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TV and other websites are full of the news. Less than a week after the U-T takeover by Platinum Equity was first reported here, the Union Tribune is laying off workers.

Back in March, Don Bauder reported that the move seemed inevitable:

"Union-Tribune employees expected another mass axing in February. It didn't come. But an even larger head-chopping than expected will inevitably come. Here are some numbers that I have gleaned. U-T annual revenue is at most $250 million and probably closer to $200 million. Some say the company is slightly profitable to break-even; others say it is in the red. The company has neglected critical expenditures such as pagination and updating the antiquated printing presses. SignOnSanDiego revenue peaked at $19 million in 2006 and is probably down to $17 million.

The sale was probably for $15 million to at most $45 million. (La Jolla real estate was not included.)The Mission Valley real estate is worth more than $45 million in even a so-so market, but the operating asset, the paper, has little value. The real estate has little bottom line value if the company continues to occupy the building. The company will be run by Black Press, whose bonds are in junk status. Ergo, the privately held company is hurting. It has been eyeing Copley since August, as reported repeatedly here, but probably didn't have the money for the purchase.

Enter Platinum as the sugar daddy. It doesn't know newspapers and will rely on Black, even though its newspapers are quite small. So there would seem to be two business strategies: 1. Since online revenue is so small, try to keep the print edition going. This will require very sharp employment cuts. The problem is that as editorial employees are cut, the product will continue to go downhill, losing circulation and market share -- possibly a death spiral scenario. Perhaps enough employment could be cut so that the company could move to smaller quarters and cash in on the Mission Valley property; 2. Go partly- or wholly-online and only go with a print edition a couple of days a week. Printing could be outsourced and the building vacated and sold. Problem: huge gamble, with online revenue so small, and reasonable online profitability so far away. Under either of these scenarios, employment will be sliced sharply."

Now we know from county tax records that the Mission Valley plant was reportedly sold for $35.5 million and that a La Jolla property with the address of 7701 Herschel Ave was sold by Copley for $4.75 million to another Delaware limited liability company, 7701 Herschel Ave, LLC. Black's role has yet to be clarified.

Comments
8

It's a sad time. Not just for the 192 of us that will be leaving the paper, but for the newspaper biz. :-(

May 12, 2009

I guess not. At least not in a Reader blog.

May 9, 2009

It should would be interesting to know just how much Platinum paid for the U-T. That range of value is too wide for any sort of analysis. Is there any way that could be determined? (Such as an insider who is ready to spill it?)

May 9, 2009

Many people buy the paper, grab the Sports section and chuck the rest in the trash. The Wheels section probably caters to the local auto retailers and other services; auto accessories, service, tires, etc.

May 8, 2009

Is Platinum is really committed to running the paper as a long-term propspect? Its announcment that it "hoped Karin Winner would stay on" is bizarre for an organization intent revitalizing the product. Winner has for years presided over the general decline in quality and relevance of the paper. Were Platinum serious about maintaining and re-establishing the UT, the logical choice be to recruit some up-and-comer from another paper, and bid Karin adieu. Instead, the news gathering staff gets slashed and the queen bee stays on her throne. Sounds like keeping the lights on until they unload the real esatate.

May 8, 2009

Norman...err...Hellcat - still no call, no visit - why do you stay away? Something we said?

May 8, 2009

MAWR= please stop the name dropping.

It is not anything anyone cares about.

May 8, 2009

The editorial quality (and quantity) of the U-T has shrunk greatly in the last couple years, as they have cut the staff. Much local news goes unreported because there are no reporters to cover it--and there's no space in the paper to publish it anyway. Yet, we got treated to extensive coverage of gardening microclimates, right on the front page of the local section. Interesting, sure, but is it NEWS? Those same climatic zones have been the same for decades, and are readily accessible in Sunset publications.

If they cut the staff further, will they be able to produce a paper? Already the U-T relies heavily upon syndicated pieces from the AP, the New York Times, or the Wall Street Journal. Then there's the wretched Wheels section that comes out on Saturday, a section that has reported exactly NOTHING on the collapse of the US auto industry. Last Saturday the auto "editor" wrote two pieces on cars that few readers could ever contemplate owning. One was on the new BMW 750iL, a car with a price range between $90 and $110,000. A car for your typical San Diegan? Right!

There seem to be two parts of the U-T that don't get cut. One is sports columnists, and the other is that auto section. But those cannot be saved forever. So, look for cuts there too.

But as the paper shrinks in size, and as advertisers abandon it, the subscription price doesn't go down. Oh, no, I expect to see them increase it. Death spiral is right.

May 7, 2009

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