JRC: Reading your analysis and glancing at it JRC looked real appealing. Digging deeper turned up some issues. Suggest you read the Yahoo board on this....Some impressions I got:
They overpaid for a lot of these papers..perhaps way overpaid
They're running them poorly...One was voted worst newspaper in Conn.
Excess cost cutting which you alluded to..comment from Yahoo poster that sounded like he knew his stuff [SparkyJRC 1254 of 1279]
<<2. How does JRC make so much profit? CUTTING COSTS. Bob is an accountant who knows how to do everything possible (short of reusing toilet paper) to make sure each paper is spending as little as possible. He also cuts staff far deeper than he should. End result, that $1 of revenue that used to net 20 cents in profit now nets 50 cent with JRC in charge. PROBLEM: The paper looses more value by lost revenues and circulation than Bob saves on the other end. A prime example of the saying "penny wise and dollar foolish".>>
Financial strength: I ran their numbers thru 2 versions of the Altman Bankruptcy Predictor Model and JRC come up toast [Another Bankruptcy prediction model, Springate, showed them OK but it's not as well regarded as Altman]
Jim, I know you do a lot of hands on research and the folks on Yahoo may be biased, disgruntled ex-employees [though most didn't come across that way], but it kinda looks, 1st cut, like the relative underperformance of this may be deserved..The Washington Post it ain't.
I would also question the idea that the internet doesn't change the game. A pure internet-based provider could do business with only a staff of local reporters and ad sales reps...no costs associated with big buildings, printing presses, carriers, dead trees. The cost of daily local newspaper is probably closer to $240 than $40 for most folks...this would cover an online service. It'll be awhile before this has a serious revenue impact, but it's gonna be a big issue with investors looking at future revenue streams.
Sorry to come across negative on this, because I really wanted to like it. |
