Once and For All Time

Non-profits would not be“saving” newspapers from financial ruin:

Mutter is skeptical of “getting a foundation to bail out an
unprofitable business”
and warned me: “It doesn’t matter whether you
organize as a for-profit business or a non-profit business. If the
inflow and outflow of money are not appropriately balanced, that
enterprise will fail.”

Emphasis mine. Becausehow unprofitable are newspapers?

After producing operating earnings at an average rate of 27.3% between
2000 and 2007, the industry’s margin this year may average no better
than 20%,
says William Drewry, a managing director of the global media
group of the UBS investment bank. Average earnings before interest,
taxes, depreciation and amortization (EBITDA) were 24.6% in 2007,
according to UBS.

Emphasis mine again. Jesus. Do you know what you and I would do with 20 percent profit margins? If, after we paid everybody and paid our bills and mortgages and rent and stuff, we had 20 percent just laying around? We’d … well, first we’d buy some REALLY expensive booze, and then we’d see who we could give raises to. I don’t know what the problem is here.

The reason I keep such a close eye on the discussions of the nonprofit model is that I’ve seen first hand how it strips the bullshit out of the conversation. You have the money you have, and if you have more than you need then you sock it away or you expand your operations or you invest in infrastructure or people … I’ve never in my life met a conversation more in need of simplifying than this one, right down to how much money there actually is, and what you’re doing with it.

A.

6 thoughts on “Once and For All Time

  1. With all due respect, Athenae, I think non-profits *would* be saving papers from financial ruin–because they’d be saving them from ownership of guys like Zell.
    That said, your point still stands. There is nothing wrong with the American newspaper industry that reasonable ownership wouldn’t solve.

  2. I’ve been spending my extra 20% on Persian rugs, but that’s just me… (I can’t Just Say No to Rugs.)
    I work in an industry where a 20% margin isunthinkable. Unbelievable. Never happen. These folks make their (very good) livings on a margin of 1%, sometimes less. They’re still making billions of dollars, weirdly. Some people need a little sense of perspective.

  3. Unreal. 20% profit is TOO LITTLE? As Interrobang notes, there are industries where that would be impossible.
    So the greedheads loaded up on debt, assuming the growth of everything in perpetuity, which was incredibly stupid. And surprise, surprise, they’re in trouble.
    Owners that actually were interested primarily in producing a solid product, and not fattening their wallets, could easily manage these papers.

  4. hey, i have an idea!
    maybe newspapers could publish informative articles about shit that matters!
    less kristol, more krugman?
    nah, that’s crazy talk.

  5. OK, this isn’t entirely fair. When high-volume printing presses go for mid and upper seven figures, and fleets of delivery trucks ditto, depreciation and amortization aren’t exactly trivial. They’re only trivial compared to the debt service and dividend costs loaded onto papers by really greedy stupid people who can’t stand the actual product they want to profit from.

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