Business and Blogging, Our Philosophy
How Long Until Newspapers Start Printing With Red Ink?
Thursday, March 2nd, 2006Writing in the March 6, 2006 issue of Fortune, Devin Leonard argues that the pending sale of Knight Ridder, the fourth largest newspaper company in the U.S., will be the clearest indication yet of just how much ground newspapers have lost to New Media.
Leonard notes:
“Circulation continues to erode as readers turn to the Internet to keep up with current events. Craigslist is siphoning away help-wanted classifieds. Analysts fear that classified real estate and automobile ads may follow.”
The best estimate is that Knight Ridder will be sold at a 10x EBITDA (operating cash flow) multiple, which is significantly lower than the 13x multiple Pullitzer, Inc. (publisher of the St. Louis Post Dispatch) fetched just last year.
Perhaps the most revealing observation comes from William Dean Singleton, CEO of the privately held Media News Group (publisher of, among other papers, the Los Angeles Daily News) which is the odds-on favorite to buy Knight Ridder:
“We think we can hold on to the print business for some time, but we are hoping that by 2012 we will get 50% of our EBITDA on the Internet.”
It’s clear that newspaper CEO’s and Wall Street Analysts are starting to come around to inescapable reality that New Media is no longer the “wave of the future”– it’s here, in a big way.
What Price Knight Ridder? [Fortune]
