Sam Zell can go to ….

December 13, 2008

Where the …. is the outrage at what Sam Zell has perpetrated in his financial manoeuvrings that have brought The Los Angeles Times, The Chicago Tribune and 23 television stations into bankruptcy?

The aptly-named “Grave Dancer” has just dug a mass-grave for thousands of innocents who work these enterprises.

The New York Times first report labeled the debacle “The Newspaper Bubble, Too, Has Burst” as if this was just some sort of innocent homeowner who bought a cut-rate mortgage.

But finally a good reporter looked at things more closely. Andrew Ross Sorkin’s December 8th article in the same paper is called “Workers Pay for Debacle at Tribune.” It is a dispassionate and detailed look at the whole mess that billionaires are far too willing to engage in at the expense of the workers who make media properties valuable in the first place.

Shame on you, Mr. Zell! So you stand to lose $315 million. Boo hoo! As Sorkin’s article states pointedly: “It is unclear how much he’ll lose, but one thing is clear: When creditors get in line, he gets to stand ahead of the employees.”

Outrage is what is called for, not some neutral view that the newspaper industry is challenged. It would not be half as challenged if grave dancers of the sort Mr. Zell represents were not allowed to create such massive havoc.

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Journalists Should Sue Themselves

September 20, 2008

Wow!

Jeff Jarvis, whose BuzzMachine blog is one of the best there is, went to town in a September 17th entry sparked by the lawsuit of the journalists at the Los Angeles Times against their controversial new owner, Sam Zell.

I think you could say that he really let the journalists have it.

The second paragraph gives you a taste of his current state-of-mind: “Journalists are such a whiny bunch, always complaining, constantly blaming someone else for their problems. But friends, as the Rev. Wright would say, the chickens are coming home to roost.”

Later in the entry the attack resumes:

“When the paper failed even at covering its own hometown industry, did you jump in to fill the void? No.

“When the internet came, did you all – every one of you as responsible, smart journalists, on your own – leap to get training in audio and video? Did you immediately hatch new ways to work collaboratively with the vast public of bloggers able and willing to join in local journalism? Not that I saw.”

He finishes this scathing attack on journalists with “Want to see who’s to blame for the state of your paper? Get a mirror.”

At the same time he presents the most emphatically damning statement about the future of newspapers:

“Newspapers and newspaper companies are about to die (emphasis mine). The last remaining puddles of auto, home, job, and retail advertising are about to be sucked down the drain thanks to the economic crisis and credit is about to be crunched into dust. So any newspaper or news company that has been teetering will fall. If Fannie Mae, Freddie Mac, Lehman Brothers, and AIG can fall, so can a puny newspaper empire — and there’ll be no taxpayer bailout for them.”

I wrote the 27th response to Jeff’s entry:

“That is the most refreshing and to-the-point article (OK, blog entry) I’ve read in the midst of these endless months of hand-wringing, tear-jerking and self-serving twaddle. It’s strong stuff, but exactly what needed to be said. Sure, some folks can take some small issue with parts of it. But they should read the entire indictment and respond to that. You’ve finally said what needed to be said. For this I thank you. I’m going to send my readers to it from my blog.”

Check it out.

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Remembering When Journalism Mattered

July 23, 2008

BeAnEditor.jpg

This marvelous document appears on the Tell Zell: What You Really Think blog, “courtesy of Andrew Spencer, now 10. Sent in and used with the permission of his mom, Gail Gedan Spencer, a blogger and copy editor at the Sun”

I’ll just note a small part of her commentary, and encourage you to visit the site.

“I’m sending you something that I’ve had taped up at my work station for the past few years. It’s a worksheet on careers that my son did in first grade. As you can see, a love of journalism must have passed into his DNA from my husband and me. It’s hopeful and sad at the same time. (He now has more sensible career goals — cartoon voice artist or professional sports team mascot.)”

I don’t think we should despair about the future of newspapers. I think we should keep the faith.

