Then Mort Zuckerman, owner of the New York Daily News, a Post competitor, matched Murdoch's bid. But Murdoch seemed confident, even going so far as to say that the merger was almost a sure thing. Murdoch hadn't counted on one thing though-another bidder. Cablevision, a cable, phone and Internet company headquartered on Long Island, stepped in and offered $650 million.
In the end, Cablevision (NYSE: CVC) won out. This had some people looking at Cablevision's chart (the stock dipped a bit after the deal was announced) and left many analysts scratching their heads. Newspapers aren't exactly a booming business. In fact, most of the stories you read about them concern slumping revenue, plummeting advertisement sales and layoffs of countless employees.
A Different Perspective
For me, things were different; not only am I a former newspaper employee, I worked at Newsday. It was my first job out of college, where I honed my editing skills and made some lifelong friends. In my mind Newsday is not just an asset, something to be bought and sold. It is the place where the people who remain after too many rounds of buyouts and layoffs try to put out the best newspaper they can each day.
When I heard the news, I wondered about the mood in the newsroom. I imagine uncertainty hanging in the air as people wondered whether Cablevision would use its considerable assets (the company owns Madison Square Garden, the Knicks and the Rangers) to help Newsday regain its prior health, or whether there would be more buyouts.
The one expense that is overlooked in these mergers, buyouts and constantly changing leadership is the human cost. The fatigue and low morale that settles over a newsroom that has lost half of its staff in five years because of budget cuts makes it almost impossible to carry out the daily tasks of putting out a newspaper. Journalism is not a commodity.
Looking to the Future
Cablevision's executives have said they plan to restore Newsday to its former quality (from before the buyouts and budget cuts), but some employees have wondered out loud to various news outlets whether Murdoch would have been the wiser choice. As one Newsday employee pointed out, he's run a newspaper before.
Last year, Sam Zell bought the Tribune Company, which in addition to Newsday, owns the Los Angeles Times and Chicago Tribune. Zell's plan was to take the company private, sell off some assets, such as the Chicago Cubs, and try to leave the newspaper end of the business largely intact. But the deal left Tribune saddled with debt and forced to buy out many employees. And with Tribune's revenue down 11% in the first quarter, it became clear that more assets would have to be sold.
Many employees at Newsday were unhappy with the changes made in recent years, both since the paper joined the Tribune Company in 2000 and in the last few months under Zell's leadership. Their greatest wish is that Cablevision uses its extensive resources to succeed where so many have failed.
Whether this will be a profitable venture for Cablevision is yet to be seen. The deal is expected to close quickly and changes will start almost immediately. I'll be watching to see whether the company has what it takes to succeed in the newspaper business.
I'll leave you with a quote that hangs in the Newsday offices (it's originally from the Book of Proverbs) and it could be called the motto of the paper, "When there is no vision, the people perish."
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Instead of a book recommendation, this week I'm going to leave you with some subscriber comments that we received about the Cabot Wealth Advisory Weekend Digest. If you have a comment, we would love to hear from you, so send us an email or post on the Cabot Forum at http://www.cabot.net/forum
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Have a great weekend. I'll be back with you next Saturday.
Until next time,
Editor of Cabot Wealth Advisory
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