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What? The Globe is worth no more than the Metro?
By adamg on Mon, 12/29/2008 - 11:32am
Dan Kennedy has posted a report from Barclays Capital that puts the value of the Boston Globe at just $12 million to $20 million - less even than the value of "the Worchester papers." It also puts the value of the Times' share in Boston Metro (49%, right?) at $5 million to $10 million, which would make the Metro worth as much as the Globe. Which I'm just finding hard to believe, especially given that this valuation comes from a service that can't spell "Worcester" right and hasn't done enough basic research to know that the Telegram & Gazette haven't been separate papers for years and years now (also, Barclays puts a value of $140 million to $166.5 million on the company's stake in "the Boston Red Sox's").
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Comments
i believe it
I see the Metro everyday on the T. I never see hard copies of The Globe anymore.
Metro vs Globe on the T
You can read the Metro without elbowing your neighbor. The London 'quality' broadsheets have all converted to tabloid form; perhaps the Globe should follow suit?
They could call it ...
g.
Or
Or, the "Herald".
No, not the Herald
Because another pack of Brits who think they know everything predicts an un-named group of rich Bostonians will buy the Herald AND the Globe and then shut down the Herald, letting Pat Purcell escape to the Cape with Rupe's Ottaway papers.
Last night at 3 AM
The thought occurred to me last night:
What if they merged operations but made one a morning paper (Globe, obviously) and the other an afternoon paper (Herald, tabloid, easy to carry, full of late sports news and evening entertainment news)?
Afternoon paper
Interesting idea, but afternoon papers have been disappearing all over the US, either shutting down or turning into morning papers.
For over a century, there used to be a Boston Evening Globe as well as the morning Globe. That ended in 1979, according to the paper's official history page.
Clarification?
Ron, you recommend that the Globe turn into a tabloid.
Are you suggesting that this is one of the problems with the Globe?
The news cycle is continuous now
.... there's no real means of distinguishing a morning and evening paper. Boston.com/Globe online are even posting updates throughout the night and day...
From My Cold Dead Hands
Shut down my Herald? Never! There's nothing like a pot of coffee and 90 pages of conservative dribble to get me out of bed in the morning. Don't make me read the Boring Broadsheet, Boston!
A coffee pot's worth of
A coffee pot's worth of dribbling. :)
It's getting better
P-f-f-f-t. Your sarcasm makes it sound as if there's nothing to read of any value. I, personally, think it's getting better, by the day.
They deny the story
Connors, Purcell not Globe buyers, saith the Globe.
Possible buyer
Amy Derjue makes a bid for the Globe.
"Worchester" Not Worst Mistake
Ok, it's easy to make fun of Barclay's for spelling Worcester "Worchester"; but their more egregious solecism was to refer to the NY Times's stake in the "Red Sox's"!
Tangent
NYT Co. owns a substantial portion of the Boston Red Sox?
1. The Sports section is there to sell newspapers, not to breathlessly promote other properties of the corporate parent.
2. The Red Sox brand is a friggin' license to print money. NYT Co. can't be in too bad of shape if they're getting a piece of that action. :)
Take the earnings. Multiply by 3-5. Call it analysis.
It's a little surreal to consider just how stupid the Barclay's report really is.
Consider those valuation figures. Here's how they arrived at them. They took the expected earnings next year (EBITDA) and multiplied them x3 to produce the lowball, and x5 to produce the high end of the range. Really. That's all they did. So since the Globe is expected (probably on the basis of equally sophisticated analysis) to earn just $4 million next year, it's pegged at $12-20.
What you've got to love about this is that (1) the estimates were picked up by supposedly sophisticated financial journalists, as if they had the slightest relationship to reality and (2) some Wall Street hack earned a large multiple of my salary to produce this drivel. And people wonder how we wound up in a financial crisis.
So?
What's wrong with that analysis? Isn't that exactly how you figure out the "worth" of something??
For one thing, it's not analysis. It's multiplication.
The problem for what Barclay's was attempting to pass off as analysis is that the entire point of the report was to estimate what the Globe might draw as an asset placed up for sale.
Potential buyers certainly pay attention to EBITDA, and want to see a reasonable return on their investment. But any serious valuation of the paper would have to include more than just its earnings in a given year. The normal place to start is to consider its liquidation value. Simply buying the Globe and auctioning off its assets, piecemeal, would yield tens of millions of dollars. That should be the low end of the range. From there, consider that 2009 is likely to be an unusually tough year for advertising-driven businesses, so a single year's EBITDA is not terribly useful. The paper is still a potential cash cow, even in an environment of declining circulation and advertising. And then, there's the ego value. Newspapers are still trophy assets, much like professional sports franchises, and not infrequently draw bids that exceed their value as investments.
Is the Globe still worth the $1.1 billion that the Times paid? No way. These days, it's worth no more than a few hundred million. But that's still a far cry from the junk estimate of $12-20 million.