It was probably in the 1990s, when the business better resembled a cruising blimp than it did the dotcoms like Pets.com, Boo.com, and TheGlobe.com, which all went kerblewy around the turn of the century. Unlike the bombing dotcoms, the high valuation of newspapers was based on real, not imaginary profits, and the belief that the profits from these deals would extend for years, if not decades, into the future.
And such deals there were. The New York Times Co bought the Boston Globe for $1.1 billion in 1993. In 1997, McClatchy acquired the corporation that owned the Minneapolis Star Tribune for $1.4 billion and Knight-Ridder purchased the Kansas City Star and Fort Worth Star-Telegram (and two other smaller papers) for $1.65 billion. On the sidelines, newspaper consultant John Morton crunched the numbers and expressed the market consensus about these transactions in the headline for his January/February 1998 American Journalism Review column: “Expensive, Yes, But Well Worth It.”
Morton’s column provides no sense of the impending doom, no inkling that an entire industry is arrowing its way to a hospice, no clue that all these newspaper people have booked passage on a death ship. Even after the Hearst Corp ditched its San Francisco Examiner for a $660 million deal to buy the San Francisco Chronicle in late 1999, more happy talk ensued. If anybody cited Warren Buffett’s 1991 warning that newspapers had lost their special “franchise” value and that he wouldn’t be buying any more of them soon, I missed it.
The newspaper faithful were still such strong believers at the end of the century that the Washington Post, one of the most prudent newspaper operations in the universe, opened a new $130 million press facility in 1999. By 2009, the company had to shutter the place. The Post wasn’t being stupid when it built the plant, it just misread the contraction of newspapers by a decade. Many newspaper owners continued to think that profits would fund expansion forever. Arthur Sulzberger Jr. completed a modern Renzo Piano-designed Manhattan office tower for his New York Times in 2007, and as recently as 2008, Rupert Murdoch was completing construction of a new $290 million printing complex for his London newspapers.
Every seller has good reason for unloading his property, but until bubbles pop the news coverage accentuates the buyer’s brilliance and vision. Thanks to the genius of hindsight, we know that the sellers of the Globe, the Star Tribune, the Chronicle, the Star, and the Star-Telegram were the dealers and the buyers were the marks. But I doubt if any of them were making a shrewd market call when they sold. The Globe, Chronicle, and Star Tribune went on the market primarily because the sprawling families that owned the properties had lost interest in the business and preferred cash to dividends. The Star and Star-Telegram went to the block because their owner, Disney, which had recently acquired them in another deal, wasn’t interested in the press.