Over recent months, there have been rumors aplenty that the Denver Post and other newspaper properties under the Digital First Media banner would soon be put up for sale -- a prospect supported by members of the Denver Newspaper Guild, who published an open letter earlier this week that essentially advertised for a new, local owner.
We're guessing that the timing is coincidental -- but the Post has just confirmed that the broadsheet and other DFM papers are now available for purchase.
The Post item, credited to Digital First Media, notes that DFM -- which is controlled by a hedge firm, Alden Global Capital -- will "'evaluate and consider strategic alternatives' that could lead to the sale of some or all of the company."
It's not difficult to read between that line -- nor is it tough to glean the meaning from a quote attributed to DFM chief operating officer John Paton: "We believe we have many options available to us to maximize the value of our businesses for our stockholders and the board of directors has therefore decided to assess the full range of these opportunities."
The prospect of an individual company grabbing all the Digital First Media newspapers is slim, particularly given the challenge of making an old-school distribution work from an economic standpoint in the Internet age. But the Post itself remains a potentially attractive property thanks to its large digital footprint, enormous name recognition and presence in a rapidly growing and vibrant community.
This doesn't mean, however, that a Colorado benefactor who cares more about the tradition of a free and active press than profitability will suddenly materialize -- and if the Post winds up in the hands of another outfit like Alden, the downsizing and scaled-back ambitions bemoaned by the Denver Newspaper Guild could continue.
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For additional context, continue for two previous posts -- the first an April interview with Post publisher Mac Tully in which he declined to discuss sale rumors, the second the aforementioned piece about the Denver Newspaper Guild. And on the last page, see Paton's memo to employees.
For the past week-plus, the embattled newspaper industry has been buzzing with chatter about the potential sale of print properties held by Digital First Media, the parent company of the Denver Post.
When contacted by Westword, Post CEO Mac Tully declined to comment about the possibility of a Post sale. But speculation shows no signs of dying down.
What started the rumors in the first place? The death of the Thunderdome.
The Thunderdome is described on the DFM web page dedicated to it as "Digital First Media's solution to providing content, support and coordination to its network of more than 100 local newsrooms, each with their own distinct communities and stories. Think of it as the wire service local newsrooms wish they had. Based on the strength of this network, Thunderdome is able to leverage the most-engaging news reports of the day -- produced by DFM journalists and through a growing portfolio of media partners -- for publication and distribution on all platforms."
This approach, along with initiatives such as the clunkily titled Project Unbolt, were envisioned by DFM's boss, John Paton, as a way to lead newspapers forward amid the digital revolution. But on April 2, Paton shared a blog entitled "Moving on From Thunderdome," in which he announced that the company had decided it was time to "go in a new direction."
This path is likely to involve abandoning DFM's newspaper properties, according to Ken Doctor, writing for Nieman Journalism Labs. Doctor characterizes the closing of Thunderdome and other cuts at the company as illustrating "the impact of unending high-single-digit loss in print advertising. The ongoing devastation in print is overwhelming even DFM's relatively faster pace of digital innovation.
"The move also signals the fatigue of majority DFM owner Alden Global Capital -- and that it is readying its newspaper properties for sale," Doctor adds. "They're not yet on the market, but expect regional auctions of DFM properties (with clusters around the Los Angeles area, the Bay Area, New England, Colorado, Texas, New Mexico and Pennsylvania) -- unless Alden can find a single buyer, which is unlikely."
The Colorado papers to which Doctor alludes include the Post and the Boulder Daily Camera.
When asked about the prospect of a sale, Tully responded via e-mail. "We do not comment on such issues as speculation about transactions," he wrote.
Others certainly do, including Mike Littwin, a former Post columnist now writing for the Colorado Independent. In an item headlined "Rich-guy alert: Denver Post may be up for sale," Littwin mentions one possible suitor: Phil Anschutz, who he describes as " the multi-billionaire media mogul who now owns the Colorado Springs Gazette and was thought to be much interested in the days when the Rocky Mountain News was on the verge of folding."
Anschutz's name is mentioned every time a major Colorado media property is available, and he certainly has the resources to make such a purchase. (Frankly, he has the resources to buy his own country -- or maybe two.) Moreover, clustering the Post, the Camera and the Gazette, thereby deploying the economics of scale, may be the best way to turn a profit in a business that appears to be aging out of profitability. Note a recent item on the Romenesko media website quoting a newspaper carrier who appeared on Howard Stern's radio show. According to him, papers must be put on porches these days because "the only people who are buying [them] are eighty."
