No Sale

FOR SALE: Newspaper. Runs good. Driven daily and Sunday for decades. Leans slightly to the left. Fully loaded: includes presses, delivery trucks, journalists, newsprint reels, many working news boxes. Has fresh coat of layoffs. Needs some work: cost-cutting, redesign, updated Web strategy. Offers buyer a unique chance to be a local big cheese. Seller is highly motivated–will take best offer.

There are quite a few newspapers for sale these days. But there don't seem to be many buyers.

In Portland, Me., the Blethen family (of Seattle Times fame) appears to be having a hard time selling the Portland Press Herald and Maine Sunday Telegram. Several rumored local buyers have looked at the papers, but so far, no deal. In Austin, Cox is looking for a buyer for the Statesman–a good paper in an affluent college town, with a good Web site–but there have been no reports of any nibbles. In San Diego, the Copley family has the Union-Tribune on the block, and while over-eager newsroom rumors claim potential buyers like William Dean Singleton, Sam Zell and The New York Times Co. are kicking the tires, that speculation seems far-fetched at best, given that trio's problems at the papers they already own. Dow Jones put the Ottaway chain on the market a while back–and then took it off a few months later when no buyer could be found.

This is not a good time to be selling a newspaper. 

A couple of years ago, selling a paper was much easier. Local investors like Brian Tierney could be found to snap up papers like the Philadelphia Inquirer and Daily News, or robber-barons like Zell would use financial ju jitsu to pick up a Tribune Co., or an investment firm like Avista could convince itself that the Minneapolis Star-Tribune was a good buy. Hell, McClatchy, which should have known better, grabbed Knight Ridder (though the paucity of competing bidders should have been a clear warning sign). Even former GE CEO Jack Welch, a certified captain of industry, made a bid to buy the Boston Globe from The New York Times for $600 million.

Ah, those were the days. Now all of those buyers probably wish they hadn't written the check (their banks certainly do). Welch, rebuffed by the Times (oops!), reportedly is no longer interested in the Globe–much to the Times' chagrin, I'll bet. And notice that no rich Los Angelenos (Ron Burkle and David Geffen, white courtesy phone please) have stepped up to bid for the Los Angeles Times, despite pleas from Times staffers and others for somebody to free the paper from Zell's ownership.

Problem is, newspapers aren't a very good investment anymore, for reasons that are all too familiar: Declining ad sales and circulation, collapse of the classifieds business, aging readership, all sorts of new competition and bankers who are leery of loaning money for such speculative investments. The ongoing economic turmoil magnifies almost all of this.

There have been a couple of major newspaper sales lately, but they've been special circumstances: Rupert Murdoch buying the Wall Street Journal for his ego; Cablevision buying Newsday for the alleged synergy with its Long Island cable operations (but overpaying, in the eyes of most analysts, including losing bidder Murdoch); and Singleton flipping some Connecticut papers to Hearst, apparently to reduce the debt elsewhere in his empire.

My point is that for Portland, Austin, San Diego and other papers currently on the block, new ownership doesn't appear likely to be the solution to the structural and economic problems that are rocking the industry. For now, the current owners are probably stuck with these papers–unless they want to explore other, more dire alternatives. Eventually, we'll probably see some vulture investors move in to buy sick papers at pennies on the dollar, but that doesn't seem to be happening. Yet.

In investing, there's something called the greater fool theory. It's based on the idea that an investor can always find somebody to buy something that's a bigger fool than the seller who originally bought it. But it may be that newspaper sellers have just about run out of fools.

Comments

[carl]

"financial ju jitsu"...love that line.

[Rick Waghorn]

On the right track... as ever.

http://outwithabang.rickwaghorn.co.uk/?p=139

[edward]

I thought I read Hearst was interested in Austin. These proposed sales are coming against a background where there is no credit anymore, so it would have to be done by someone with deep pockets.

[Rocky]

The NAA should get their lobbyists on the hill ASAP! I hear Paulson et al. are willing to buy all sorts of assets that no one else will buy. The $20 billion value of the newspaper industry is chump change.

Heck, you could probably mark the assets up to whatever number you want. Wall Street gets to.