How to become a millionaire

An old joke is making the rounds for newspaper folks these days. It goes like this: Want to know how to become a millionaire? Invest a billion dollars in newspapers.

That bit isn’t funny to anyone. But it is true for people investing in newspapers these days. Newspaper stock values are crashing. McClatchy has lost 95 percent of its stock value since purchasing KRT. Gatehouse Media stock has essentially become a penny player. Journal Register company stock is basically worthless. Even the strong public chains have lost significant amounts of stock valuation (Gannett down 80 percent since the beginning of 2005, New York Times down 70 percent for the same period, Newscorp down 36 percent).

If one had invested $1 billion three years ago in some of the world’s biggest public newspaper companies, there is a good chance the investment would be approaching $1 million today.

So what’s the good news? For those who like to see the world through a rosè-tinted wine glass, there is the possibility of a white knight. Or maybe just a gray one.

Alan Mutter writes at Newsosaur:

With a growing number of newspapers on the market at a time they most likely will fetch historically low prices, somebody is going to start buying some of them. But don’t count on the usual suspects.Start thinking, instead, about such unconventional potential purchasers as the multibillion-dollar investment funds created by countries like Singapore or the sheikhdoms of the United Arab Emirates.

The upside is those non-traditional players all have multiple billions to pour into newspapers. The downside(s) — numerous. Mutter points out many, including both the agendas some of these investors might hope to push with their media properties and the potential backlash of having the local paper owned by a group of dimm fur’ners (as my Alabama relatives would say).

However, few traditional media players have the where-withal, desire or stock-holder backing to buy the newspapers that are (or soon will be) on the market. Most are cash-strapped, debt-laden or revenue challenged at the moment. But even those who aren’t would have to know something that has escaped the perception of most media analysts before plunking down anything for those rags on the blocks. That something would be how to stop the bleeding.

Mutter has some thoughts on that, as well. Maybe I will get to them tomorrow.

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1 Response to “How to become a millionaire”

  1. August 20, 2008 at 5:36 am

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

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