When monopoly newspapers sell the buildings they operate in just to pay salaries, is it a wise investment from professional business managers? Or is it more like an alcoholic selling his family’s house and pawning his kids’ bicycles to buy more booze? You make the call.
When Philadelphia Media Holdings bought the Philadelphia Inquirer last year, borrowing $375 million for the purchase, the company began cuts to pay off its debt. Next, they begin to sell real estate, including the 18-story tower on North Broad Street that has been home to the newspaper since 1924.
An expert believes Philadelphia Media can earn as much as $70 million for the building. Maybe not so much.
The Chicago Tribune’s 1920s tower on Michigan Avenue — The Magnificent Mile — is next up for sale. The masterpiece art deco building has pieces of famous buildings such as the Great Wall of China, the Alamo, the Blarney Castle and every nearly every other famous building you can think of.
Maybe those pieces could be sold separately?
The rival Chicago Sun Times owners have stripped and sold the valuable real estate assets a few years ago in what many think may be the final years or even months of the once great newspaper.
With profits and revenue falling, newspaper companies are increasingly looking to sell the real estate they have payed off 75 years ago, just to stay afloat. What are they thinking? Maybe they can wait out the Internet storm? People will come back to the soggy newspaper thrown from a pedafile’s 70s sedan?
Do they think their classified ads will bounce back and beat Craigslist’s free ads or EBays national network? Let’s see, you pay $50 for a couple of lines of abbreviated words in 7 point type (the small print on credit card applications). Then you have a probable ex-con come to your door to buy your “antique” table for $100. Next week you find your front door kicked in and your TVs, computers, cash and jewelry swiped. Who knew?
Though many newspapers are still considered profitable, they are seen by many on Wall Street as a dying medium. In some cases, the Inquirer and the Boston Herald among them, financial pressures are forcing newspapers to sell their property as a quick way to come up with cash. In others, especially papers acquired by private-equity firms, the new owners are simply trying to squeeze as much money out of the operation as possible, says newspaper analyst John Morton, president of Morton Research Inc.
Avista Capital Partners, which acquired the Minneapolis Star Tribune in January, was hoping to sell four downtown blocks to the Minnesota Vikings, (which recently fell through). Too bad. More cuts. Maybe a new buyer for the Star-Trib by next year. Hey what about the paper’s “high penetration” in the city?
Do advertising agencies really care about your penetration? What about ad response rates measured against targetd ads on Google or Yahoo? What kind of figures do you have on that?