Gannett deal for Tribune newspapers may be near, but is financing such a deal wise?
Morning Brief: Amazon to begin offering Prime members ‘unlimited reading from a rotating selection of books, magazines’ in new benefit called Prime Reading
The long expected deal by Gannett to acquire the newspaper chain formerly known as Tribune Publishing may be near, if you believe some media reporters, but the long term consequences of such a deal could be the real stumbling block.
Decades ago, such major media acquisitions could be finalized by the buyer using their cash reserves to make the acquisition. Newspapers were delivering seemingly endless profits for their owners, and so being able to pay with cash, or a combination of cash and stock, would be the preferred method.
But despite making several hefty acquisitions in recent years, Gannett still sees its revenues falling, and net income – while still in the black – is not providing the kinds of profits that would be needed to make any acquisition of a company the size and value of tronc (the new name for Tribune Publishing) possible using cash.
What Gannett is hoping for, of course, is that the addition of such papers as the Los Angeles Times, Chicago Tribune and Baltimore Sun will increase Gannett’s national footprint to such a degree that digital advertisers will flock to it. It is also hoping that it can wring out enough costs that it can make currently barely profitable newspaper properties far more profitable, providing the kind of cash necessary for it to handle a larger debate load.
That means layoffs, the kinds of layoffs we’ve seen at other papers acquired by Gannett. And that is the biggest reason those in the newspaper industry are far from excited about the prospects of a completed Gannett-tronc deal.
Under Steve Jobs, Apple once saw newspaper and magazine reading – along with books, of course – as a way to boost iOS device sales. Jobs made sure that when he sat on stage (on a couch, if you remember) to introduce the iPad, he had The New York Times on board so he could demo reading the daily paper on the new digital device.
Media could sell hardware was the thinking.
Amazon has looked at things differently – they’ve used hardware to sell media. Low priced eReaders, and then low priced tablets, could fuel eBook and digital publication sales.
But Amazon today said it would begin offering Amazon Prime members free access to some media by offering “unlimited reading from a rotating selection of books, magazines, comics and more” in a new benefit to members called Prime Reading. The offer doesn’t just apply to those owners of Kindles or Fire tablets, but also those using Amazon reading apps.
The goal, of course, is signing up more Prime members.
(You can see the press release for the new program here.)
As you can see, this is a good deal for readers who are Prime members, but it won’t do much for either hardware sales, or more importantly to TNM readers, publishers participating.
Amazon has plenty of media that it can utilize in the program without having to beg major publishers to participate. But if it wants, it can lure partners with the prospect of added readership. It will be interesting to see who has their content showing up in the program.