The surprising report in PE Week Wire that Knight Ridder has re-upped with Tribe Networks for another round of funding, alongside The Washington Post Co., is actually old news. The report, triggered by a regulatory filing, was based on Stage B funding made in early fall 2005 – about nine months ago, and well before […]
Everybody knows Knight Ridder is “over,” as a former executive recently put it to me. But what does that mean to “TKG,” Tribune, Knight Ridder and Gannett’s joint venture to pump hundreds of millions of dollars into CareerBuilder, a successful recruitment portal; ShopLocal, a fast-growing but jury’s still-out online inserts and sales portal; and Topix, an online news sorter that is cutting edge but commercially undeveloped.
Also at stake, but more peripherally, are Knight Ridder’s 1/6 role in Classified Ventures, which produces Cars.com, Homescape and apartments.com, and recently purchased HomeGain. It also holds a minority share in Tribe Nets, a social network that is experimenting with games but is a probable write-off.
If Knight Ridder is sold, TKG has change of control provisions in place that could provide allow the other partners to buy CareerBuilder and the other online properties under their market value. If Gannett is the buyer, it would be a relatively seamless change, although Gannett would become a very dominant part of the consortia, to the discomfort of Tribune. If McClatchy is the buyer or a venture firm, it isn’t as clear. One assumes that McClatchy or other buyers would maintain the CareerBuilder affiliation, but might not participate as partners.
Daily Candy, the fashion-and-trends newsletter with local editions in eight markets and copy right out of “Sex and The City,” is on the block for $100 million. The value seems high, but its young, trendy, female readership could be a good fit with media companies like Fox or IAC that want to hit the local marketplace in non-traditional, non-journalistic formats.
Our guess is that it would be less of a fit with strait-laced, sales-oriented sites like ShopLocal; online Yellow Pages like Verizon SuperPages that are trying to create a retail connection; or the increasing number of newspapers that have developed online shopping verticals. But that’s ok. The latter, especially, would balk at the price, and the journalism.
Daily Candy was started in New York in 2000. After receiving a $3.5 million cash infusion from former AOL President Bob Pittman in 2003, the site has now expanded to Boston, Chicago, Dallas, Washington D.C., Los Angeles, San Francisco, London and starting in March, Atlanta.
Thomson President and CEO Richard Harrington opened his keynote at SIIA’s Summit in New York Jan.31 by noting that Consultant Lee Greenhouse praised him as “the best newspaper guy I know. You got out of it.”
Indeed, Thomson bailed out of the newspaper industry in 2000, selling 150 daily and community papers at a peak price of $3.5 billion. “In 2000, newspapers were going into a seven year cycle,” he said. “I don’t know if they’ll come out of it. But people aren’t betting on it.”
The sale was accompanied by the sale of Thomson’s travel business. Summing up the divestiture of two core businesses, Harrington noted: “We did not see how they would be sustainable businesses. We chose to go after high-end knowledge workers.”
Today, Thomson is the second largest information company (after Reed Elsevier) with 2005 revenues estimated by Outsell Inc. at $8.81 billion – more than $2.58 billion bigger than Gannett. More than 70 percent of its revenues come from electronic services. More than half are on the service side.
Knight Ridder may not be the best managed company, or a great place to work. But can another media company do a better job of leveraging its 29 newspapers? This is the assumption behind a challenge by two major shareholders, who want to get rid of 65-year-old Chairman Tony Ridder and either sell the company off to the highest bidder, or break it up.
Legg Mason’s Private Capital Management (PCM), which owns 19 percent of the company, complains in a letter to the board that Knight Ridder is underperforming, even compared to the rest of the newspaper industry. According to PCM, the company has failed to deal with “continuing consolidation among traditional sources of print advertising revenue; the redirection of advertising dollars to other media; its unexceptional operating margins; and its lack of a nationally read paper capable of being leveraged in the online market.” PCM’s complaint has been joined by Harris Associates, which owns 9 percent. Tony Ridder, meanwhile, holds just 1.9 percent.
The specter of a possible bidding war for Knight Ridder has caused the company’s battered stock to do a quick jump. But one assumes that PCM and Harris’ complaints are about more than just a short-term stock boost. The question is why PCM thinks that other newspaper companies would achieve better results.
Some analysts haven’t figured out Skype’s value to eBay. But I see it fairly plainly: classifieds. The classifieds industry appears to be on the verge of a freefall, due to services such as Craig’s List that don’t charge But with Skype in the picture, I see lots of “value add” that buyers and sellers would happily pay for.
Using Skype, which integrates Voice over IP phone and instant messaging, the unadorned text ads may still run free. But Skype potentially adds a lot of value by directly connecting sellers to buyers via Pay-Per-Call, while sending them more in-depth information at the same time.
The integration of Skype also helps close the loop in the transaction cycle. Currently, eBay transmits five million emails a day between its buyers and sellers, mostly for expensive goods like real estate or autos that are “involved” and “complex.” Skype’s instant messaging, voice mail and voice call services are likely to increase the volume of such communications, and also make them more universal.