Internet Media Rapidly Destroying Value Of Newspapers
May 7th, 2008
We’ve reported previously that newspapers are losing advertisers to Internet media, that young people are abandoning newspapers for Internet media and that newspaper revenue is tanking.
The result of these trends is that the value of traditional newspapers is in a freefall:
- Avista, the PE-fund that bought the Minneapolis Star-Tribune for $530 million in late 2006, has written down 75 percent of its original investment. The leverage fund only put up $100 million of its own cash, with the rest coming form financiers. A letter to the fund’s investors, denied a report saying it was on the brink of bankruptcy, though the firm has hired Blackstone to help it deal with its financial issues.
- McClatchy, the third-largest newspaper owner, has seen its shares go down over 60 percent since the end of 2006.
- Shares of Journal Communications, which operates dozens of newspapers and television stations, are down by over 50 percent.
According to the Star Tribune, the write-down, taken at the end of 2007, reflects the estimated loss of value and is consistent with the falling stock prices of other publicly held newspaper companies.
Newspapers need a reboot in order to remain relevant. Much of the content in mainstream newspapers is syndicated content that readers are likely to have seen previously online. In an age of Twitter communication, newspapers can’t provide timely coverage, either.
via paidContent
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