Here's that clip:
Of course, predictions about the demise of print are often premature. Plenty of prognosticators thought physical newspapers would already be a thing of the past, yet print ads continue to generate more revenue at at the average paper (including this one) than their online equivalent.
But that doesn't necessarily guarantee that potential buyers will line up to get a piece of the Post if and when it goes on the block.
Here's a 2012 video of John Paton talking up the Thunderdome.
Continue for our post about the Denver Newspaper Guild's call for new Denver Post ownership. Denver Newspaper Guild Advertises for New, Local Denver Post Owner September 9
Thus far, that hasn't happened -- but many members of the Denver Newspaper Guild, which represents the majority of Post employees, clearly wish it would. The Guild, as part of a national action, has issued an open letter asking for a local benefactor to step up and buy the paper rather than allowing it to slowly deteriorate under the auspices of a purely profit-driven hedge fund. Get details and read the letter below.
The Post isn't mentioned by name in the letter, but there's no mistaking that it's the subject of the plea. The broadsheet is described as "a newspaper with more than 100 years of history and multiple Pulitzer Prizes" that's " looking for an owner who cares about Denver, Colorado and the Rocky Mountain Empire, as well as an unfettered press to watch over them."
What's wrong with the current one? The letter argues that Alden, referred to as a "New York City hedge fund," concentrates "on lofty profit margins rather than lofty journalistic ambitions, has cut jobs in all areas of the newsroom and refuses to open its purse strings and reward employees with much-needed raises. Fewer journalists means fewer people asking hard questions. Fewer journalists means fewer people demanding accountability from those in positions of power. Fewer journalists means fewer news stories and less information for the public."
This situation isn't unique to the Post. Indeed, the current action, backed by DNG's parent union, The National Guild, targets two-dozen newspapers across the country, including the San Jose Mercury News, the Oakland Tribune and the Long Beach Press-Telegram. And DNG administrative officer Tony Mulligan acknowledges that some other Digital First Media properties have been hit harder by layoffs, downsizing and budget cuts than has the Post, the company's flagship daily.
That doesn't mean the Post's escaped unscathed. "I would estimate that the Post staff has been cut 30 percent since Alden took controlling interest," Mulligan says. He adds that "the Post is run by competent managers, but it appears the financial decisions are being made by bean counters or snake-oil salesmen at the corporate office in New York. And we'd like to see more local control."
When asked if the letter is a serious effort to attract a buyer for the Post or a means by which to focus attention on the negative effect of Alden's ownership, Mulligan replies, "Both. Even though the paper's now profitable, our members and employees of Digital First Media around the country are seeing staffing cuts continue, the selling-off of real estate, the stagnant wages. We're all frustrated by the hedge-fund business model we're working under, so this is a way to voice that frustration and maybe trigger some positive change."
Mulligan's seen plenty of reports about the Post and other DFM properties heading for the block but has no inside information about whether they're legit. Then again, the papers are "owned by a hedge fund," he notes, "and isn't everything owned by a hedge fund up for sale?"
As for a dream owner, Mulligan describes "a wealthy local benefactor who has an interest in the paper functioning as the community watchdog and providing a real resource for the community" -- but he doesn't offer a living example of such an individual. Rather, he cites the late Helen Bonfils, daughter of Post co-owner Frederick Bonfils, who acquired controlling interest in the paper in 1933 and took pride in overseeing it for decades thereafter.
"Let's resurrect Helen -- a local person who actually cares about Colorado and sees value in providing a good news source for the community," Mulligan says.
If a flesh-and-blood person with these attributes doesn't come along, Mulligan fears that the Post will grow weaker and weaker over time. In his view, "this business model may make perfect sense in the hedge-fund world, but it doesn't seem to make much sense as a long-term business strategy. When you sell off all your real estate and rent, it hits your bottom line -- and when you reduce your staff, you reduce your ability to create valuable content."
Meanwhile, more Post reporters are defecting, including Kristen Painter, who tweeted about her recent jump to the Minneapolis Star Tribune, and business vet Andy Vuong, who revealed on Twitter that he was joining the staff at Charles Schwab.
That's seeing the writing on the wall.
Continue to read the Denver Newspaper Guild "Wanted: New Owner" letter and release. "Wanted: New Owner" Denver Newspaper Guild letter and release:
"Dear local community benefactor,
A newspaper with more than 100 years of history and multiple Pulitzer Prizes is looking for an owner who cares about Denver, Colorado and the Rocky Mountain Empire, as well as an unfettered press to watch over them.
