Newspapers hock their bargain basements
With stock prices spiraling toward zero, debt looming and their future in doubt, newspapers are looking for ways to keep the money coming in. Some of those ways sound good, but only on paper. Here’s the latest example, as detailed in an Associated Press story:
With revenue plunging as readers and advertisers flee to the Web, many newspaper companies have turned to selling off their buildings to raise money or save on costs. But now that option may be drying up too, as frozen credit markets make commercial real estate deals scarce.
At least half a dozen newspaper companies have said this year they plan to sell their buildings, some with the intention of leasing back space for their news operations. Others are moving to smaller offices to save money as staffs dwindle and the era of commanding downtown newspaper buildings appears near an end.
The newspapers could hardly have picked a worse time to put their buildings on the block, with the value of commercial real estate deals plummeting from just a year ago.
One of my colleagues, a real estate reporter, told me I should check this angle out a long time ago, and I always meant to. Two years ago, when I am ashamed to admit we first discussed the idea, we thought it would be a hot story about how papers could make a lot of money as they struggled with falling advertising revenue and circulation. Like the publishers, I ended up not pursuing the idea. That’s too bad for me, but it’s really bad for the publishers.
The story lists a bunch of buildings for sale, while noting that all sorts of problems could complicate the matter, including historical preservation laws on certain properties. It also names companies that are trying to cook up a little cash with their holdings, from Tribune Co and McClatchy Co to The New York Times Co.
Finally, the story points out that selling the property at a lower price than they bought it for might be tough but necessary:
Newspapers have been through their worst year in 2008, and Mike Simonton, a media analyst with Fitch Ratings, projects an average revenue decline of 15 percent to 20 percent next year.
“The sale price could be lower than the price they paid for the building,” he said. “But if it’s necessary to remain in compliance with debt agreements, it’s certainly more favorable than bankruptcy.”
Keep an eye on
- News Corp is underwriting a fresh money lifeline for German pay-TV broadcaster Premiere AG, but under one condition: It wants to be able to increase its 25 percent take to more than 30 percent ONLY if it doesn’t have to bid to buy the company outright. German law requires this under normal conditions. (Reuters)
- Staff change at washingtonpost.com: Top editor Jim Brady (Disclosure: My former boss) is leaving after four years. It looks to be part of the eventual blending of the Web and print newsrooms, which leaves some of its staffers fretting. (The Washington Post)
- Hey media moguls: Don’t fight over it. Now all of you can be the biggest loser. (New York Observer)