Seattle Paper Loses 98% Of Its Value In 4 Years

The Seattle Times Company, publisher of the Seattle Times lost 98% of its value in the past four years.

In 2004, newspaper broker Dirks, Van Essen & Murray put the value of the company at $900 million. Two years later McClatchy purchased a 49.5% share of the paper from Knight Ridder, which valued the paper at $240 million. McClatchy has regularly written down the value of the company since and in a federal filing dated Nov. 7, it valued its 49.5% stake in the company at $7.9 million.

The Times is privately held, so these figures might prove wrong, but if you own a newspaper, or your inheritance is dependent upon a newspaper, take this as a warning, and think about selling before there is no value left.

(This first appeared on Alley Insider.)

The Ongoing Obama Blackberry Mystery Continues To Go On

Transition team, schmansition team. Let’s get down to brass tacks: Will our next president be able to fire off tons of emails via his phone? Maybe.

Politico has a transcript from a Barbara Walters interview:

WALTERS: How are you going to get along without your Blackberry?

OBAMA: (Laughs). This is a problem. I, you know, one of the things that I’m going to have to work through is how to break through the isolation &the bubble that exists around the president. And I’m in the process of negotiating with the Secret Service, with lawyers, with White House staff&

WALTERS: You might have a Blackberry?

OBAMA: Well, I’m, I’m negotiating to figure out how can I get information from outside of the ten or 12 people who surround my office in the White House. Because, one of the worst things I think that could happen to a president is losing touch with what people are going through day to day.

Oh, and if you’re really obsessed with who’s going to run the country next year, you’ll be pleased to know that Robert Gates has been asked to stay on according to The New York Times. I mean pleased to know that someone was chosen. You might be displeased with the selection. You might not.

Cheap, Ugly, Electric Car. And Its Slow Too. I’ll Take It.

In May of 2009, this auto will be available in the U.S. for $19,000. It’ll only go 25-35 miles per hour, until it passes regulations. Then it’ll go 70 mph at top speed. It don’t look like much but at that price, if you live in a city and don’t drive much it looks like a steal. If it starts falling apart though, I’m not sure a mechanic could help you out.

Treehugger: It looks surprisingly like a Smart Car and frankly has one of the dumbest names I’ve ever come across, but the $19,000 all-electric RTEV (Ruff & Tuff Electric Vehicles)Wheego Whip will be available in the United States in May 2009.

The Wheego Whip can reach a maximum speed of about 70 mph, but until it passes crash tests by the US DoT, expected sometime in 2010, it will be released initially as a Low Speed Vehicle (25 mph maximum speed) or a Medium Speed Vehicle (35 mph max). RTEV says that the Whip can travel 50 miles on single 8-hour charge, from any standard household 110 or 220v outlet.

Sounds like your ideal ride? Read on:

Based Off Chinese Car’s Platform
To manufacture the two-seat Wheego Whip RTEV has partnered with Shuanghuan Automobile Company. Based off Shuanghuan’s existing gasoline-powered Noble, RTEV has designed the car’s drive system, which uses plug-in dry cell sealed (AGM) batteries. The international version of the car—known, far more sensibly, as the E-Noble—will be manufactured in China, while the Wheego Whip will undergo final assembly in the United States.

GM Saves Some Money: It Fires Tiger Woods

Image via Wikipedia

General Motors is ending its endorsment deal with Tiger Woods. The contract was set to lapse next year, but the company sped up the process and terminated it now. We’ve read that the contract was worth between $7 and $8 million annually. Not enough to save the industry, but not exactly a pittance.

Either the U.S. auto industry thinks it won’t get a bailout and it’s tightening its belt. Or it engaging in symbolic gestures to woo the public. Either way, its a smart business plan. And possible further evidence that advertising doesn’t work. Would they cut him off if they really thought he helped sell cars?

AdWeek: General Motors today said it would terminate its endorsement deal with Tiger Woods in December, ending the pro golfer’s nine-year stint with the automaker.

GM issued a statement asserting that  both GM and Woods “agreed to a mutual and amicable separation that included a desire for more personal time for the [golfer] who is expecting his second child in late winter as well as the search for budget efficiencies during a difficult economy for GM.”

…As the auto industry continues to sputter and the big carmakers seek a federal  bailout, it’s little surprise that media spending in the category has begun to erode.

According to Nielsen Monitor-Plus data, Ford and Chrysler each spent 22 percent less on advertising in 2008, while General Motors’ ad spend dropped 6 percent. Through July, GM retained its position as the top-spending auto company, investing $1.25 billion in advertising.

