NYTimes Going on Sale? Anyone Need Some Used Socks?
interesting observations, promoted -- cho
A couple of days after the New York Times, according to some, helped the Public Integrity Section (PIS) of the Bush Justice Department shaft Spitzer the stories start going the rounds again about how vulnerable the Times is to a takeover. This one came up this morning.Firesale at the Times. The story has some legs of its own because the hedge fund group that is accumulating shares (Harbinger) now has a bigger position than the NYT’s family owners. The structure of the company prevents them taking over ownership directly but they are now in a position to do a lot of damage to the share price. Judging from the shares’ price performance over the last few years that’s probably not something that will impinge too much on the thinking of the paper’s present ownership.
I’ve been following this kind of story under two different kinds of headings, which I hope you will be interested in reading about. I’ll be brief. One of them concerns the question of how prepared the US is to be “globalized”, legally, culturally and so on, and how stupid the country is with what it has done with its money. The other involves some thoughts on the economics of the newspaper business. Let's take this one first, and then turn to the other one
This latter one is the one that always seem to refer to the internet as a cause of what is going on with the press. I think there is more involved than the internet, and that it is interesting that people do not seem to look much further than that for answers. So the story is shaped around the way internet advertisers are cutting into revenues at the old line press and making their business model unsupportable.
This is a good story line, and has a lot of support from people who often seem to view the internet as more than a just another tool, but perhaps not another life style. One of the promoters of this view used to be quite well known. Henry Blodget. Remember him? He was a high wire artist during the heady days of the internet stock bubble, and took a fall for his employers I would think. Anyway he’s still putting out the word on internet stocks and stuff, and here’s what he thinks about the advertising end of the business and the NY Times.
Blodget on the NYTimes.
There's an old fashioned economic muscle story too. New York has a number of newspapers, among them the Times (Clinton McCain), the New York Post (Obama), the Daily News (?), the Wall Street Journal (McCain?). Rupert Murdoch owns the Post and the Journal. The Journal like the Times is a national paper.
I believe the Times is in Murdoch’s sights. Not because he wants it but because he wants to turn the Journal into a national newspaper and go world wide with its financial coverage which he will also sell to local newspapers who are unable to keep covering the local economy.
Murdoch is putting a package together to compete with Reuters and Bloomberg. The Times is trying to put together a competitive package out of the capabilities of Reuters and the International Herald Tribune in Paris. Even when I lived in Paris, and that’s a very long time ago now, the IHT was not one of the places to go for news about the US or anything else. Now though, Murdoch does seem to be someone who does understand that the internet is a tool, but that what makes a tool work in the media business is a combination of political will and financial muscle.
Unlike US newspaper operations, Murdoch is running an effective, profitable international business. (You can say what you want about it, I’m a great fan of that movie with John Cleese about the zoo and the Aussie newspaper magnate who was taking over the zoo and wanted to make a guaranteed profit margin out of the creatures. It was called ‘Fierce Creatures’ and starred the cast of another super movie called “A Fish Called Wanda” which some saw as the best takeoff of the CIA ever (well almost)
Fierce Creatures. If you haven’t seen either of them, probably because you’re too young, don’t let me stop you.
Anyway, Murdoch is able to make enough money out of his world wide operation that he can sell the New York Post at a loss, and he has been doing that for years. The current estimate is he’s pouring $40 million into his loss leader. He got tax breaks from Rudy Tuesday to off set some of it. He’s got the price at half that of the Daily News, and he sells his ads for less money than others in the New York market can. The Daily News still makes money for its shareholders. They both have around 6 million readers. Euro soccer fans and movie watchers paying subscription fees to BSkyB TV probably provide a lot of the loot for Murdoch’s loss leader. You don’t generate that kind of money out of internet business operations I don’t think. Maybe you could out of stock sales and takeovers, but not out of ad clicks. And these days you’d have to be sure it is real money.
So when Murdoch took the Journal, a going estimate was, if he could increase the paper's national circulation by 200,000 a day he could take away the Times national advertising base, and start to make real trouble. Then the Times would be forced back into the New York area, and would have to start selling off assets. Here’s a couple of stories to document parts of this. New York Post versus Daily News and Zuckerman on Murdoch. That would put the Times up against a wall because its management doesn’t seem to have the smarts to know how to run a bath.
That brings us to to the other piece I mentioned before the question how the US stacks up when it comes to being ‘globallized.’ All fine and good to have these Sovereign Wealth chaps come in with their check books flashing to buy the good stuff. The US economy has been organized as an administrative and regulatory entity which doesn’t have to worry about uncontrolled immigration of money, because the country never had to worry about the rest of the world.
The regulated parts of the media business are a good case in point for the whole thing is divided up by metro market with arcane rules about who can own what in combination with what in each market. It seems to be an internal protectionist system which has grown out of the old regulated utility public interest model. So print, radio and TV go together in this weird way. This has protected local capital pools to some extent, and seems to have created niche opportunities for real estate speculators to become opinion shapers. But makes it too expensive for national agglomerators. If I’m wrong, or off target, please let me know.
I think the upshot means there is not sufficient mobilizable resources to defend any of the metro center combinations from someone like a Murdoch who can come in from outside with virtually unlimited funds, and a market building approach which is based on developing political influence on behalf of strategic business interests.
Murdoch is not earning vast increases in revenue every year from crazy European soccer fans, but thanks to what has been done with the dollar, the money he is earning from crazy soccer fans is worth a bit more every day in the U.S., and has doubled relative to what it can buy while Bush has been President with his version of a strong dollar policy.
If the dollar has fallen by half relative to the Euro, the Euro has doubled relative to the dollar. Hasn’t it? So every Euro buys 2 dollars, and Murdoch is paying less to subsidize the New York Post and his give away sales price and advertising rates every day because he is using less of his foreign sourced money to do it.
Free trade. Boom. Boom. Roll Up. Roll Up. Come to Carnival. Boom. Boom. Everything and everyone is on sale. If you don’t like today’s price come back tomorrow, it will be cheaper. Not cheap enough? Come back next month. Don’t wait for ever. It is all going up in smoke. Roll Up. Roll Up. Boom. Boom.
How can a New York newspaper compete with that? Especially one that has a management team that believes the internet is the problem, and promotes the very policies which are destroying its owners on its front pages? This folks is just a little cameo of the whimpering climacteric which brings great empires to a close. They no longer know what they are doing. But won’t make room for the next generation. Remember the story of Saturn or Ouranos and what Zeus and Rhea need to do before Zeus could institute right rule, and why Father Time still carries a sickle?
Oh, anyone want to buy some used socks by any chance? The Times has a neat little side business in red ones up there in Boston. The world’s not been too interested in baseball, but there’s probably someone who can figure out how to make piles of money from getting sports fans really organized with a global subscriber base paying to watch Americans kick the shit out of each other. But there again who really needs sports they can never play?
Just to end didn't there ought to be a real political discussion about just how the media, as a public utility, fits into the general scheme of things, and what kind of media model we want and need, with what kind of truthful coverage. Just because the Time works closely with the government doesn't mean nationalization has to be the wave of the future. But if it isn't going to be, and there is going to be a media, need laws and regulations, and legislators and regulators who will start by protecting the capability from financial predatory takeovers and leverage.