By Doug Porter
If you don’t like what you’ve been seeing in the San Diego Union-Tribune lately, wait a couple of months. Seriously. The newspaper of record in America’s Finest City may soon have new owners.
Newspaper publisher Gannett has gone public with an offer to buy Tribune Publishing after getting a less-than-enthusiastic response to a private offer made on April 12th.
The proposed deal would fold the Tribune’s nine daily newspapers, including the Los Angeles Times and the San Diego Union-Tribune into a media monolith publishing USA Today and newspapers in 107 other cities.
Gannett’s all-cash offer was to pay $12.25 per share, 63% more than the Tribune’s closing stock price last Friday. The deal would include assuming $390 million of Tribune’s debt outstanding as of Dec. 31, 2015. Via Twitter
From the Guardian:
“We are pleased to offer Tribune stockholders a significant and compelling premium and immediate cash value for their investment,” said John Jeffry Louis, chairman of Gannett’s board of directors.
A combination with Tribune would rapidly advance Gannett’s strategy to grow the USA Today Network, the largest local to national network of journalists in the country, to include more local markets and new platforms, which we believe will benefit readers and result in significant and sustained value creation for Gannett stockholders.”
Gannett said that a combination of the companies would make for $50m in savings annually.
That Swirling Sound…
…you may be hearing is the death spiral of traditional dead-tree media.
San Diego’s Union-Tribune has gone from being the flagship paper of the Copley family’s publishing empire (valued at $1 billion), to a short term investment ($35-50 million, including real estate) for Platinum Equity of Beverley Hills, to the foundation ($110 million, including real estate) of developer ‘Papa’ Doug Manchester’s failed vision for a right-wing media empire, to being acquired by the Tribune company ($85 million, not including real estate), which hoped to monopolize the Southern California market.
(I should note that these dollar amounts are really apples to oranges since none of these deals/valuations included the same moving parts as the others.)
Gannett previously expressed interest in the UT, as told by Ken Doctor in Capital New York:
For a couple of decades, the country’s biggest newspaper chains salivated at the prospect of owning the monopoly daily in affluent and growing San Diego. The Copley family ran a highly profitable operation, after buying both the morning Union and the evening Tribune (merged in 1992) in 1928.
Gannett head Al Neuharth paid frequent visits, wanting to be first in line if the family wanted to cash out. Knight Ridder’s Tony Ridder paid his respects, in much the same way he did with the Lesher family, who owned the prosperous Contra Costa Times. Ridder closed the C.C. Times deal in 1995 for $360 million, but the Copleys just wouldn’t sell their paper that then sold 400,000 papers daily, a circulation now cut by more than half.
At the height of the market, in the early aughts, selling the San Diego Union-Tribune, and associated properties, would have paid the family a bounty in the neighborhood of a billion dollars. That’s the valuation that Owen Van Essen, one of the newspaper’s top brokers, places on the top-of-its game UT.
Given that the Tribune company is currently hostile (or at least non-responsive) to Gannett’s offer, this deal could go away. Or somebody else may come along. Or the price could go up.
UT Politics du Jour
The Union-Tribune has taken a swing towards the middle of the road under Tribune ownership, and –at least on local issues– this would remain unchanged under Gannett ownership. A Business Insider article from October 2014 identifies USA Today’s readership as mixed and leaning slightly to the left (but apathetic).
It’s been my observation in Gannett’s takeover of at least one small town paper (I used to live in Staunton, VA., home of the News-Leader) that the rough edges tend to come off the editorials while the general political direction remains unchanged.
The Gannett takeover of the UT will likely include replacing national news coverage with a USA Today insert, as has already happened in four dozen markets.
The News Economy
After several years of massive investment and (usually massive) audience growth, the brave new world of digital media has hit a wall. Cutbacks at big-name outlets, from Buzzfeed to the Huffington Post have come in the wake of their inability to monetize their audiences; even big data dumps on consumer behavior has its limits as a source of revenue.
It NOT that people are consuming less news. Political news in 2016 is a mega-growth industry. Unfortunately, 2017 is just around the corner, as Ken Doctor points out at Newsonomics:
Three years ago, political news accounted for 816 million monthly minutes of usage, according to Comscore. In February, it accounted for 2.36 billion minutes — almost a tripling. February was a high-water mark, but political news hit one billion minutes in June 2015 and has grown steadily since.
Over that time period, total minutes spent on digital — thanks to smartphones — increased markedly, but political news minutes greatly exceeded even that growth.
Let’s face it. This extraordinary political news year won’t last, likely replaced by a relatively boring second Clinton administration. News fatigue, anyone? As that political time spent shrinks, who and what will replace it?
The problems of profitability and shrinking audience size for legacy media like newspapers haven’t gone away, despite mergers, downsizing, more mergers, and real estate fire sales.
A new technology is coming on the already-fractured news media scene: Virtual Reality. Just as YouTube changed the game for reporting video, VR will add another dimension.
How will VR be monetized? Can ‘news’ be monetized at all anymore?
I don’t know, and you would be advised to run away from anybody telling you they know how at this point. I would be willing to bet that the near-future hardware will make the expensive and all-encompassing goggles being currently marketed look as ridiculous as the original cellular phones look to us now.
Here’s a quick trip into what the future might bring, via Marketing Week:
Screengrab from a New York Times VR story
As the technology develops, the number of brands, artists and publishers exploring the opportunities is rising, from VR boxing matches to a virtual tour of Buckingham Palace and experimental singer Björk’s app for exploring her music videos. Meanwhile, theme park Alton Towers has revealed its first VR rollercoaster, and last year The New York Times gifted a million subscribers with Google Cardboard to promote its VR app.
Although the tech is in its infancy and brands are only just starting to explore the possibilities of VR, Unicef is one organisation that has already seen some success. Last year, it created an eight-minute 360-degree film called ‘Clouds over Sidra’ to draw attention to the Syrian refugee crisis. The film focuses on the life of a 12-year-old girl living in a refugee camp in the Jordanian desert. When it was shown to people on the streets of Auckland, New Zealand the organisation doubled donations, and the immersive experience is now being tested in the UK.
Katherine Crisp, head of strategy and innovation at Unicef UK, says: “You can see when people watch [the virtual reality film] that they are truly immersed in another world. On removing the headsets some people find it very emotional, some cry, some are moved into silence and others ask what can I do to help?”
I’m going to UC San Diego’s ArtPower! Filmatic Festival in early May, which will include immersive experiences at the edge of science and technology.
Maybe I’ll get some ideas. After all, I was the guy (really!) back in the early 1970’s telling students at the OB Free School that some day we’d be getting our news via the phone. I have no idea where or how that idea popped into my head and had forgotten about it until a couple years back when then-OBFS principal Denny Doyle recounted the story.
______________________
The above is an excerpt from D Porter’s column at SDFP.
{ 0 comments… add one now }