Tuesday, December 4, 2007
Matt Cooper Wants To Buy New York Times
NYT Stock. Not the New York Times Co. The reason he wants to buy NYT stock is because he thinks the Grey Lady is ripe for a takeover bid. Writing for Conde Nast's Portfolio.com, Matt Cooper says, "But why wouldn't you buy some New York Times stock, right now? The yield is 5.6%. It's around its 52-week low. It's selling for around $16, when it was at $50 in 2001 and around $35 just over two years ago. The market cap of the company is around $2.3 billion which is what a lot of PE firms leave in their desk drawer.....I just think the stock is so cheap that someone, at some point, is going to take a run at it. Maybe they'll be sucessful like Rupert was with Dow Jones and maybe they won't be, but at some point it's gotta go up....."
Now, before you turn that gleam in your eyes into action, here's a little backgrounder, which Cooper seems to want to ignore. The first issue is that the print media, as an industry, is tanking badly, and it hasn't hit bottom. The second issue is that Matt Cooper is the same Cooper who, along with Judith Miller, of afore mentioned New York Times, almost made the cut as a jailbird in the valerie Plame leak case. At the last minute, he cut a deal with the Special Prosecutor, Peter fitzgerald, and left Judith Miller to take the rap alone. Miller spent months in jail. Now the reason I mention this issue is not because it has any direct impact on NYT stock price, but because Matt Cooper, formerly at TIME's Washington Bureau, talking about the NYT's financial doldrums without a single mention of the earthshaking background he has with it is rather ironic...
Leaving aside the scandalous talk of outed blonde spies and naive journalists, let's focus on the state of the print media and the value of the New York Times brand. It's no big secret that the print media is bleeding advertisers to online news publishers like Google News and star scribes to online publishers and blogs. Newsrooms are shrinking, foreign bureaus are all but extinct and the thickness and size of the papers is dropping precariously. This, in turn further reduces revenues. Revenues are falling and the number of people employed by the industry is falling. The only thing that holds this precarious industry from the brink is the brand name these papers have built up. In 2006, Knight Ridder Inc., the nation's second biggest publisher, was sold to McClatchy Co. for $4.5 billion. McClatchy promptly tore apart the Knight Ridder papers, and sold them off individually to the highest bidder. More recently, Rupert Murdoch's NewsCorp successfully convinced the Dow Jones to accept his $5 billion offer.
What happens is that the brand name is so valuable that deep pocketed buyers are prepared to pay any price to get access to the power and halo assocaited with the brand, profitability be damned. There is very little, or no interest, in the after-sale profitability, nor is there any expectation of such profitability. Which means that the New York Times brand is of no use to the Sulzberger family trying desperately to raise revenue using futile tricks like the now extinct Times Select firewall. But the New York Times brand is very, very valuable to a buyer who wants to use the brand, and if the NYT turns up on the bidding block, prospective suitors would likely pay through the nose, whatever the state of ad revenues or subscriber base. Post-sale, what happens to the New York Times and it's precious brand is anyone's guess.
One thing I can say for sure - Matt Cooper is dead wrong. The NYT stock could ultimately land up in single digits, and with its name sullied by the new owner. Pre-sales, the stock is likely to shoot up, due to the interest in the sale, and the likely infusion of new capital and hopes of a turnaround. After that, it's a long, long way to the bottom...
Now, before you turn that gleam in your eyes into action, here's a little backgrounder, which Cooper seems to want to ignore. The first issue is that the print media, as an industry, is tanking badly, and it hasn't hit bottom. The second issue is that Matt Cooper is the same Cooper who, along with Judith Miller, of afore mentioned New York Times, almost made the cut as a jailbird in the valerie Plame leak case. At the last minute, he cut a deal with the Special Prosecutor, Peter fitzgerald, and left Judith Miller to take the rap alone. Miller spent months in jail. Now the reason I mention this issue is not because it has any direct impact on NYT stock price, but because Matt Cooper, formerly at TIME's Washington Bureau, talking about the NYT's financial doldrums without a single mention of the earthshaking background he has with it is rather ironic...
Leaving aside the scandalous talk of outed blonde spies and naive journalists, let's focus on the state of the print media and the value of the New York Times brand. It's no big secret that the print media is bleeding advertisers to online news publishers like Google News and star scribes to online publishers and blogs. Newsrooms are shrinking, foreign bureaus are all but extinct and the thickness and size of the papers is dropping precariously. This, in turn further reduces revenues. Revenues are falling and the number of people employed by the industry is falling. The only thing that holds this precarious industry from the brink is the brand name these papers have built up. In 2006, Knight Ridder Inc., the nation's second biggest publisher, was sold to McClatchy Co. for $4.5 billion. McClatchy promptly tore apart the Knight Ridder papers, and sold them off individually to the highest bidder. More recently, Rupert Murdoch's NewsCorp successfully convinced the Dow Jones to accept his $5 billion offer.
What happens is that the brand name is so valuable that deep pocketed buyers are prepared to pay any price to get access to the power and halo assocaited with the brand, profitability be damned. There is very little, or no interest, in the after-sale profitability, nor is there any expectation of such profitability. Which means that the New York Times brand is of no use to the Sulzberger family trying desperately to raise revenue using futile tricks like the now extinct Times Select firewall. But the New York Times brand is very, very valuable to a buyer who wants to use the brand, and if the NYT turns up on the bidding block, prospective suitors would likely pay through the nose, whatever the state of ad revenues or subscriber base. Post-sale, what happens to the New York Times and it's precious brand is anyone's guess.
One thing I can say for sure - Matt Cooper is dead wrong. The NYT stock could ultimately land up in single digits, and with its name sullied by the new owner. Pre-sales, the stock is likely to shoot up, due to the interest in the sale, and the likely infusion of new capital and hopes of a turnaround. After that, it's a long, long way to the bottom...
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