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In this morning’s Washington Post, columnist Steven Pearlstein tries to make the case that buying up a bunch of newspapers could be a fantastic business decision. Pearlstein’s piece comes in the format of a letter to Berkshire Hathaway’s Warren E. Buffett, who is bearish these days on newspapers. The longtime investment guru sees them as sources of “unending losses.”
What to do about them? Pearlstein has an idea:
From an investment standpoint, the better way to look at these properties is to think of buying all of them. In a single stroke, and with a relatively modest amount of money, a strategic buyer could assemble a national syndicate with millions of readers capable of achieving the economies of scale that have, for the most part, eluded our badly fragmented industry. And with the near-death experience of these papers still fresh in the minds of readers and employees, a forceful new owner would have an opportunity to offer a different set of products based on a different and more sustainable business model.
Pearlstein then goes on to sketch out a biz model that, somehow, doesn’t smell all that different and sustainable from the one that’s been tanking all over the country for the past several years.
What really struck me about Pearlstein’s proposal, though, was, Hey, that’s what we tried!—-nearly two years ago. In 2007, Creative Loafing CEO Ben Eason essentially executed a Pearlstein, as applied to the world of alternative newsweeklies. Eason bought the Washington City Paper and the Chicago Reader in a move to extend the brand of his four southern Creative Loafing papers. Throw in an alliance or two with some West-coast alt-weeklies, the thinking went, and you’d have a national platform for ads and audience.
As we in the Creative Loafing family have discovered, and as Pearlstein seems bent on ignoring, a newspaper is a newspaper is a newspaper. It gets tougher and tougher each week to wring revenue out of these machines, for a number of reasons that have been amply covered everywhere. Just a thought for Pearlstein: Perhaps the fewer number of newspapers you own, the better off you are. Creative Loafing is now in Chapter 11 bankruptcy.
Even so, I felt a surge of pride in my company this morning. It’s kind of nice to have a Pulitzer Prize-winning mind endorse your company’s business model, however dented it may be at this point.