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Not a Good Week for Publishers

June 20, 2008


It’s not as if the last few months have been exactly

perky and upbeat around publishing offices across the U.S. But the last week seems

to have been completely inundated with a dismal torrent of bad news. Both Hearst

(3rd largest magazine publishing in the U.S.) and Hachette (dropped

out of the #10 spot in 2006, but presumably still in the top 15) lost their

chief executives  ̶  whatever language the companies used in

making the announcements, these guys got the boot.

 

Meanwhile the big newspaper companies were reporting

horrible financial results: Gannett Co., which publishes more than eighty U.S.

newspapers, acknowledged that publishing ad revenue fell 14.3% in May. Its smaller

rival McClatchy Co. reported a 15% drop in newspaper ad revenue for the first

five months of the year and announced a 10% cut of its work force. New York

Times Co. said last Wednesday that ad revenue dropped 12%. And on June 17,

Bloomberg reported

that “Los Angeles Times and Chicago Tribune controlling investor Sam

Zell may be unable to stop the loss of advertising revenue leading him and

other U.S. newspaper publishers closer to default on billions of dollars in

debt.”

 

My take on all of this is the opposite of Robert Schiller’s

well-known phrase (and book title) “Irrational Exuberance.” I call it Irrational Pessimism.

 

As I pointed out in my blog entry “Is

the Internet Really Destroying Newspapers?”, quoting from a PEW report, “Even with so

many new sources, more people now consume what old media newsrooms produce,

particularly from print, than before. Online, for instance, the top 10 news Web

sites, drawing mostly from old brands, are more of an oligarchy, commanding a

larger share of audience than in the legacy media.”

 

Yesterday I received the executive summary of PWC’s “Global

Entertainment and Media Outlook: 2008-2012” (at 112 pages, it’s a little more

than the average executive might expect in a summary!). The full report would

take me offline for weeks, but the executive summary represents a marvelous

chunk of research. Notable is PWC’s prognosis for the newspaper industry:

continuing declines through 2009, followed by a return to modest growth.

 

As this chart from PEW illustrates, Hearst is not

suffering in terms of revenue growth. The two firings, as suggested in several

media reports, may have much more to do with internal company politics than with

failed strategies. (A fascinating article in Fortune, “Intrigue

at Hearst’s Castle,” examines the intricacies of Hearst’s corporate

structure.)

TotalRevenue3Biggest-2002-06.jpg

 

These days it’s very easy to get on the newspapers-are-dying

bandwagon. I think that the conclusion to this story is still to be written.

 

-30-

 

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Pity the Newspaper

March 24, 2008

Of all media industries assaulted by changes wrought by the Internet, it’s a toss-up as to which is considered the more beleaguered, newspapers or music. Not an enviable prize for which to compete.

Certainly both receive plenty of coverage of their varying woes — their problems are not well-kept secrets. But I’ve not seen such a damning indictment of the newspaper industry as the one appearing in today’s New York Times. In an article titled “Newspapers’ New Owners Turn Grim,” journalist David Carr focuses in particular on the wealthy (and dare I say egotistical?) individuals and/or their private equity firms who convinced themselves in the last several years that newspapers looked like a good bet for the future.

Opinions are apparently rapidly changing. According to an article quoted from The Baltimore Sun, Sam Zell, “the motorcycle-riding real estate mogul who took control of Tribune in an $8.2 billion sale in December, ‘The news business is something worse than horrible. If that’s the future, we don’t have much of a future.’”

Brian P. Tierney, who bought The Philadelphia Inquirer and The Philadelphia Daily News in 2006, is quoted in The Times article saying “I’m an optimist, but it is very hard to be positive about what’s going on.”

David Carr notes that the newspaper industry has not yet hit the bottom of the rocky shoals. Last year overall newspaper revenues dropped by about 7 percent, he notes, but meanwhile publishing, like so many other industries, is only now confronting the second whammy: the U.S. recession. He quotes one (anonymous) analyst predicting a 15% revenue drop in 2008.

Further, newspapers are undercutting their own chances of bouncing back after the recession because in order to weather the current downturn they’re cutting staff, undermining the quality of their product, and any likelihood of readers (and advertisers) rushing back in the future.

It’s a terribly grim picture of this once-grand industry.

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