(Editor's note: To access some of these stories, registration or a subscription may be required. Please check the individual links for the site's policy.) We live in an environment in which, with the proper investment-banking support, your grandmother's toilet-paper cozy could fetch top dollar in a takeover. Several private equity groups would submit bids, as would no doubt some private investors, lured by the prestige of owning your grandmother's pink knit cover for that spare roll, well known as her favorite. Why am I brining up your grandmother's decor? Because even when the business media aren't jumping to the wrong conclusions, deifying run-of-the-mill CEOs who are possessed of little but the gift of gab or failing to use a proper sense of business history to discern the future, they still can fail investors. Witness the latest coverage of Tribune ( TRB). The media has given us droning, just-the-facts-ma'am reporting of what is a very ironic issue with wider implications that need to be examined. This droning itself tells us as much about the fate of newspapers as the insultingly meager bids. You got that? The major problem with newspaper companies, especially in their inability to reach younger readers or garner takeover bids that lay anywhere north of laughable, has to do with their play-it-safe tone. And this cautious tone, essential to any investors making a valiant but mistaken attempt to play contrarian and invest in the newspaper companies right now, was borne more for business reasons than anything having to do with journalism.
Until that changes, traders and long-term investors alike should keep their powder dry. Here is the entire reason newspapers couldn't even sell their souls to the devil, condensed into two paragraphs: Newspapers operated for a about century under near double-monopoly conditions. They all but had distributions sewn up, and competing newspapers could not get their products on the trucks without a lot of bother and money. Now anyone with a spare thought and a keyboard can compete. Also, newspapers were the one and only place to go for classified advertising. Now? I'll bet even your grandmother sells classifieds on that cozy. But back when everything was safe from fast-moving competition, the tone of newspapers could be safe and steady, too. Senatorial. Godlike. It didn't have to entertain or reach for larger insight -- in fact, it didn't pay to do so -- if doing so carried even a soupcon of risk. Any manner of risk was not worth the trouble, especially in light of that considerable and totally reliable cash flow that came from that de facto double monopoly. But you need to try harder to keep your audience riveted and informed in the face of losing both of those monopolies. This was never more evident than this weekend, when we heard what has been readily apparent to Business Press Maven readers for quite some time (such as the mention from my
New Year's piece ): Bidders for Tribune apparently were just going through the motions. They either saw the newspaper business' troubles as an opportunity to steal the whole company for a song and a few trinkets or, more likely, were just enamored of the opportunity to garner free publicity by dressing up as white knight for a company that, in the end, plays an important role in society.
(Let me make this clear: I believe newspapers do play an important role in society. But full disclosure, I also get paid by newspapers, in addition to Web sites such as this one and multiple book-publishing companies. So by all rights, I want newspaper companies to flourish.) That's why it was incredible, yet somehow fitting, that even as newspapers were wringing their hands over how to reach readers in such a competitive environment, they trotted out the same old boilerplate for the Tribune bids when the textured facts of the case called for much more. The Wall Street Journal led its piece this weekend with a firm grasp of the obvious, by telling us the company's television properties were key to its survival. You don't say? The comes the stiffness of the third paragraph: "After reviewing the offers in a meeting with its advisers Saturday, the special committee of Tribune's board that is overseeing the auction appeared to lean towards taking action on its own." Dudes, for historical context on these Tribune bids, you need to leave the context of business and go to literature, all the way to O. Henry. These so-called takeover bids were right out of The Ransom of Red Chief. The bidders all but asked to be paid to take the company. And now, as a countermove, the company is "leaning toward taking action of its own" -- such as shoving a load of debt down the shareholder gullet?
Summing up with what can only be described as less than bracing insight, The New York Times notes that either something will happen, or won't. Check out the kicker here, investors:
People close to the process have said that the outside offers were perceived as inadequate and that the company could take itself private on its own, sell off its broadcast unit or undertake a stock buyback. It could also do nothing.Reaching (or not) for some sort of larger significance, the Times ran a separate article this morning about how a journalist (a fictional editor) is one of several professionals actually featured in an ad to sell a life-saving product. That means someone, somewhere still has to think well of journalists. Whatever. But if journalists really want to get insight into why their product isn't selling in a world where they're not protected by two effective monopolies, they should simply read their work with this in mind.