Tuesday, April 3, 2012

Philadelphia newspapers sold to local politicians and business interests for bargain basement price

Journalists will tell, right there in print, that they are objective observers of the truth and free of political bias. The other guys in the newsroom across the street, on the other hand, are driven by greed and political motives.

So it goes in the world of journalists, where "digital first' proponents can be against digital editions, and for laying off their fellow journalists, as long as they, themselves, continue to get a paycheck and are listened to.

All this is my own prelude to saying that reading the reaction to the sale of Philadelphia Media Network, publisher of The Philadelphia Inquirer and The Daily News by various newspaper outlets was an exercise in frustration.

New Jersey.com's report on the sale was not at all subtle: the newspapers had been bought by a Democratic party boss (George Norcross) for political advantage. Only mentioned in passing was the fact that other members of the new ownership team play politics on the other side of the street.

Not surprisingly, the comments on the story are all about the horrors of the liberal media and how Norcross is a "liberal hack". Mission accomplished.

This is from a newspaper that goes to great length to hide its ownership by Advance. Even its "About Us" page says nothing about its ownership.

Forbes magazine is not known being afraid to show its political stripes, but its media coverage continues to be excellent.

The Forbes story, written by Brian Solomon, gets right to the most important single point of the Philly paper story: its sales price, $55 million.

The short piece simply reminds readers that it was only in 2006 that McClatchy, having recently bought the Knight Ridder chain, proceeded to sell off some of the properties. That year it sold the Philly dailies to Brian Tierney, a PR executive, for $515 million. It was a good deal for McClatchy, it turned out, as the Tierney reign proved to be a disaster, and the sales price was revealed in 2010 to have been – shall we say – a tad high.

That year, 2010, the papers were sold again this time to financial players who probably thought they were getting a good deal at $139 million.

But if there is one group that knows the value of media least it is the PE firms that invest in media. If they had a clue about what they were doing they wouldn't currently own so much of the B2B media industry, and wouldn't spend all their time trying to sell it off to other PE firms.

Only two years later the papers are once again in new hands, and the valuation of the papers has again fallen.

But the Solomon story missed one great opportunity: it fails to mention that another well known business had recently been sold but at a somewhat different valuation. The Los Angeles Dodgers was just sold to a group of investors for a sum somewhere around $2 billion. The contrast in the sales prices tell you all you need to know about where newspapers stand today: if you have fans you have value, even if you are a perennial loser.

Only billionaires can afford to buy sports teams. Maybe the press should layoff the mere millionaires that are forced to settle for buying newspapers.