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| Feature |
New Money Rediscovers Old Media
Michelle Leder
05/01/2007
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Cuban contends that prior experience working in newspapers
should not be a prerequisite for prospective investors, simply because the
executives and families who have been controlling the industry for years have
lost so many readers (see "Losing the Paper Chase"). One thing that
these men do share, however, is a demographic affinity toward print media. Daily
newspaper readership is strongest among those 65 and older, and declines sharply
as age decreases. Buffett, Broad and Welch are in their 70s. "These old guys not
only have the money, but they also have an appetite for newspapers," Cuban
says.
TOP VIEW
Newspaper company share prices and valuations are tumbling after
years of dwindling readership—and highly coveted younger consumers are turning
more often to the Internet to receive their information. But some of
America’s most successful contrarians are going bargain-shopping, buying these
troubled properties and investing millions in hopes of transforming them into
lean, mean, digital moneymaking machines. Driven by ego and profit, these
entrepreneurs often find themselves forced to make some of the toughest decisions of their careers. |
Youth Movement
Jared Kushner, 26, is an exception to this trend. He spent
nearly $10 million last summer to purchase a majority stake in the weekly
New York Observer. Like Cuban, Kushner believes that Wall Street and
institutional investors have greatly exaggerated the demise of the newspaper
industry. "Newspapers aren’t dying as much as they have to reinvent themselves,"
he says, adding that he’s "not scared off by all the hysteria." In February,
about six months after purchasing the salmon-colored newspaper that focuses on
Manhattan’s elite, Kushner began the reinvention process. He transformed the
paper from a broadsheet to a tabloid format and began replacing the
Observer’s 3,000-word features with shorter pieces.
"I wasn’t looking to get into the news business," Kushner
admits. "My interest was geared to an interesting opportunity." Kushner, the son
of New Jersey real estate developer Charles Kushner, likens his investment in
the Observer to buying a building that sits on a great location, but needs
major renovations. Published reports peg the Observer’s losses at roughly $2
million per year, though Kushner believes many of the "simple things" that his
team has changed will put the paper on the path toward profitability. In early
March, Kushner announced that he had purchased the political website
PoliticsNJ.com for an undisclosed sum. Although it was not immediately clear
what the connection between the website and the Observer will be,
the site received a redesign and added two new columns (including one by former
governor Christie Whitman) shortly after the announcement.
"We’re adapting the paper to the way people are consuming media
now, and we’re going to take the Observer brand to a whole other
level," he says. As for signs that his adjustments are working, Kushner said in
early February that it was still too early to tell. "We’re looking at a million
different options."
| “The level of arrogance among newspaper executives has amazed me.” |
The Philadelphia Story
Bruce Toll and his partners have also been busy making changes
since they acquired the Philadelphia
Inquirer and Philadelphia Daily News last year for $562 million. Toll, vice chairman of Toll Brothers, one of
the nation’s largest homebuilders, is a partner in Philadelphia Media
Holdings, a group of local business leaders who purchased the two papers from
McClatchy. The partners put up less than $200 million and borrowed more than
$300 million from the Royal Bank of Scotland.
Toll, who grew up in southeast Pennsylvania and says that he
began reading the Inquirer when he was 5, "always
thought it would be a nice idea to buy a paper. But it never really entered my
mind that it would actually happen until McClatchy announced that it was selling
the Inquirer. It’s not like I had called Knight-Ridder [which sold to
McClatchy in 2006] looking to buy the paper before," he explains. "But the right
thing for the paper is to have the paper’s ownership be in the local
Pennsylvania area."
Philadelphia Media Holdings hopes to improve the newspapers’
lot by spinning off new products to focus on sports, healthcare, entertainment
and neighborhoods. The group is exploring options for a redesign, and Toll has
expressed plans to add pages and improve the presentation of the layout. Brian
P. Tierney, founder of advertising agency Tierney Communications and chief
executive of Philadelphia Media Holdings, has also said that he sees tremendous
opportunities for the publications to reach out and connect with a younger
demographic.
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