|(Flickr by NS Newsflash)|
$70 million. That’s all John Henry paid on Friday for The Boston Globe, a paper The New York Times had acquired for $1.1 billion in 1993. Next to nothing. That’s what IBT Media paid to buy Newsweek over the weekend from IAC, which itself had paid only $1 plus $40 million in pension obligations to buy it two years ago.
How do you explain the prices that these storied media institutions have been sold for over the last 72 hours?" That's the question posed by Andrew Ross Sorkin, merger & acquisitions reporter in The New York Times article: "Billionaires' Latest Trophies Are Newspapers"
One answer comes from......
Ken Doctor, an analyst at Outsell, a research and consulting firm for the publishing industry:“These deals don’t make financial sense.” (see also his article "The Newsonomics of John Henry buying the Boston Globe".) Basically implying that these low prices are still too high. I'm not sure whether we are witnessing the upcoming irrelevance of the newspaper business, or just a reshuffling whereby the old media will have a special but smaller role than the new media, because the former still provide high quality content?
For background reading, see the following report from the senate in 2009 about the future of journalism: