Not least because a digital titan was the “white knight” riding in to save a dead-tree medium.
The low value of the sale has also set alarm bells ringing of the mortality of the print medium, as indeed has the ease with which the Katherine Graham family has parted with a one-town, one-industry paper they had so affectionately, so assiduously nurtured into a global brand.
“Comparing WaPo’s price to Tumblr & Instagram is stupid. Guess what? Great journalism is a worse business than social networking! Who cares?” A tweet from the Atlantic’s Andrew Golis.
Here’s why he’s wrong.
The Washington Post brand—a role model for journalism around the democratic world, and an aspiration in countries that don’t enjoy free press like Singapore and China—once considered priceless, now has a value.
Even the Hindustan Times, a thinly traded stock, has a value of Rs. 2,250 crore today that is based only on their profit and loss, and doesn’t factor in real estate or the brand.
WashPo’s value at Rs. 61 to the US dollar is Rs 1,550 crore.
This is relevant as it marks a shift in the way news media companies are valued.
Newscorp, Disney and New York Times didn’t value Wall Street Journal, ABC (and ESPN) or the International Herald Tribune like PE funds at 25 times profit after tax.
They believed they were bidding for the brand.
Twenty years ago, when the New York Times bought over Boston Globe, they valued it based on current revenues, expected future revenues from joint ad selling, cost efficiencies from scale, and, importantly, value of the Globe’s brand: possibly calculated by assigning a certain dollar value to each paid subscriber.
World over, news companies weren’t just valued by their business success, but for intangibles such as ability to influence public perception, discussion and political agenda, and the brand recall as well. And for good reason.
It’s no small feat for a brand to be recognized by every household in America.
McDonalds, Ford, Elvis Presley during his time, these are brands every American has heard of. Washington Post, New York Times, ABC, CBS, and other media companies, with a fraction of the turnover of McDonalds or Ford, are names known to every American.
How do you assign a value to that?
Similarly, Red Sox owner’s purchase of the Boston Globe at a value of 70 million dollars three days ago puts a pretty low value to a brand that is known to every citizen in Massachusetts.
Aside from the fact that the sale shows that proprietors are willing to exit without assigning any major value to the brand, it also shows that proprietors have given up, maybe without trying enough, finding ways to monetize a brand either by innovative brand extensions or franchise operations beyond the core product.
You can’t blame them. Experiments world over have shown that audiences are sticky to the first medium and don’t transfer across.
The most commercially successful radio channels, TV stations and magazines were started by a team of people dedicated to their platform and didn’t have much to do with the core business.
Take Time Out for instance, present in every major city, owned by very autonomous franchises. There isn’t any city where the destination city happenings/blog site is TimeOut.com.
Not Bangalore, London, Mumbai, Los Angeles, San Francisco, Prague or St. Petersburg.
It’s too soon to tell if the sale of Washington Post is good for journalism or not.
It’ll depend on the maturity and seriousness with which the new owner decides to run the paper with.
The trend of billionaires owning newspapers will only benefit journalism if they are as ruthless with the bottom lines of their news companies as they would be of any other company they have a stake in.
Because for any industry to flourish, bad business models and poorly run companies in the industry must perish quickly.
Companies that do journalism the world over will benefit only when Warren Buffet, Jeff Bezos and other billionaire owners use their wealth of knowledge, experience in their areas of specialization and deep pockets to experiment with the goal of creating a business model that sustains itself.
This is why I believe Network 18’s sale to Reliance was a disservice to the news industry in India – it allowed a business that was far too expensively run to survive longer.
And the sale, now in its second year, will only help the industry when, with Reliance’s business acumen, the Network 18 group can find a way to be profitable (inclusive of interest cost).
Sure, it’s legitimate strategy to bleed the competition if you can sustain your loss, but to have a sugar daddy reinforcing poor business will soon lead India to an environment with only vested interest business media owners.
Incidentally, the Indian Express and its owners have no other business interests. The Hindu and Ananda Bazaar Patrika are other such companies.
In the fields of education, healthcare and news media, being purely “for-profit” has always seemed to be a little bit of a conflict of interest. But it is at times like these that we remind ourselves that a self-sustaining business model is the most important trait of a company that wants to be consistent in its impact on society