(Why is this on here? I started writing it for The Business Sheet, then I saw they already had it up, so I figure, why not?)

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What Do Advertisers Do When They Stop Believing In Advertising?

When the economy enters a recession, the first thing to get lopped off is the ad budget. Or so goes the conventional thought. If this truth holds, what happens when the economy enters into a downturn that is unique, perplexing, unknown and scary?

For all the promise of interactive ads on the web, I’ve yet to see any ads that floor me, make me stop and say, “Wow. That’s the next big thing.” I’m not alone. I’ve put this question to many of the smart people I know and they don’t see much either. For now, the web remains an unfulfilled adman’s promise. The banner ads, the text ads, they’re just jazzed up carry overs from an older era. The banner ad isn’t radically different than the advertisement I see in a magazine or a newspaper. The people inside it dance and move, but so what. Part of the problem with web advertising is that companies still don’t know how consumers use the Internet. The Internet is a dynamic and ever changing space.

Gmail provides a good case study. When Gmail was rolled out, privacy hounds howled that Google was crawling through our email to deliver targeted ads. Eventually we shrugged, and it isn’t a big talking point when Gmail is mentioned. This example illustrates a few challenges for advertisers. Do they dare put ads in our Gmail? How personal is too personal? If I say I want a Louis Vuitton suitcase for Christmas, and lo, a Louis Vuitton ad pops up next to my email, am I turned off to the brand? Or do I click? And maybe buy it early?

Google’s pay per click scheme also perverts the ad landscape. Previously advertisers were throwing away 50% of their ad inventory, they just didn’t know which 50%, or so goes the cliche. On the web they know what’s wasted. Or so they think. Because a consumer doesn’t click on an ad, does not make it effective. But in these lean times, companies want results, which could hurt web advertising. This was in Ad Week:

Since brand advertising on the Internet has never really developed solid measurement standards, its ROI value is often seen as superfluous when compared to performance-based ads. Thus, it often is the first line to go when budget cuts come. Some industry experts go so far as to predict that a severe ad recession will result in a complete rethinking of how image-based brands — the Coca-Colas, McDonald’s and Cloroxes of the world — approach online advertising.

Some industry veterans argue that the greatest handicap of display ads is their long-held reputation as bland. Whether traditional banner ads, skyscrapers or 350×200 rich media units, Web ads are eminently ignorable, and rarely move one to laugh or cry.

Most advertising is “eminently ignorable.” Any time an ad comes on television I grab my phone, I switch the channel, I look online. The photo above is the result of an eye tracking study that follows our online behavior. The red and yellow represent hot spots where people tend to look. This “golden triangle or golden F” holds across many websites. And it brings up these questions: Do we pay attention to ads at all? Is it possible that the promise of more trackable ad results could simply mean the death of advertising? What happens when advertisers realize people don’t pay much attention to ads, regardless of where they appear? Unless real, useful, and trackable ads become a reality, could this looming depression crush advertising as we know it?

How Much Of A Say Do Taxpayers Get For Financing Bailouts?

Image by Getty Images via Daylife

Now that the U.S. government injected billions of dollars into the banking system, the U.S. populace is starting to speak up about some of the odd business decisions banks make. Millions in bonuses? When you’ve drastically underperformed? No way. Unjustified. What about other things, like junkets and spa getaways? AIG, I’m looking at you. Not on the taxpayers dime.

There was a time when the banks could argue that they needed the junkets and the bonuses to remain competitive in the marketplace. I even fell for those arguements. Heck, I even made them a month ago. Now, those arguements are useless. Go ahead, quit if you’re upset you can’t get a bonus or a free spa weekend. Good luck finding a job.

The Taxpayers For Common Sense is adding its own question to the list: Why let our publicly owned banks waste money on sponsoring sports teams?

• Citi Field: The new home of the Mets, costing the recently bailed out bank $400 million for a 20 year naming deal.
• AIG: Their logo is on the chest of English soccer team Manchester United. The Daily Mail: “As AIG is the main sponsor of English Premier League football team Manchester United, the deal means that, in effect, [the team's] players are now being sponsored by the U.S. taxpayer.” The contract is worth $85 million and ends in 2010.

They list a few others, but the naming rights are ubiquitous throughout sports and theaters. These contracts are for many years going forward, so I’m not sure we could undo them. And I’m not sure we should. Where do we draw the line with what businesses that received capital should or can do? Are they truly ours now? I have no idea.

Timothy Geithner, Skateboarder.

