Dropping the paper in order to save it

Maybe I’m part of the solution after all.

Media Nation has learned that the Sunday-versus-weekday revenue split at the Boston Globe may be more dramatic than I had previously heard. In 2008, the Monday-through-Friday editions brought in $113 million. The Saturday and Sunday papers’ take was $259 million — just a shade under 70 percent of the total.

I don’t have separate numbers for the Sunday paper alone. But, traditionally, Saturday papers are the smallest and least lucrative of the week, which means that the Sunday Globe accounts for the overwhelming majority of those weekend revenues. Several days ago, I wrote that the Sunday Globe was thought to account for 60 percent of revenues; it now appears that figure might have been low.

Given that, it makes sense for the Globe to push electronic distribution for its weekday papers as long as it’s done with an eye toward preserving the Sunday print edition. If the Globe could save on printing and distribution costs and entice weekday advertisers into the Sunday edition, its revenues might drop, but its profit margin could rise. (Or, since this is a newspaper we’re talking about, rematerialize.)

Also this morning, a couple of tidbits on the New York Times Co.’s efforts to sell the Globe:

• A bid by former Globe executive Stephen Taylor, a member of the family who sold the paper to the Times Co. in 1993, may be facing some obstacles. Word is that the group is still trying to line up investors. Not that those investors won’t be found, but it doesn’t sound like Taylor is ready to write a check just yet.

I also hear that the San Diego-based Platinum Equity group may be losing its ardor for the deal — which puts Taylor in a strong position if he can come up with the money. People are buzzing about the addition of former Globe publisher Ben Taylor (a cousin of Stephen’s) and longtime Boston journalist Mary McGrath to the Taylor group. But they’ve got to find the dough.

Given that the Taylors sold the Globe for $1.1 billion, and that they are now trying to buy it back (along with the Worcester Telegram & Gazette) for a mere fraction of that, you’d think money wouldn’t be a problem.

But the $1.1 billion was split among many, many members of the Taylor family. And investors these days aren’t exactly clamoring to get into the newspaper business.

• On the other hand, Poynter Institute media-business analyst Rick Edmonds writes that recent statements from the Times Co. suggesting it might hold onto the Globe are, in all likelihood, so much malarkey (via Ralph Ranalli at BeatthePress.org).

The reason: the Times Co. needs to take a loss by the end of 2009 in order to offset capital gains it’s realized by selling off other properties. In addition, Edmonds says:

I don’t think taxes alone would impel a sale. The Times Co. may also fear getting stuck with another round of operating losses (or find itself forced to lay off more employees, with renewed labor upheaval). Also, the company may have worn out its welcome both inside the paper and with Bostonians, who would welcome a Taylor family restoration.

As Ranalli notes, Edmonds is the guy who cracked the code earlier this year in explaining the Times Co.’s claim that the Globe was on track to lose $85 million. According to Edmonds’ analysis, though that number was real, the paper’s actual cash operating loss for 2009 would probably be around $20 million. All of a sudden, the Times Co.’s demand for $20 million in union concessions made sense.

When Times Co. chairman Arthur Sulzberger Jr. told Globe employees in August that the paper’s finances had improved and the company was in no hurry to sell, it struck me mainly as a ploy to drive up the price. Edmonds’ latest fits right in with that.

Photo (cc) by Tony the Misfit and republished here under a Creative Commons license. Some rights reserved.

8 thoughts on “Dropping the paper in order to save it

  1. mike_b1

    Re Taylor/McGrath and the “buzzing people,” do you have any sense of what Messers. Taylors would do if they were to buy the Globe? In other words, what’s their solution to profitability and stability?

    1. Dan Kennedy

      Mike: No sense at all. Wish I did. I do think it’s safe to say that the Taylor bid is all about saving the Globe, even though the “saved” Globe may be smaller and mostly online. I don’t think that’s what Platinum’s interest is, but who knows?

  2. Newshound

    Does anyone have any idea why an investment (or speculation) here would be more attractive than many of the opportunities trading on the open market?

  3. mike_b1

    Newshound, if you believe in buying low, that established brands have an advantage over unknown ones, and that there are higher profits to be made tomorrow than today in supplying (mostly) original news content, the Globe would be a potentially attractive acquisition.

  4. lkcape

    The problem with newspapers, Dan, is not solely one of high product cost or low advertising revenues.

    It is also that the reader has lost interest.

    The Globe, like other rags, has fiddled and fiddled with their content mix and have yet to turn the curve in the upward direction.

    Content is what sells newspapers, and newspapers that sell gain subscribers and advertisers.

    The push and shove to lower costs, while advisable for survival, is not what will keep newspapers alive.

    Content is crucial.

    1. Dan Kennedy

      Ikcape: We’ve been over this many times before, so I’ll leave it at this — when you consider print and online readership together, the loss of readers is pretty minor. The loss of advertising is catastrophic, and that’s 90 percent technology, 10 percent changing business patterns, and 0 percent content-related.

  5. LFNeilson

    Methinks the wizards comparing daily vs. Sunday revenues would do well to read the fable of the goose that laid the golden eggs. Dropping or reducing the daily would probably have a severe negative effect on the Sunday revenues.

  6. TomW

    I’m more of a hard-news person, so I have always found the Globe’s feature-laden Sunday edition the leaast useful of the seven days’ offerings. If they were to add a Times-like week in review section, I might consider going Sunday-only. Otherwise, I’ll keep coughing up for seven days.

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