Tronc/Gannett

Sometimes you've got to sell.

You may not think this applies to you, two fading news enterprises fighting for survival, but there are self-satisfied owners across all avenues of business, those so caught up in their vision and their love of the company that they can't see the forest for the trees, they can't see it's better to sell.

Sometimes it's better to make the deal.

In the case of music contracts, it gets you in the game. Despite all the hoopla about old acts going indie and new acts having a low barrier to entry the truth is there's a small cadre of experienced players who control the music industry, and if you're not aligned with them, it's almost certain you will not have success. They've spent years establishing relationships. You don't get on CBS "Sunday Morning" by accident, you need help, and if you're not willing to give up a few shekels to get there, the joke is on you. Your goal is to make everybody win, not just yourself.

And when everybody wants you you can charge top buck.

But when your asset value is declining, you make a deal. You agree to be on a triple bill of eighties acts. Your hits are in the rearview mirror, how do you maximize money today?

I don't know what happens to newspapers. Once upon a time they were the only outlet, now there's news everywhere, not all of it generated by independent, trustworthy sources, but you don't need to go to the paper's site, or buy the physical item, to know which way the wind blows.

Television news is history. They cut it to the bone and left none of the essence, there's no reporting extant. It became all about profits, asset value was irrelevant, hell, Comcast owns NBC, it's just part of a giant conglomerate. All you've got on television is beautiful people reading headlines and old farts bloviating their opinions, even though they're constantly proven to be wrong. Want to get news analysis? You're better off going online. As for talk radio, that's for people so inured to their vision they cannot get out of their own way.

Tronc could not get out of its own way.

The "Los Angeles Times" is a pamphlet, that's what Mark McGrath told me once and he's right. I wouldn't be able to convince anybody to buy it, there's so little inside. It'd be like charging someone ten bucks for an album of four songs, with three of them karaoke versions of others' hits. You've got to play to win, or you lose.

Now the previous owner of the "Times," the Chandler family, sold the paper to the "Tribune," which was run into the ground by Sam Zell. And you might think this was a mistake, that they sold too low and ended up in a quagmire, but the truth is you can't eke out every last dollar, sometimes you've got to let go. Not everybody can be the Bancroft family, which sold the "Wall Street Journal" at top buck to Rupert Murdoch just before the newspaper crash. People like to boast, tell you they made the biggest score, they don't tell you about their losses, and the internet sphere is littered with companies that refused to sell out to Facebook or Google that ended up being worth zero, because there was really nothing there, other than maybe a public offering that overvalued the company once. Would Tinder be so valuable if it wasn't part of Barry Diller's IAC empire? And I'm still not convinced Snap is worth all that much, seems flavor of the moment to me, another platform to exhibit content, albeit with a twist. Maybe there's room for one more internet victor, but maybe not.

And there certainly isn't room for all these newspapers.

The newspaper was the filter. It told you what you needed to know. But it was supported by advertising. That model doesn't work anymore, the ads have fallen through the floor and in many cases, like with the L.A. "Times," there's just not enough news left. We need reporting. A couple of news outlets will survive. But it may not be the usual suspects, because they're so busy cutting costs, trying to maintain their margins. Talk to Amazon about maintaining its margins, it was loss after loss, investment after investment, until it all turned around. And the Seattle behemoth got lucky with its Web Services, but that's what happens when you stay in the game and have tons of infrastructure, you're ripe for success, but if you keep cutting...

So we've got this outsider who buys a chunk of "Tribune" and thinks he's got the answers. I'm not saying news won't be disrupted, but I am saying that the usual suspects have expertise. No outsider has triumphed in music for eons. The hated insiders know something, they learned something during all those years of work. They might be less than brilliant, they might be risk averse, but they're got experience!

So this cracker is gonna focus on digital, as if nobody ever thought of that.

And Gannett comes up with a buyout offer and he thinks the company is worth more.

This is not Jeff Bewkes and HBO, which is banking coin, this is a fading asset, it's only worth much more if you can pivot and rebuild it, and the odds of that are very long...

Try selling your CDs today, I just unloaded a bunch, for ten cents apiece. Value is seventy percent less than it was a decade ago, maybe a bit worse. Oh, of course, I could wait until it all turns around, when the discs become a fetish, like vinyl, but maybe that never happens and is my money best tied up in this asset?

This is not real estate, of which they are making no more. Live long enough and you'll probably make money in real property, as long as you didn't overpay, and it never goes to zero, but... All that MTV footage, all that stuff we thought was evergreen, it's not, you want to sell it when you've got a willing bidder.

Or maybe you're one of those doofuses who's all show and no substance. Who invests in declining assets like automobiles...

Well, the true professionals know better. And the true professionals are bankers. Gannett still wanted to make the deal but the lenders said no.

Now what?

I can't imagine the L.A. "Times" resuscitating, I'd rather invest in
Vice, which at least has a hold on what the younger generation wants to know.

And Gannett's engulf and devour strategy has hit a wall.

And we've got oldsters decrying the death of papers and reporters who are playing musical chairs, just waiting for the buyout or to be fired, who don't realize that today you wear many hats, you don't only write, but you market, and he not looking to the future will be squeezed out.

Talk about the destruction of shareholder value...

These CEOs fill their boards with cronies and then they drive their companies off a cliff.

I'm not saying to play it safe, but if the ship is sinking, sometimes it's best to jump off.

And if you can't see a future for your asset, maybe it's time to liquidate.

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