Media Dinosaur: Up for Sale
Wanna be Jim Cantore's boss? If you have that desire--and a few billion laying around--give Landmark Communications a call. The Norfolk-based company is looking to sell its media holdings, including The Weather Channel.
Landmark's flagship publication, the Virginian-Pilot, announced plans for a possible sale this morning, in a front-page story. The privately-held company's vice-chairman, Richard F. Barry III, confirmed that two investment banks--J.P. Morgan and Lehman Brothers--have been hired to explore "strategic alternatives," including the possible sale of Landmark's core businesses.
According to Mr. Barry, J.P. Morgan is advising the company on a potential sale of The Weather Channel, which could fetch up to $5 billion, according to industry analysts. Lehman Brothers is advising on the potential sale of other assets, which include television stations in Nashville and Las Vegas, along with nine daily newspapers and almost 100 non-daily papers and specialty publications.
Company executives refused to say why a sale is being considered. But in 2005, Landmark decided to sell its share in Trader Communications, a classified advertising business it started with Cox Communications in the early 1990s. At the time, Landmark CEO Frank Batten, Jr., said the sale was necessary to "reduce" his company's exposure to the classified advertising market. He outlined that rationale in a Q&A with Virginian-Pilot reporter Battino Batts:
Q. Explain the current classified advertising market. Where do you see the market going, and why was it risky for Landmark to have so much revenue from classifieds?
A. I don’t know that I have any great insights into the future of classified advertising. It was more that we had a such a very large percentage of the company’s revenues coming from classified advertising. When you think of classified, the main categories are automotive advertising, real estate advertising and employment advertising. And so Trader, the newspapers and also the television stations have a large amount of automotive advertising. We had too much concentration in that category of customers. I think it will be wise to reduce our concentration for now. There was no message that we have some vision for the future of classified advertising.
Q. How has the classified advertising landscape changed over the years since Landmark formed Trader?
A. The big change has been the growth of the Internet. I think Trader has done a good job of growing into the Internet advertising business.
Q. What is the future of newspapers in Landmark? How does the decision to sell the stake in Trader reflect on the company’s commitment?
A. We don’t have any plans to sell any of our other three main businesses. Those businesses are our weather businesses, our newspaper businesses and our broadcasting businesses. We like all of those businesses.
Obviously, something has changed over the past two years, since Landmark's three "main businesses" are now up for sale. Perhaps the Batten family sees an opportunity for a huge windfall, or maybe they've concluded that print journalism--which still forms the core of the company's operations--is a dinosaur. While the Virginian-Pilot is the nation's 52nd largest daily newspaper (in terms of circulation), the newspaper industry has been battered by declining circulation and rising costs.
Word of the potential sale comes as Landmark is attempting to repackage two of its most important properties, the Pilot newspaper and The Weather Channel. Over the past couple of years, the cable channel has launched a wave of prime-time series and documentaries, aimed at attracting more viewers. Some of those programs have actively endorsed the theory of global warming, a sharp departure from the channel's long-standing policy of "straight" weather reporting, as mandated by its founder, legendary TV meteorologist John Coleman. And, in late 2007, the Virginian-Pilot implemented a new re-branding campaign, built around a similar, "activist" journalism approach, summed up in a new slogan:
"Every day. The potential for change. The insight to know how. It's in your hands."
Today's announcement suggests that Landmark--and the Batten family--have other changes in mind for their media holdings. Ironically, the Pilot's operations manager is scheduled to speak next week to the Norfolk-area chapter of the American Marketing Association, discussing the "rebirth" of the nation's best newspapers. However, with the paper (and the rest of the company) up for sale, it suggests that Landmark's owners don't share that optimism.
ADDENDUM: Hoover's, which tracks privately-held companies, estimates Landmark's 2006 sales at $1.7 billion, a meager 1.8% increase over the previous years. That reflects the continuing slump in newspaper advertising and other print revenue streams that has depressed the value of many media conglomerates, including The New York Times Company and Gannett.
The potential sale of Landmark seems to be the latest variation of a growing trend in the industry: separating (or selling) more valuable TV properties from slumping newspaper holdings, in order to boost stock prices and the corporate bottom line. Last fall, Dallas-based Belo Corporation announced plans to create a separate company for its struggling newspaper division. That will create less of a fiscal drag on its TV operations, which generate more than twice the earnings of its newspapers. Belo share prices soared when the split was announced, and more media companies are following suit.
Landmark's "strategic options" will almost certainly follow that same pattern. The Weather Channel will fetch a premium price, as will the company's local TV stations in Nevada and Tennessee. The newspapers are less attractive, but buyers will eventually be found for those properties as well. Meanwhile, that catchy new slogan has taken on a new meaning for the 1,200 employees who work at the Virginian-Pilot and Landmark's Norfolk headquarters.
Finally, if the suits at Landmark had any sense of fairness, they'd offer John Coleman first crack at buying The Weather Channel. In a corporate power play, Landmark forced Coleman out in the early 1980s, and he never earned anything for his stake in the then-fledgling operation. Since the, The Weather Channel has become one of the most popular--and valuable--properties in the cable universe.
POSTSCRIPT: If reader feedback is indication, many in the Norfolk area would welcome a sale of the Pilot. Some sample comments, posted in response to this morning's article.
Submitted by dannyb70271 on Thu, 01/03/2008 at 10:43 am.
Count me as one of those who think this paper to be one of the worst in the country. It's not because I disagree with their political views, it is because they rarely if ever give the other side a voice. I also tend to think some of the stories are fabricated and/or exaggerated.
Submitted by db on Thu, 01/03/2008 at 10:25 am.
Here's hoping the sale of TWC creates opportunities to debate climate elitists (need I name names?) on-air about man-hyped global warming...
Submitted by nelson71 on Thu, 01/03/2008 at 10:06 am.
Many comments are negative, vbwxman, because the Pilot has for decades increasingly used it's position as area's primary (monopolistic) media publication as a means to -dictate- the news rather than report it. Americans have always had open minds, my friend - our open minds have long since been taken advantage of. As a result of such practices at the Pilot and other ultra liberal media organizations across the country, many of the firm, core principles that have bound Americans together since the founding of our great nation have over time eroded, decayed, and our society reflects this. Observers do not blame the Pilot exclusively, merely as an agent. Anyway, you asked, there's one answer. The decline in subscribers is not purely Internet-driven; there is a very large fed-up contingency. I don't think a sale could change any of this.
Submitted by Redskin44 on Thu, 01/03/2008 at 9:45 am.
Unbiased reporting would be nice and try to follow the newspaper's declared motto. Clean house and get some reporters who can write a story that includes both sides as well as all the facts. This newspaper seems to be anti-police and seems to always take the side of the suspect/criminal. Because of the laziness of most readers and residents of Tidewater and unwillingness to think for themselves, I believe it is dangerous for a newspaper to endorse candidates no matter what the candidate's party affiliation is!
Submitted by dm4769 on Wed, 01/02/2008 at 11:51 pm.
The Virginian Pilot may be sold? Tell me it's so :). In my opinion, the Virginian Pilot is one of the worst newspapers in the United States. Over the years, I have been amazed at some of the stories that have been published by this paper. And one reporter (who will remain unnamed so as to comply with the posting guidelines) will twist the facts to the point of creating news and creating lies. I hope the paper is sold and responsible leadership will manage the paper as it should be; to provide responsible public service to the Hampton Roads area and exercise the first amendment with both balanced reporting and truthful reporting.