The world is getting to know the new face of the Treasury and the Economist helped us all out by writing up a profile of the incoming man. Here’s our favorite part:

Mr [Timothy] Geithner looks a lot younger than his 47 years (though not as young as he did before the crisis began). He skateboards and snowboards and exudes a sort of hipster-wonkiness, using “way” as a synonym for “very” as in “way consequential” and occasionally underlining his point with the word “fuck”. In temperament he seems similar to Mr [Barack] Obama: he is suspicious of ideology, questions received wisdom, likes a competition of ideas and is keenly aware of how uncertain the world is.

We have our fingers crossed that he’s not a long boarder. We also want photographic evidence of this skateboarding claim. If this guy turns out to be a poseur, our hearts will be broken.

I can’t begin to tell you how exciting this is. Remember when skateboarders were punks marginalized by society?

Originally written for The Business Sheet

New York Times (NYT) Cuts Dividend

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From Alley Insider: After the market closed today the New York Times announced it would cut its dividend from 23 cents a share to 6 cents, which will save the company $97.8 million a year. Lord knows they need the cash. It probably would have been wise to cut the dividend to zero, but this is still a big step in the right direction. The stock now sits at $5.72 a share.

Now the over 50 family members that are trustees will have to live off $6.8 million from the dividend, which is still over $120,000 a year, says New York Magazine. Not too shabby, but possibly enough to fracture the family and force a sale of the paper.

This could actually be the best time to cut the dividend with out risking the company, as there will be fewer big offers for the company in this economic climate. Of course, it only takes one offer to possibly rock the boat.

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Hulu Already More Profitable Than YouTube?

Update: Alley Insider disagrees with what’s written below.

Last night, the FT reported that YouTube and Hulu would be even in revenue by 2009. Turns out that’s gross revenue. In terms of profitability, Hulu is already way up according to All Thing’s D’s Media Memo:

Media Memo: But I had questions about the data, reported by the Financial Times. So I called Arash Amel, the Screen Digest analyst who provided the numbers. Glad I did, because Amel’s analysis is actually much more provocative: He believes Hulu is already making more money than YouTube.

The short explanation: The numbers that the FT reported are gross revenue — total money received from advertisers — not net revenue –what’s left over after paying for the video.

If you’re talking about net revenue, Amel says, than Hulu, a joint venture between News Corp.’s Fox (NWS) and GE’s NBC (GE) is already making a small profit — perhaps $12 million a year. And he believes that Google’s YouTube (GOOG) is still losing money every year.

The longer explanation: Amel’s model assumes that while Hulu is showing far fewer video streams to many less people than Google does, it is able to sell ads on most of them — perhaps 80% of all streams have a paying advertiser, he thinks. Google, meanwhile, is thought to be able to sell ads on just 3%-4% of its views.

Just as important, but not widely discussed: Amel believes that YouTube’s costs are much more significant than most observers guess. That’s because YouTube isn’t just paying massive bandwidth and hosting costs for all those clips. It’s also paying out huge licensing and content fees to copyright owners like music labels.

Amel thinks YouTube is paying more for those fees than it does for infrastructure/bandwidth. This dovetails with what an industry source told me last week.

Amel won’t be publishing a full report on his analysis until next week. But he was able to break down his numbers for me over the phone. There is one obvious problem here. While he’s worked out a set of fairly detailed numbers for Hulu, he can’t get any more specific with Google other than it’s “loss-making”.

Hulu:

2008 gross revenue for US: $70 million

Net margin (factors in payments to affiliates, content owners; and infrastructure costs): 15% – 18%

Net revenue: $10.5 million – $12.6 million

YouTube:

2008 gross revenue for US: $114 million

Net margin: None

Net revenue: None.

Murdoch: Free News? No. More Paywalls? Yes!

If you’ve got an elite financial news service, you don’t have to give away your news for free. As a matter of fact, you might be able to charge a whole lot for it. Does this mean going after the New York Times is a bad strategy?

PaidContent: Besides that, an interesting bit about WSJ.com: “One way we are planning to take advantage of online opportunities is by offering three tiers of content. The first will be the news that we put online for free. The second will be available for those who subscribe to wsj.com. And the third will be a premium service, designed to give its customers the ability to customize high-end financial news and analysis from around the world.” The last part is what may be a new tier in the works, though Murdoch has talked previously in generic terms about increasing rates for WSJ.com subscription service and adding more content/services to it. One thought: it could be that the third tier will add content from other DJ brands like Barrons’, Dow Jones’ enterprise group brands like Factiva, Venturewire and others, and even bundle business/financial news from News Corp.’s international brands like Times UK, The Australian, and other TV news outfits worldwide. More as we find out….