The current owner, a New York City hedge fund, focuses on lofty profit margins rather than lofty journalistic ambitions, has cut jobs in all areas of the newsroom and refuses to open its purse strings and reward employees with much-needed raises. Fewer journalists means fewer people asking hard questions. Fewer journalists means fewer people demanding accountability from those in positions of power. Fewer journalists means fewer news stories and less information for the public.
We seek an owner who has a stake in our community and a sense of local, civic responsibility. The Denver Newspaper Guild hopes that local stewardship will help return the paper to its glory days and a new owner may be more willing to pay the price to do it.
The Denver Newspaper Guild
Wanted: New owners.
That's the message today from journalists, ad reps and other media workers across the country seeking alternatives to Digital First Media, the nation's second-largest newspaper chain.
Today, Guild-represented staff at major newspapers including The Denver Post, San Jose Mercury News and St. Paul Pioneer Press have published ads online and in print seeking local, community-minded buyers for their newsrooms.
"Dear local community benefactor," one such ad begins, "A newspaper with more than 100 years of history and multiple Pulitzer Prizes is looking for an owner who cares about Denver, Colorado and the Rocky Mountain Empire. The current owner, a hedge fund out of New York City, refuses to open its purse strings and reward employees with much-needed raises."
Properties owned by Digital First Media have yet to be put officially on the market, but recent actions (including the sale of newspaper buildings and the shutdown of the company's Thunderdome initiative) make it clear that investors are seeking an exit strategy.
Nationally, The Newspaper Guild-CWA is reaching out to Digital First CEO John Paton, offering to help identify potential new owners for individual papers and regional clusters.
"The future of journalism is too important to leave in the hands of distant investors who fail to grasp that investing in better news products is also good business," said Bernie Lunzer, president of The Newspaper Guild. "These papers are profitable, and they can remain so, but cutting costs is not a long-term business strategy."
Comprised of MediaNews Group and 21st Century Media (formerly Journal Register), Digital First Media manages more than 100 local newsrooms in 18 states. Its majority owner is the "Distressed Opportunities Fund" of New York-based hedge fund Alden Global Capital, founded by Randall Duncan Smith, a specialist in "vulture investing."
Under the direction of Alden, Digital First has drained its media properties of real estate and other assets, while laying off journalists, cutting wages and reducing news coverage.
"When we were fully staffed, our coverage was better, there's just no getting around it," said Kieran Nicholson, a breaking news reporter who's worked at the Denver Post for 28 years. "Everyone here continues to work hard -- we try to do more with less, but it's a tough road."
Nicholson and his colleagues are hoping for owners who would take pride in The Denver Post and its tradition of excellence, he said. "Every business has to be profitable, and we all understand that, but we think a local owner might also see this as community service."
The Guild welcomes confidential inquiries from potential investors, as well as Digital First employees, including those at non-represented papers. Contact Tony Mulligan, Denver Newspaper Guild administrative officer, at firstname.lastname@example.org or 303-595-9818.
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Continue to read John Paton's memo to employees about today's announcement. John Paton's memo to employees:
Date: Fri, Sep 12, 2014 at 11:59 AM Subject: On Behalf of John Paton To:
This morning we are announcing that our company, Digital First Media, is working with the investment bank UBS to review the strategic alternatives for our business.
Strategic alternatives -- what does that mean exactly?
Well, it could mean we decide to sell the company. Or sell parts of it. Or expand it. Or stay the course.
DFM is a company with a successful strategy that drives results. And that means we now have options -- options that we should now review to determine what is best for our future.
After a rocky five years, the newspaper industry is firmly back on its feet again.
Many of the largest companies in the media business have spun off their publishing assets and they have been well received by the public markets with healthy balance sheets and plans to drive their digital future and the capacity to grow.
Other than the usual die-hard skeptics, it is now a given that newspapers, as multi-platform news organizations, will thrive in the future as the best and biggest providers of local news and advertising in their markets.
But scale is the key to that future. Scale to build the products our customers want. The products we will need in the future for news or sales will look nothing like they do now. Any newspaper company's future will rely upon its ability to build those products fast and as cost-effectively as possible.
So, we are now reviewing all of those options - those strategic alternatives - that best position our company for the future.
I am not sure of the outcome of that review or how long it will take.
But I do know this: As employees, the best thing we can do while this review is underway is to keep doing what we have been doing best these past years -- producing unsurpassed local journalism; serving our customers' needs and continuing to boldly experiment with our digital future....
I will do my best to keep you informed as this review progresses.
Until next time,
Send your story tips to the author, Michael Roberts.