The Maven: Pulp Fiction

It moves The Business Press Maven to tears when he is forced to stomp on the basic premise of an article he was desperate to love. So give me a moment to collect myself before I go on.

There.

A couple of weeks after the McClatchy (MNI - Cramer's Take - Stockpickr) clutch of Knight Ridder (KRI - Cramer's Take - Stockpickr), The New Yorker's James Surowiecki, whom The Business Press Maven normally likes, tried to pick up a rock and throw it at the big loathsome head of conventional wisdom.

In short, Surowiecki attempted to make the case that newspapers were still a good investment. He started out, bless his heart, by casually calling the $6.5 billion McClatchy paid for the congenitally troubled Knight Ridder a "lowball price."

I didn't agree, but, even with McClatchy selling a bunch of Knight Ridder's papers for parts, I was flush and eager to hear more. Right in the first paragraph, Surowiecki dutifully notes the reality that the Internet has "demolished the economics of the industry, allowing people to read free news from many sources..."

Before we get to his second paragraph and a flaw in his thesis so big you can drive a steamship through it, let me just say that if anyone was poised to like this article it was me. For one, making a contrarian argument always makes my pulse race and, more importantly, making such an argument is one of the only ways words can make you money. Moreover, I get paid by newspapers (in addition to online publications like this one), so I benefit financially from their survival. And there is nothing that serves civilized society better than a good newspaper.

But strap yourself in so we can leap the logic set down in the second paragraph, where Surowiecki tells us the McClatchy gambit depended upon one promising and overlooked fact: that newspapers have historically high profit margins.