What's going to happen to McClatchy?

McClatchy is about the largest newspaper chain in America not either in the hands of vulture capitalists nor race-to-the-bottom grifters like Craphouse. (That's my name for Gatehouse, which is the tail that wags the dog in its merger with Gannett in what is publicly called the "new Gannett.")

That said, it had to file Chapter 11 earlier this year, and as part of that, today is the deadline for bids on what is currently much more than a "carcass."

Yesterday, Ken Doctor offered his take on what might happen. He listed four categories of potential buyers, either for the entire body or for individual newspapers. 

Let’s categorize the likeliest bidders:

• The Insider 
• The Savior 
• The Financial Engineer 
• The Roller-Upper

He then takes a look at each.

"Insider" is Chatham Asset Management, the vulture capitalist who owns a slice, but no more than a slice. (Alden, owner of Dead Fucking Media/Media Snooze, would be another.)

Update, July 6: Those are two of the three bidders, Doctor reports, and also says the third is a non-starter. So, vulture capitalists 1, knights in shining armor 0.

Update 2, July 9: More ugh. McClatchy reports Alden is very interested — interested enough to challenge Chatham's bid and get the auction delayed. Update 3, early July 10: Judge did review the challenge, and has now rejected it. Sale is back on.

Update, July 12: Chatham won the auction and is buying the whole schmeer. It could still part it out, of course.

Update, July 17: This all said, Chatham's post-2016 actions as owner of Postmedia make it look potentially like little more than lesser evilism vs Alden.

"Savior" would be primarily nonprofit ownership. Ken says he's heard rumors that interested buyers would be interested in applying the nonprofit model to the entire beast. I'm skeptical, and will get to that more in a minute.

"Financial Engineer" is a vulture capitalist, but Ken says it's likely NOT one of the companies already bigfooting the newspaper landscape.

"Roller-Upper"? Either CrapHouse or vulture capitalist Alden and head boy Heath Freeman.

Here's a string of Tweets I had on all of this.

McClatchy is a newspaper chain still worth saving from the vulture capitalists. Boy, it would be nice if Ken Doctor's sources are right and some "savior" bought it. 1/x https://t.co/cg1Erys0jo

— Fuck Jesse Ventura and fuck Primo Nutbar 🚩🌻 (@AFCC_Esq) June 30, 2020

That's the lead-in to all of this, of course. And it WOULD be nice. McC has had solid reporting, has a good DC bureau, and there, it often thinks slightly outside the bipartisan foreign policy establishment box.

OK, next?

Nonprofit newspapers aren't ideal, re McClatchy. Here in Texas, the Texas Tribune has pulled punches on issues of importance to some of its sponsors, like when environmentalism runs into O-I-L. (It will deny that, but I've got receipts.)  2/x

— Fuck Jesse Ventura and fuck Primo Nutbar 🚩🌻 (@AFCC_Esq) June 30, 2020

And related:

And, COVID has punched a hole in event money (which has ethics issues and has been abandoned by most profit-based papers and mags), so the idea of ramping up events across a chain like McClatchy certainly wouldn't fly. 3/x

— Fuck Jesse Ventura and fuck Primo Nutbar 🚩🌻 (@AFCC_Esq) June 30, 2020

That's why, contra Ken's sources, (Jon Allsop of CJR also discusses the issue) I really don't see a single buyer for the whole company as a nonprofit organization shop. (I'm not sure I see a single buyer for the whole schmeer, or at least a single non-flipping buyer, but that's another story.)

What I do see as a possible, part 1:

Because of all of that, I think it's unlikely a buyer would emerge to take the entire McClatchy chain nonprofit. I could see its whole set of Cal papers going that way .@mediagazer and .@kdoctor. Too bad it sold Monterey and San Jose. 4/x

— Fuck Jesse Ventura and fuck Primo Nutbar 🚩🌻 (@AFCC_Esq) June 30, 2020

And part 2:

As for the non-Cal McClatchy papers? Miami Herald and the Spanish-language paper could get a community buyer for sure. The rest? Would an Alden finance a Craphouse/New Gannett buy of them just to get a foot in that door? 5/x

— Fuck Jesse Ventura and fuck Primo Nutbar 🚩🌻 (@AFCC_Esq) June 30, 2020

So, there you go.

On the whole group of Cal papers, it's possible that maybe a nonprofit reaches a deal with Alden, as it via Dead Fucking Media is now the owner of Monterey and San Jose. It could be another current newspaper group which could then try making the Cal papers a nonprofit org as a subsidiary of some sort.

We shall see. And, we have now seen.

