Thursday, March 19, 2009

Internet Killed the Newspaper "Star" ... (Well Actually the Union Tribune)

My local newspaper -- The San Diego Union Tribune -- is now in the hands of a private equity firm known for gobbling up distressed companies, according to The Wall Street Journal.  Beverly Hills-based Platinum Equity is now editor-in-chief.  And, the price is reported to be rock bottom -- the Journal reports "less than $50 million" (although the Union Trib itself disclosed no numbers and tried to put a braver face on the deal and what it means for the paper itself, and its fast-dwindling employees).  The Journal further reports that just a few years ago, the Union Trib generated $100 million in positive cash flow (and arguably was worth nearly $1 billion at the time)!  And, to add even more insult, the reported $50 million price tag includes the newspapers real estate holdings -- meaning that the paper itself was valued at significantly less than $50 million, assuming that number is correct.  This comes, of course, the same week as one of Seattle's two major newspapers simply shuttered its paper operations.

The culprit?  The Internet, of course.  Traditional newspapers simply can't compete in an advertising model anymore when most of us can get the latest news we want for free.  The same holds true for the Union Trib itself -- all of its content is available for free online (although I continue to pay to subscribe to the paper version delivered the old-fashioned way).

Why do I continue to pay?  Because I want blue chip reporters and world class reporting.  But, sadly, this will be increasingly difficult -- impossible? -- as the Union Trib will continue to sever more and more employees.  At least the new owners are up front about that "strategy" ...