Jon Fine has an interesting take on how private equity firms, who are all about money, are making the media all about money and nothing else. Sure, money talks, that’s true. But we think there’s a bit more to it than Jon posits.
For one thing, there are believe it or not private equity firms that DO consider strategic fit, and look for ways to make money by combining and “leveraging” assets, finding the “synergies” that Jon says they don’t, thus:
A private-equity-owned Tribune will jettison notions that there are synergies to be wrung from its Chicago TV, radio, and newspaper operations, and perhaps the entire notion that it’s good for a company to own several kinds of media.
But, as David Acharya of private equity firm Apprise Media LLC said to us this week at a Magazine Publishers of America breakfast: Apprise will make a play for a magazine that’s making only hundreds of thousands of dollars a year chump change, really if it’s a good strategic fit with something else. An example he gave was how they’re happy to have both Gun World and matching enthusiast magazine Knife World. Or, they’ll combine complimentary businesses, for example if they see opportunities that “have an online component as well as an event tradeshow component,” he says by way of example.
Also, it’s not like the whole money thing was invented this week, or this year, or this century, or that family-run companies were necessarily more wholesome and hands-off, editorially speaking, than companies that had to worry about the variations on Net Present Value and Cash Flow to which Jon alludes. The whole slimming of the American newspaper industry a now decades-old trend has been wrought by the desire to keep margins up, sometimes for Wall Street but other times for private investors. And we’ve known more than one family publisher who’s allowed his editorial pages to be polluted for short-term commercial gain.
One more thing: How to explain real estate mogul Mort Zuckerman‘s penchant for losing money on his publications if not for motives Jon attributes to local owners who are “content to let profits slide because owning the local paper gratifies one’s ego and public spirit.”
We like Jon’s point about the digital frontier being laden with money-making potential, and think (Columbia’s J-school dean Nick Lemann notwithstanding) that journalists, or at least senior editors, had better understand the business of their business, because the way to get resources is to explain how they’ll help the business. “Brutal”? Perhaps. Or maybe just reality.
Not to find fault with our CEO’s hub fair game, she said gleefully, looking up from her baby photo-laden desk but, y’know, we wanted to weigh in with a bit more than we think Jon gave this time.