June 05, 2014

DFM could stand for Dead Fricking Media (updated)

"Digital first" media company Digital First Media has apparently hit the end of the road.

Not only has it killed off a centralized "content" production hub (I refuse to call it a syndicated news bureau), but it is reportedly looking to sell off its entire set of newspaper holdings.

In case you're wondering what all that involves, since DFM was created when self-alleged digital guru John Paton and his Journal Register Company, having had its own bout with bankruptcy, acquired the bankruptcy ashes of MediaNews before the new entity wound up with its own second swim in the bankruptcy tank, it involves a lot, especially if you're a California newspaper reader. And, in the Southland, with a couple of bank shots elsewhere, it will involve even more. (More on that below.)

The old JRC owned the New Haven (Conn.) Register as its flagship, and some smaller daily and non-daily papers, mainly in the Great Lakes area. MediaNews is, or was, a newspaper powerhouse, owning (per Wiki) the Denver Post, L.A. Daily News, San Bernardino Sun, San Jose Mercury News, a number of coastal California dailies a whole group of smaller papers in the East Bay area of California and more.

As the link above notes, the merged companies, after their joint 2012 bankruptcy swim, came under the primary ownership of Alden Capital, which apparently, like other hedge-fund type financier groups, wants its money, or cents on its dollar, sooner rather than later. So, it's sale time.

Not just sale time, but perhaps fire sale time. As ad declines continue, and even Saint Warren of Buffett sells one or two of the smaller papers he bought from Media General not too long ago, there's no way the media acquisitions world can swallow this whole python in one sale.

(Update, April 14: It looks like DFM is swinging the ax hard, a possible pre-sale slashing, if it's ending the "Faith" section of the paper in the capital of Mormonism.)

So, like when Freedom was broken up a couple of years ago, there will probably be some regional sales.

That led to the new (at least on paper and PR) ascendancy of the Orange County Register, under new owner Aaron Kushner.

Ken Doctor, starting with his main piece on the DFM implosion, links to other stories that explain the SoCal bank shots.

Kushner is expanding into L.A. with his Los Angeles Register, first of all. If the L.A. Daily News is going on the sale block, well, one way to make its financials look shinier is to cut yet more staff. Ditto at the San Bernardino Sun; given that Kushner also owns the Riverside paper and is trying to broaden its regional coverage and distribution, his eyes are surely getting wider.

And, that's not all that's at stake. 

The L.A. Times is part of the Tribune Company, which is splitting into print and non-print divisions. Doctor questions the debt level that's being dumped on the print division. Now, it's a split, not a sale, but most of that debt will be owned to the non-print half of the split, and a fair chunk will be due immediately. In addition, the non-print division will keep key office space and charge newspapers rent. Obviously, one way to make sure that debt gets serviced and other things get paid is ... cut staff.

Given that the Trib Co cut 1,500 print division jobs, total, in the previous two years, there's not slack in the system right now. Many more cuts, and the L.A. Times will look like ... the L.A. Daily News.

Sounds like dominoes all lining up for Kushner, right? 

Meanwhile, yet other news could make him greedier yet. Per Doctor's piece, blatantly and thuggishly San Diego businessman Doug Manchester, owner of the old Union-Tribune, also wants to sell.

So, Kushner could be hitting the jackpot, eh?

Uhh, maybe not. Per that expansion link:
(S)ome analysts have been skeptical over whether Freedom will be able to keep up with the high costs of expansion. 

Gabriel Kahn, a professor at the USC Annenberg School for Communication and Journalism, told KPCC that it's expensive to launch papers in new communities and wondered how much cash Kushner has left.

"It reminds you of baker trying to roll out a pie crust and push it farther and farther. Eventually you run out of dough," Kahn told KPCC in February.
It's a good question, considering he just paid to buy the Riverside paper from Belo and is now talking about an expansion into Palm Springs. Add in that he's done a fair amount of his own spinning about his expansion so far and things could get worse in L.A. for newspapers.

Also of concern is his lack of consistency in hiring and firing, and despite all his self-ballyhooing, the seeming lack of a consistent vision.

Update, June 5, 2014: Ken Doctor notes how the Kushner yellow flags have now become red. The Long Beach rollout cut back to weekly. Community sections cut back in the OC. And, the biggies? Mandatory two-week furloughs, plus late vendor payments.

Picture L.A. with three roughly equal papers, all in a war and fighting over diminishing scraps of print ad money. Picture Kushner also overextending with a San Diego edition. Picture him thinking about expanding Riverside into San Bernardino. (Per that link above, all of this is quite possible.)

Then picture him facing a debt call in 3-4 years and his own bankruptcy, then getting reverse-vultured. Soon enough, one of the three L.A. papers will go Daily Mail in a bid for cheap webclicks. Or the Kochs, as feared more than reputably rumored, will buy the Times on a fire sale. Or, a nutjob with media experience, Phil Anschutz, will do that. Per the update immediately above, all of these financial woes for Kushner are very possible indeed.

So depending on what gets sold (or spun off) when, for how much, and with how much debt load to the new owners, the print media world in the Southland could see a new race to the bottom.

It won't be vastly better in the Bay Area; Anschutz, already there with the San Francisco Examiner, might try to swoop up some of the properties there. His other papers are, to the  degree analysts can tell, all money losers, but he doesn't really care.

The big issue is that, as Michael Wolff notes, we still haven't figured out how (with select exceptions) to make the online model pay. I've blogged before that the Net is exactly the opposite of print in this way. Because space for stories was limited, it made the "information" of ads pricey, to quote the second paragraph of Stewart Brand's famous saying — one that Gnu Media gurus routinely ignore. Wolff adds elsewhere that advertisers have figured out that Net traffic numbers aren't real, either, which is why click-per-impression rates continue to drop. (Yet more from Wolff here.)

On the Net? Because story/photo/video/space is limited only by server size, and every daily paper with a website, plus top blogs and news aggregators, post wire service stories, ad "information" is almost free, even if it doesn't "want" to be so.

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Other media "fails" continue. I just saw that the Pittsburgh-Post Gazette is offering online ads to community papers with a 50-50 sales split via a network it's created. And, that would be a newspaper that, on its website, has nary an ad above the web-fold level. It is, I guess, paywalled with a meter or something, I guess, as it offers digital subscriptions, though I see no "first of 10 free stories for the month" Javascript screen when I click on an individual story link. And, I clicked at least 10 locally-generated stories and columns and still got no paywall warning.

Maybe the PPG is just arrogant enough, or dumb enough, to hope that people will pay $9.95 a month for something that they can get for free, at a site that has a fairly bland design on local stories and bland-to-clunky on wire stuff, which has a little bit different page design. I mean, the home page doesn't even have a slider of the top 5 or so stories.

It's been a good month or so for newspaper industry stupidities in general.

And, speaking of online media fails? Let's add the New York Times' "Premier" to that, maybe?

People should read this piece by Jack Shafer. Shafer gives a good smackdown to the NYT's "Premier" premium website in specific, and to the concept of "premium" newspaper websites in general. Folks in Dallas, Boston, and likely San Fran, who think they can "sell" a premium website while keeping a totally free, totally unpaywalled basic one, should take note. But almost surely won't. 

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