Cablevision to Investors: Sorry We Bought That (Really Expensive) Newspaper Last Year
by Peter Kafka
Posted on February 10, 2009 at 7:01 AM PT
What happens when you pay a whole lot of money for a newspaper as the newspaper industry is in freefall? You have to make an embarrassing admission to shareholders a year later.
Last week, we saw News Corp. (NWS) go through this exercise when it wrote off half the value of the $5.7 billion it spent on Dow Jones and The Wall Street Journal. Now it’s Cablevision’s (CVC) turn: The Long Island-based cable company is taking a charge of up to $450 million for its hometown newspaper, Newsday, which it bought from Tribune for $650 million last summer.
That’s a write-off of up to 70 percent of the purchase price. News Corp. had also wanted Newsday–in part so it could consolidate its back-end operations with those of its New York Post–but bailed out after the price climbed above its $580 million bid. (News Corp. is the owner of this Web site.)
Boilerplate “sorry about that” language from Cablevision’s SEC filing: “These impairment charges reflect the continuing deterioration of values in the newspaper industry and the greater than anticipated economic downturn and its current and anticipated impact on the newspaper publishing group’s advertising business.”
Not included in the filing: “We probably should have realized something was up when Rupert Murdoch dropped out of the bidding. If Rupe says a paper’s too expensive, he’s probably on to something.”
Comments
Writedowns are the new media cool. IAC’s operating loss was also “impacted in Q4 2008 by a $15.0 million impairment charge related to the goodwill and intangible assets of Connected Ventures.” Since IAC didnt acquire the whole kit and kaboodle, there isn’t much tangible value left.
Posted by Jonathan Marcus at February 10th, 2009 at 10:29 amDon’t forget AOL! Definitely a good time to take out your trash – no one seems to be looking.
Posted by Peter Kafka at February 10th, 2009 at 11:11 amCombine your post with this – http://tinyurl.com/czsyn2 – and you get a lesson: Sam Zell flat-ass knows how to sell at the top.
Put another way: don’t ever buy anything from Sam Zell. (Tom Ricketts: Doh! http://tinyurl.com/dm48s9)
Posted by Brandon Copple at February 11th, 2009 at 12:18 pmHey Brandon. I would have said that. Except Sam tried his own hand at the catch-a-falling-knife stunt, and that didn’t work out too well, either.
Posted by Peter Kafka at February 11th, 2009 at 12:28 pmYeah. He’s much better at selling than buying. In addition to the Trib debacle, he overpaid for many of the EOP buildings.
But he says the f-word a lot, so that’s cool.
Posted by Brandon Copple at February 11th, 2009 at 12:52 pm