Publishing/Writing: Insights, News, Intrigue

02/08/2011

Investing in News Media Publishing has been a Sucker’s Game…EXCEPT for…


By now, most have heard that HuffPost was sold to AOL for 315 million! God bless Arianna Huffington and her success…She is the first to score BIG money from any kind of a media investment in six years…But, she worked hard, was hands-on and sharp on surrounding herself with knowledgeable, intelligent people. (There is a little confusion on just how much of the money Arianna received. Forbes mag discusses).

Aaron Elstein,  of Crain’s New York Business, details a little history of past and present media investors…including Rupert Murdoch (WSJ), Warren Buffet (Wash. Post), Philip Falcone (NY Times) among others…and their successes and failures. Two of the three high rollers I just mentioned are in the media investment losers’ column (two are definitely investment losers and Murdoch is struggling).

This is an interesting, insightful and revealing article: 

HuffPo’s profits are rare these days

by Aaron Elstein

Back in the spring of 1995, renowned money manager Mario Gabelli bought a 6% stake in publisher Pulitzer Inc., owner the St. Louis Post-Dispatch and other newspapers. Over the following years, Mr. Gabelli added shares until he owned 40% of the company.

In early 2005, Mr. Gabelli scored big when Pulitzer agreed to be acquired by rival Lee Enterprises for $1.5 billion. The investor’s stake by then was worth no less than $600 million.

This almost-forgotten deal wouldn’t be worth recalling except for this fact: It was the last fortune made by an outside investor in the news business. Until Arianna Huffington and her partners scored earlier this week with the $315 million sale of her website to AOL, that is.

Mind you, when reviewing big investor scores in media-land, I’ve disregarded the Bancroft family, which owned Dow Jones and the Wall Street Journal for over a century until Rupert Murdoch blew them away in 2007 with a $5 billion bid. The Bancrofts inherited their stakes and were such passive owners that it seems more fair to call them “dividend collectors” than investors.

For nearly everyone else, investing in news media has been a sucker’s game for years.

One of the biggest losers is Warren Buffett, the Washington Post Co.’s biggest stockholder, who has seen his stake fall by more than half over the past six years, to about $800 million. (He plans to leave the company’s board soon.)

Philip Falcone’s investment in the New York Times Co. has been a tremendous bust. Starting in 2007, the hedge fund manager began acquiring what eventually became about 20% of the Times’ stock. But the stock has sunk, and Mr. Falcone’s stake has shrunk to 2.6% as he’s unwound his position: Last November, Mr. Falcone sold 7 million shares for less than half the price he paid for his original investment, according to a regulatory filing.

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