If Ken's sources are right about Chatham's relative reservoir of goodwill, it's possible they try some sort of spinoff of at least part of the properties. Maybe what I said about the California group going together as a nonprofit org happens. Per the Knight Foundation seriously considering, then deciding not to be, the white knight, and being in Miami, maybe it bites on just taking the Herald.

That said, per Ken, the old Knight-Ridder execs' pension lawsuit could slow everything down a bit. Update: Federal judge has delayed ruling on whether their suit can proceed until he sees the bids. That story, reflecting typically good and honest internal self-reporting, notes that a winner is supposed to be unveiled July 15, IF the company crossed a July 14 threshold allowing a "distressed termination" of its pension plans, not just limited to the old KR execs' pensions.

Trumpsteria is even hitting McClatchy

I am hereby suggesting a new portmanteau, mashing up on "Trump" and "hysteria" for "Trumpsteria." Like a wisteria, it will be purplish in its anger, and sometimes in its prose.

Like McClatchy, which I thought at one time knew better than to run speculative-at-best crap like this about Jared Kushner meeting with people who may be, but likely aren't, that close to Vladimir Putin.

First there's this, among the more tenuous statements.

By Election Day, an automated Kremlin cyberattack of unprecedented scale and sophistication had delivered critical and phony news about the Democratic presidential nominee to the Twitter and Facebook accounts of millions of voters. Some investigators suspect the Russians targeted voters in swing states, even in key precincts. 

Russia’s operation used computer commands knowns as “bots” to collect and dramatically heighten the reach of negative or fabricated news about Clinton, including a story in the final days of the campaign accusing her of running a pedophile ring at a Washington pizzeria.

Erm, given that major newspapers have retracted their "17 intelligence sources" stories, and for other reasons, if by "Russia" you mean "Russian government," we still know no such thing.

It gets worse:

One source familiar with Justice's criminal probe said investigators doubt Russian operatives controlling the so-called robotic cyber commands that fetched and distributed fake news stories could have independently "known where to specifically target … to which high-impact states and districts in those states."

So, we have an intelligence operation brilliant enough to distribute fake news stories, or enhance their Google rank, etc., etc., and who have been selected for their cyber-smarts deliberately to target American presidential politics —

BUT, BUT, BUT too dumb to know about the Electoral College and battleground states, and left without guidance from supervisors who would know?

Supposedly, the cyberhandlers behind these bots were even smart enough not just to try to help Trump in the general but also in the Republican primaries. But still dumb!

As for other aspects of that latter link? Clint Watts is ex-FBI. I don't know if he's a BFF of James Comey or not, but it's at least possible. And,  he's clearly otherwise bipartisan foreign policy establishment insider, given stuff like his past association with the Foreign Policy Research Institute. At the same time, CNN says he is NOT known as a cyber expert.

==

On another Trumpian relative, Donald Jr., Masha Gessen has the much more factual story. A low-wattage conman was being conned by brighter ones.

Jeff Bezos and the death of print: Hypocrite, or right?

In the wake of Jeff Bezos buying the Washington Post, Tech Crunch and others are pointing to an interview he did in 2012 with a German magazine saying that print newspapers are going to be dead in 20 years.

Now, with his buy of the Post, some critics are saying he was hypocritical. More yet are saying he was, and is, clueless. Yet others are talking about papers as playtoys for the rich, implying that's all Bezos wants.

Let's briefly address those observations, then go on to discussing his original interview.

First, in response to all three critiques: Did Bezos promise he'd keep the Post open 20 years as a print paper? No. Has he retracted his interview comments? No.

Now, on to each individual one.

Hypocrite? Why? Even if he bought the post to get inside-the-Beltway access to politicos, lobbyists, etc., owners of all major metropolitan papers trade off access, at least to some degree, and have for decades. Some get too chummy at it. But, it's not hypocritical to do that, or at least  not in the way critics mean.

Clueless? I talked in my original post about all sorts of Amazon-Post synchronicities, even though it's Bezos as an individual, not as Amazon CEO, buying. The obvious, since the Post finally has a paywall running, is to ramp up a mobile version of the Post. It's obvious from the Amazon side, too; e-book sales have been basically flat for a year or so, and a number of publishing analysts think that's more than a short-term issue. So, Bezos needs more "product" on those Kindles. Not a bit clueless.

Playtoy? Again, don't think so. This is a man who has serious long-term money sunk in a private spaceport. With that, and surely with the Post, he wants concrete returns.

So, now that I've dismissed the carpers, what about his claim? Is he right?

If we narrow his focus, both for the sake of argument and the assumption that he probably meant this anyway, and confine his comment to major metropolitan seven-day dailies, I think he's spot on. That's even more true for larger dailies that, unlike the New York Times, Post, and McClatchy chain, don't have good in-house non-AP news bureaus for national and international news.

