Tags: billionaires | money | revenue | newspapers

Billionaires Flock to Money-Losing Newspapers

By    |   Wednesday, 01 October 2014 12:33 PM

Newspapers may be awash in red ink, but that hasn't stopped billionaires from snapping them up like candy.

Warren Buffett's Berkshire Hathaway spent $344 million on 28 regional newspapers from 2011 to 2013 and now owns 69 of them. Amazon founder Jeff Bezos snagged The Washington Post last year for $250 million. And former hedge fund manager John Henry reeled in The Boston Globe for $70 million last year.

The purchases may be part flight of fancy — vanity buys. But the billionaires also have voiced a feeling of civic obligation and see value in the battered assets, CNBC reports.

Sophisticated targeting and a nearly all-digital audience would likely be key elements of any success, according to the news service.

"There's a glimmer of a hope for a growth story," Dean Starkman, who covers Wall Street for the Los Angeles Times, told CNBC.

"We know there's high demand — there's a market for this. The question is who's going to be able to figure out the model where the costs of producing high-quality journalism and high-quality information in the public interest don't exceed the revenue that you can generate from it."

The moneymen might be on to something. Despite the fact that many people believe the newspaper is going the way of the dodo bird, circulation revenue recorded a second-consecutive year of growth in 2013, rising 3.7 percent to $10.87 billion, according to the Newspaper Association of America (NAA).

However, total revenue for the U.S. newspaper media business was $37.6 billion in 2013, a slight decline from $38.6 billion in 2012, but revenues increased from digital ads, direct marketing and other newly developing sources, according to CNBC.

"This trend reflects an industry evolving its business model in a significant way, taking advantage of developments in technology, consumer behavior and advertiser interest, to grow audience and diversify its revenue stream," NAA said in announcing the numbers.

"Investors . . . see more value than the market in existing properties. [They] think 'if these were run better, with some investment and improvement in quality and serve their markets better, then these are good businesses,'" Tom Rosenstiel, executive director of the educational nonprofit American Press Institute, told CNBC.

Meanwhile, major media companies, including Gannett, Tribune Co. and E.W. Scripps, are spinning off their newspapers into separate companies to rid themselves of the money-losing enterprises.

"So whose fault is it? No one's," writes David Carr, media columnist for The New York Times. "Nothing is wrong in a fundamental sense: a free-market economy is moving to reallocate capital to its more productive uses, which happens all the time."

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Newspapers may be awash in red ink, but that hasn't stopped billionaires from snapping them up like candy.
billionaires, money, revenue, newspapers
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2014-33-01
Wednesday, 01 October 2014 12:33 PM
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