There has been a rash of newspaper buying lately and we do not mean the papers being purchased at the newsstand. Recently, billionaire Warren Buffett shocked the world when he purchased 63 newspapers from a failing newspaper conglomerate that had seen its stock price drop by around 90 percent in the past four years. And you’re no doubt aware that Amazon.com’s CEO Jeff Bezos purchased the Washington Post and that Boston Red Sox owner John Henry bought the Boston Globe.
In the midst of all of these multi-million dollar deals came the announcement that Mortimer Zuckerman was going to put the New York Daily News up for sale. Obviously, Zuckerman felt that the time was right for selling his paper and, judging by the activity in the newspaper business, he should have been correct. But the only offer Zuckerman might entertain could be a $1 buyout offer from New York-based cable television and media giant, Cablevision. As you may have guessed, there is more to this story than meets the eye.
The NY Daily News Is Not Doing Well Financially
According to Reuters, the NY Daily News lost $30 million last year and that was compounded by the mystifying decision to invest $150 million in a new printing press. If Cablevision were to buy the NY Daily News, it would inherit this debt, which actually makes the $1 offer seem pretty generous. But in the business world, a $1 offer — even for a failing company — is seen as an insult and that could be the way that Cablevision intended it.
The NY Daily News Business Model Is Outdated
According to the New York Times, the NY Daily News has a circulation of 427,452 for its daily publications and 558,057 for its Sunday paper. Those numbers are a far cry from the millions of loyal readers the paper used to have and that decline is a direct reflection of the NY Daily News’ failing business model.
The NY Daily News relies heavily on newsstand sales and generates very little revenue with its website. With circulation falling off so dramatically, the newsprint advertising revenues are also suffering. Anyone who purchases the NY Daily News would have to overhaul the way the paper does business and that would not be an inexpensive transition.
Cablevision May Be Serious
Despite the possibility that its offer could be seen as an insult, there are indications that Cablevision could be serious in its bid. Cablevision’s subscription base fell by nearly five percent last year as more people are cutting the cable in lieu of services such as Netflix and Roku. Cablevision may seriously be considering the need to expand as a media company and the chance to buy the NY Daily News for $1 may be too good to pass up.
The actual call for bids has not officially gone out yet, so no one knows what Zuckerman thinks of the Cablevision offer. In the end, this story is a great example of how mismanagement in the media publishing business can take a once iconic publication and turn it into a financial disaster.