This blog is mainly about the spectacular train wreck at The Sacramento Bee and its parent company, the McClatchy Company. But I also post about current events, the Iraq and Afghanistan wars, politics, anything else that grabs my attention. Take a look around this blog, hope you enjoy it.
Friday, May 29, 2009
Forbes: Pruitt is hoping the competition goes bankrupt before McClatchy does
Puff piece. MNI papers are mostly the last ones left in their markets. Miami has a little competition from the Ft. Lauderdale and West Palm Beach papers, but not much. KC, Charlotte and Sacramento have no direct competition. Raleigh has only minor competition from the Durham Herald Sun, a paper owned by a heavily indebted chain. MNI has at best cannibalized its print advertising with online. In fact, online's growth has not even come close to replacing print's decline in advertising sales.
MNI needs to come up with a plan. Be it online subscriptions or something else. But right now, the plan seems to be mine the balance sheet for whatever can be found. Squeeze the employees while maintaining executive excess. Threaten the bond holders with bankruptcy while preserving the McClatchy family's control of the company.
Threatening the bondholders is actually a smart move. But realistically, the ad trend will not reverse even when the economy does turn around. Classifieds will never come back. Classified newspaper advertising will go the way of the Dodo bird. Charging for online content, would kill the $200 million in online revenue. Any pay-for-content model will never replace that $200 million.
Warren Beatty with a pepsodent smile... more like Jessica Simpson without a clue.
Threatening the bondholders is actually a smart move.
============
It is not only a foolish move but one that will mark him in the long term.
If he manages to strong arm bondholders into this, his future prospects for financing or investment are nil.
If you think the Newspaper Cartel is great at black balling, you haven't seen anything until you see how quick word gets around the financial industry.
There is nothing smart about this. It is called desperate.
"Threatening the bondholders is actually a smart move."Not really. For one thing no one but the bond holders knows how many bonds are protected by credit default swaps. A bondholder with a CDS won't sell for any price less than full face value. Further, as long as the McClatchy family is unwilling to part with control of the company, the bankruptcy threat is meaningless. The bondholders know full well that if they force MNI into bankruptcy, they will get stock in exchange for their debt. Stock that may well be worth something more than twenty cents on the dollar now.
"Charging for online content, would kill the $200 million in online revenue. Any pay-for-content model will never replace that $200 million."That is the 64 dollar question. Some publications, the Wall Street Journal, Trade-A-Plane and Rock & Dirt have found that pay for content is worth far more than their online ad revenues from free content. The conventional wisdom among most people inside the industry is that pay for content won't work. What I see as an investor is MNI's $200,000,000 of online revenue is not coming close to replacing its revenue loss in print. I don't see the current free content as working for MNI.
Why would it matter to Pruitt if the competition goes bankrupt before McClatchy. Having other newspapers declare bankruptcy does not save McClatchy from the same fate.
There is no magical revenue that would all of a sudden fall into the coffers of McClatchy because another newspaper chain declares bankruptcy. Most of these newspapers don't have a second newspaper in their direct region.
Why would it matter to Pruitt if the competition goes bankrupt before McClatchy. Having other newspapers declare bankruptcy does not save McClatchy from the same fate.
It is the old Monopolist mentality. He operates under the false impression that if all his competition dies out that he will still be there to fill the demand.
He has yet to recognize that demand destruction is occurring in conjunction with the recession and believes that when times get better advertisers will return. He doesn't understand that advertisers being forced out of his company's product are finding out that they don't need his vehicle of delivery.
"He doesn't understand that advertisers being forced out of his company's product are finding out that they don't need his vehicle of delivery."
This is a part of the old school newspaper mentality. How Pruitt is still i nthe position he is in is quite frankly, beyond me. In the past when times were good, companies did print advertising because they could, probably calling it a necessary evil. Newspapers ere SLOW to adjust with the times and are now reaping what they failed to sow. Now that ad budgets come so much further under the microscope, newspaper's inefficiencies are now coming to light in an ever changing advertising world where there are so many better, (and more cost effective) ways to bring advertising messages to the market place.