Take a look at, say, a metro as big as the Dallas Morning News. Sorry, "The" ...

Belo doesn't have that much of a "bureau" between its three biggies in Dallas, Riverside, Calif., and Providence, R.I. The Snooze itself has greatly trimmed its DC bureau and cut back its one in Mexico City over the past decade.

So, most national news, all international news, and a fair chunk of state news outside the Metroplex area or Austin is off the wires. Half or more of hard news in the paper is wire. It's already dumped some things like sending its high school sports coverage to a third-party website. And, until Google, Yahoo, et al are forced by rates being high enough for AP and Reuters stuff to paywall their news sites, the need to look at a paper for most hard news coverage will continue to decline. Ditto for non-local sports, which isn't profitable from an ad perspective anyway, as sports pages in hardcopy continue to get looser, even with need for all that white space for agate.

Let's take a fairly busy weekday, say, Fridays, because you have local society news, local society event previews, etc. Even then, in Dallas, you could put your locally generated news, feature, opinion and sports content, with current ad inches, on a 16-page paper. Maybe less, if you kill some use, or overuse, of white space.

Will younger readers (or today's readers, cohorted up in age) pay $1 for that, or a buck, inflation-adjusted, in 20 years? Doubt it. So, today's print readership decline will only continue, as will print ad dollars. (This despite newspaper execs who talk about booming auto sales while not looking at their own industry to see still-slumping auto ad sales. And, if/as auto execs see sales boom even as they cut their print ads, well, they're not dumb.)

Anyway, Friday was generous. A Tuesday or Wednesday Snooze of the type I mentioned might only be an 12-pager, unless  you're storing up a bunch of enterprise stories. (I didn't take Monday as an example because of the extra sports volume then, at least during football, for pro stuff.)

Related to this is newspapers finding a niche in the Internet world. In what's a pretty good column, the Times' Ross Douthat notes how British newspapers had their niches pre-Net, and how the Post blew its, post-Net, by letting Politico get started.

Next big question:

How does a Bezos, or somebody else, get there?

Look at Advance. Whether or not one agrees with its methodology, or the brutality of its implementation, or the details of its judgment, it's making some Bezos-like assumption and deciding to act now.

My take: I'm not sure what methodology might be best, but its isn't totally right; Advance is too brutal; it's cutting in the wrong areas.

The methodology is wrong because of its "hybrid" ideas of printing every day, but just not doing home delivery every day, as Advance is doing in most, but not all, places where it's transitioning. If Advance is trying that "split" to hang on to ad dollars, soon enough, advertisers will start wanting discounts on non-delivery days, if Advance isn't already offering them.

Rather, if a seven-day daily would simply junk, say, Monday, Tuesday and Thursday entirely, it could focus future cuts on copy editors and pressmen. If you're cutting hardcopy product specific days, that's the "easy" cuts. Gives you a five-day work week for both, with Thursdays for designing, building and printing special sections and such.

That said, per a throwaway line in this Tech Crunch piece, if the Post under Bezos is like Amazon under Bezos, he will be Advance-level ruthless once he decides on a goal and a path. We all know the crap level of Amazon warehouses.

Now, smaller seven-day dailies, in older, often more white, smaller cities? They can probably hang on past the 20-year mark by going to six-day, or eventually, five-day operation but still remain daily.

Definitely so for the six-day dailies that, along with non-dailies, Warren Buffet likes. They can survive past Bezos' deadline, but part of the price will likely  be dropping another day of print.

The non-dailies? They'll stay around but diminish as the old, mainly white, less-computer owning, less-Internet using, rural and small town core reader cohort ages out to death. But, 20 years from now? A lot of triweeklies will be semiweeklies and a lot of semiweeklies will be weeklies.

And, arguably, papers big enough to run separate digital and hardcopy/legacy operations should do so. Beyond the production benefits alleged in this piece, it makes easier to continue the trims, or whacks, on the legacy side as or when they're perceived to be needed.

What went wrong at the Mercury News?

An early online innovator. Great reporting by the likes of Gary Webb (before the Merc threw him under the bus). A booming market. Mediocre papers in San Francisco.

So, what went wrong? That's the theme of this in-depth piece by Columbia Journalism Review. (H/t to my friend Leo Lincourt.)

My reaction? It nails the main points of what went wrong not just at the Merc, but to some degree, the industry in general:

First, I didn't realize that the Merc had, at the start, "paywalled" its website, only to abandon it later. Related to that, as Leo notes, is its failure to find "niche" reporting worthy of being paywalled, or to realize what it had in Silicon Valley. Especially after Steve Jobs' return to Apple, the Merc, even with national media "discovering" Silicon Valley, could have had the angle on premium, paywalled content. The WSJ is partially paywalled even with the New York Times in its backyard, after all.

