minutes in length, with 15% of all sessions being greater than 10 minutes. Shorter sessions are conducted on the iPhone, consistent with most publisher experiences: Newsy is finding users generally spend one to three minutes, and watch fewer videos (2.3 videos “initialized” compared to 3.4 for the iPad user). Median session length on the iPhone app is around 150 seconds, says Spencer. All those numbers compare favorably with industry online usage.

The two-and-a-half-year-old Newsy now employs 18 full-time and 12-15 part-time staffers. It is expanding its advertising presence, using 15-second pre-rolls and bottom of the page banners as  its main business model, with others in the offing.

Implications: Outsell believes the Newsy model in and of itself is of great consequence to news creators. It’s an intriguing tablet native product that manages to grab a hold of much of what makes the new platform such a mind-boggling reader and advertising opportunity.

It’s a plus product, as in: Mobile + Video + Social + Curation, all on the foundation of News. On the tablet, these factors aren’t separate from each other; in fact, the confluence of them is, in part, what gives the tablet platform its game-changing power. It’s not just news publishers, or broadcasters, who can take note. All producers of information can learn lots from taking a look at the Newsy product and business model.

As Spencer notes, it’s the tablet that is the center of his business, because of its unique capabilities; mobile accounts for 70-80% of the traffic. The web, meaning desktop and laptop? “I publish to the the web as the platform of last resort.” That’s a mind-turning idea, and one that legacy companies can think through, tossing print into that “what’s your best platform for this product?” question.

The whole question of aggregation products for the tablet is a work-in-progress. While Google, Yahoo!, AOLand MSN have dominated the online space, the single brand-encouraging interface of the iPad has transformed the picture — for now. We see services such as Flipboard and Pulse out early with curation/aggregation products, but the big guys aren’t yet well represented. At the same time, both newspaper and magazine publishers (think Next Issue Media) are trying to figure out if industry aggregation plays, long discarded for online, may be resuscitated. Newsy, then, gives those companies and industries something to think about, and in its get-it-done, get-into-the-market-cheaply momentum, a model from which to learn.