8 comments:
Puff piece. MNI papers are mostly the last ones left in their markets. Miami has a little competition from the Ft. Lauderdale and West Palm Beach papers, but not much. KC, Charlotte and Sacramento have no direct competition. Raleigh has only minor competition from the Durham Herald Sun, a paper owned by a heavily indebted chain. MNI has at best cannibalized its print advertising with online. In fact, online's growth has not even come close to replacing print's decline in advertising sales.
MNI needs to come up with a plan. Be it online subscriptions or something else. But right now, the plan seems to be mine the balance sheet for whatever can be found. Squeeze the employees while maintaining executive excess. Threaten the bond holders with bankruptcy while preserving the McClatchy family's control of the company.
Walt-in-Durham
Threatening the bondholders is actually a smart move. But realistically, the ad trend will not reverse even when the economy does turn around. Classifieds will never come back. Classified newspaper advertising will go the way of the Dodo bird. Charging for online content, would kill the $200 million in online revenue. Any pay-for-content model will never replace that $200 million.
Warren Beatty with a pepsodent smile... more like Jessica Simpson without a clue.
Which analyst gives Pruitt high marks for his strategy? I know more than ten of them that will tell you he is a fool.
Threatening the bondholders is actually a smart move.
============
It is not only a foolish move but one that will mark him in the long term.
If he manages to strong arm bondholders into this, his future prospects for financing or investment are nil.
If you think the Newspaper Cartel is great at black balling, you haven't seen anything until you see how quick word gets around the financial industry.
There is nothing smart about this. It is called desperate.
"Threatening the bondholders is actually a smart move."Not really. For one thing no one but the bond holders knows how many bonds are protected by credit default swaps. A bondholder with a CDS won't sell for any price less than full face value. Further, as long as the McClatchy family is unwilling to part with control of the company, the bankruptcy threat is meaningless. The bondholders know full well that if they force MNI into bankruptcy, they will get stock in exchange for their debt. Stock that may well be worth something more than twenty cents on the dollar now.
"Charging for online content, would kill the $200 million in online revenue. Any pay-for-content model will never replace that $200 million."That is the 64 dollar question. Some publications, the Wall Street Journal, Trade-A-Plane and Rock & Dirt have found that pay for content is worth far more than their online ad revenues from free content. The conventional wisdom among most people inside the industry is that pay for content won't work. What I see as an investor is MNI's $200,000,000 of online revenue is not coming close to replacing its revenue loss in print. I don't see the current free content as working for MNI.
Walt-in-Durham
Why would it matter to Pruitt if the competition goes bankrupt before McClatchy. Having other newspapers declare bankruptcy does not save McClatchy from the same fate.
There is no magical revenue that would all of a sudden fall into the coffers of McClatchy because another newspaper chain declares bankruptcy. Most of these newspapers don't have a second newspaper in their direct region.
Why would it matter to Pruitt if the competition goes bankrupt before McClatchy. Having other newspapers declare bankruptcy does not save McClatchy from the same fate.
It is the old Monopolist mentality. He operates under the false impression that if all his competition dies out that he will still be there to fill the demand.
He has yet to recognize that demand destruction is occurring in conjunction with the recession and believes that when times get better advertisers will return. He doesn't understand that advertisers being forced out of his company's product are finding out that they don't need his vehicle of delivery.
"He doesn't understand that advertisers being forced out of his company's product are finding out that they don't need his vehicle of delivery."
This is a part of the old school newspaper mentality. How Pruitt is still i nthe position he is in is quite frankly, beyond me. In the past when times were good, companies did print advertising because they could, probably calling it a necessary evil. Newspapers ere SLOW to adjust with the times and are now reaping what they failed to sow. Now that ad budgets come so much further under the microscope, newspaper's inefficiencies are now coming to light in an ever changing advertising world where there are so many better, (and more cost effective) ways to bring advertising messages to the market place.
Post a Comment