Second, specific to the Merc, Dean Singleton is an idiot, and certainly had a hand in the Merc's demise, as he has in the AP focusing first on news aggregators and many other things that have hurt the industry. The story doesn't at all look at him, but it's too bad it didn't. (That said, Deano's injuriousness to the industry, while being Example No. 1 of not "getting" the online newspaper world, could make a separate story of equal length all by itself.

Third, per many other observers, we see the problems with newspapers trading on the NYSE and focusing on short-term profits. The stock-zooming 1990s has had its payback, with newspapers doubling down on new purchases while ignoring the destructiveness of the Net:

(General manager Dan) Finnigan explained that either they were going to cannibalize their own businesses or someone else would. 

This was at a meeting of Knight-Ridder publishers, where he tried to get them on board with investing in ...

CareerBuilder! (K-R/The Merc also took a whiff at buying into eBay.)

This was even as people were warning that newspapers should accept lower profit margins and maybe even initial losses for investments in some new technology, websites, etc.

In that way, newspapers (those publicly traded and especially those, like Knight-Ridder but unlike the NYT, with one-level stock structure) are emblematic of what's wrong with hypercapitalist America today.

That said, one commenter there, who holds up the nonprofit Poynter Institute, with its ownership of the St. Petersberg Times as a model? Dunno about Poynter or that paper, but, in the UK the Stott Foundation has admitted that, over the past several years, it's hemorrhaged hundreds of millions of dollars/pounds on The Guardian's highly touted but non-paywalled website.

The St. Pete Times also has no paywall, which leads me to say, nonprofit ownership guarantees nothing in the modern newspaper industry, especially if you have a stupid business model.

The "cannibalization" is also another argument for paywalls. Especially at smaller, more regional papers, paywalls not only are a way to make more money off of online operations, but keep people from leaving hardcopy and its ads, which are still the largest revenue producer.

Related to that, how many industries bemoan making "only" a 9 percent profit? As noted, the Merc's margin had fallen to 9 percent by 2006. Even today, if you throw out debt service (mainly from the buying-up binges of 1995-2005) papers are still profitable; just not at 20-plus percent.

In the story, Tony Ridder comes off as a bean-counter, but one who honestly was doing so within "old newspaper" mentality.

One complaint, though. The story throws Gary Webb and his well-known reporting on the Nicaraguan Contras-cocaine-CIA connection kind of, or more than kind of, under the bus, at least by implication. On the purely editorial side, I'd have to agree with one commenter that slicing and dicing Webb was far more egregious than any of the business/editorial/Internet inter-departmental screw-ups.

Anyway, give the whole thing a read.

What’s the next paper to fold?

At Time, Justin McIntyre guesses it’s the Philadelphia Daily News, the weaker of Philly’s JOA-paired papers. Others are listed at the link, including one here in Texas.

No takers for Miami Herald?

McClatchy has the Herald on the block, but nobody’s buying, reportedly.

Why would they? South Florida real estate will be in the tank — commercial reali estate, mind you, and not just homes — for another five years, I would guess. That means five years of crappy real estate add.

Meanwhile, McC has $2 bil of buyout debt from taking over Knight-Ridder just two short years ago. God, it sucks to be in this business.

I mean, community newspaper chains aren’t as bad off, certainly, but folks whose newspaper companies are based on big dailies?

Many of our cities will be missing a newspaper

If you're my age, you're old enough to remember the demise of the two-newspaper city in the U.S., except in its biggest cities.

Coming next? The For more on yesterday's events, demise of the one-newspaper city in a number of places, perhaps.

A number of liberal bloggers have rightly praised McClatchy's news coverage out of D.C. during the Bush Imperium. Well, it's one of the worst-off chains, financially.

Additional factors? Especially due to struggling car dealers, the ad downturn is local as well as national. Real estate's plummet is, of course, definitely a local issue, especially in subprime ground-zero spots. And, the credit crunch makes national advertising lines of credit hard to line up.

The heartless mainstream media continues to filet itself

The Miami Herald lays you off. After a bait-and-switch sending your job to India.

Then, it wants you to blog about it, and about how you’re going to survive without full-time income! (Scroll down to the June 22 post, or go directly there.

And, this is McClatchy.

Outside its more thorough, non Bush-shitted coverage of Iraq, it shows again it is Just.Another.Newspaper.

McClatchy — just another newspaper company

Forget their in-depth, unbiased Iraq coverage. When outsourcing jobs to India is the least problematic of your newspaper job downsizing actions, you’re just another big conservative newspaper company at bottom line.