Saturday, January 15, 2011

Another Nail in The Charlotte Observer's Coffin

In the newspaper business "if it bleeds it leads" is the norm, unless the bleeding is cash from within.

It is not news that will gather much attention, but to those in the investment business its just another sign that things are not going well for The Charlotte Observer and the Observer's parent company McClatchy Company.

According to a press release, The Charlotte Observer is transferring ownership of its land and property, at 600 S. Tryon St., to the McClatchy pension fund. McClatchy is also transferring the land and property of six other newspapers, including the Rock Hill Herald and the Myrtle Beach Sun-News, to the pension fund.

According to the Observer, chief executive Gary Pruitt said the company has "no plans at this time" to move the Observer or the other papers from their current locations.

The Observer had been working with several real estate brokers in an effort to find a buyer for the paper's nearly empty headquarters without much success.

McClatchy's pension fund while not formally in trouble is under pressure as well due to a lagging stock market and company wide layoffs. Accordingly the plan must be funded when projections of emerging liabilities (benefit payments) out pace investment growth.

McClatchy froze its pension plan in 2009 limiting the benefit to grandfathered current employees, one of many options available to companies looking to cut expenses.

The move will save McCatchy nearly all of this year's required pension contribution but does little to improve the company's long term balance sheet.

McCatchy stock continues to trade around 5 dollars a share down from nearly 80 dollars a share in 2005.

How bleak is the newspaper business? Read one analyst's detailed report here or Cedar's 30 second overview below:

Frankly it's terminal and CEO's are desperate, so desperate that Rupert Murdoch has been devising ways to prevent Google Inc. from accessing News Corporation’s articles or content through its Internet search engine, in hopes of shoring up its online paid subscription base.

But clearly no one will pay for general news content that is available elsewhere for free. Also by today's standard the morning paper is "stale news" and nothing more than a recap of yesterday's events.

As the Observer quietly tweaks it's TOS terms of service agreement for online users, expect more "pop ups" and gotchas in an effort to "force" page views and "clicks".

Longer term I'd expect continued consolidation of operations. Rock Hill Herald and the News and Observer will eventually morph into a statewide publication as the readership decline of printed papers mirror the mortality rate of adults over the age of 60.

So endeth the lesson.


Anonymous said...

I'd like to scream out that you are WRONG! But you are not wrong, your dead on, and the Observer is not long for the world.

Anonymous said...

Bring back the "Charlotte News" and bury the Observer..

Anonymous said...

to: Anon 11:17am


Anonymous said...

The Observer is but a shadow of its former self. I do remember when you could count on them to write thoughtful stories, when reporters did the work that needed to be done and they had copy editors who actually edited copy. Now? Not so much in any category. For a city Charlotte's size, for the local paper to have such meager local news is just sad. I feel bad for the couple of talented reporters who are still there, destined, likely, to go down with the proverbial ship. And sadly, it will not be the great loss it once might have been.

Ghoul said...

Think hoe many more page views they would get if they stopped shutting off comments.