John Juliano: Undisputed value

Sep 18, 2015 at 05:24 pm by Staff


I've been thinking a lot about value versus valuation as both Tribune Publishing and McClatchy announced stock buyback plans (writes John Juliano).

When this is placed against the self-aggrandised estimates of self worth by the PT Barnum of our time, Donald Trump, I can't help think of Lily Tomlin's famous quote, "What is reality? Nothing more than a collective hunch."

Tribune Publishing is the newspaper spinoff of Tribune Media, the highly recognisable and well-respected company in American culture that owned the Los Angeles Times and the Chicago Tribune in addition to television stations, radio stations and numerous other holdings. In the past year, Tribune Publishing's stock value has dropped by more than half. In a memo to staff, the company announced that it, and its CEO Jack Griffin, would be buying back $30 million worth of stock in an effort not only to prop up the price, but to demonstrate their confidence in themselves.

McClatchy on the other hand is once again in danger of being delisted from the New York stock exchange, having dropped below one dollar, but is only allocating $17 million to the effort.

Adding to the swirl of newspaper media trying to manage the perception of its own value - something for which over the past two decades it has proven to have an almost suicidal talent - John Paton has waited out his time offstage and is starting a comeback on the speaking circuit.

An exercise I would give straight-out-of-college sales job applicants was to set the price for a product. I would describe what the product did, our development costs, and number of units we could expect to sell. I would then ask the million-dollar question, what's the right price for this product?

The correct answer is, whatever people will pay. (Substituting the phrase 'the market' for 'people' sounds more impressive and professional but removes what Graham Greene called the "human factor"). Manipulating the perception of worth is what marketing is all about.



Announcements that companies and their key executives are buying back stock are open to a wide variety of interpretations. I also expect that an announcement is required by the American Securities and Exchange Commission (SEC). My questions on hearing about the buyback was how many shares must be removed from the marketplace, from a purely arithmetic point of view, to change the value of the stock? Is it really a doable endeavour?

Is this showing confidence, or desperation? Will it be the chance of a lifetime for Jack Griffin to buy at the bottom and what percentage of his net worth is he investing to demonstrate his confidence in Tribune Publishing?

John Paton's profile rising at the same time parallels Trump's re-entry into American politics: each elicits strong reactions to their vision and message. To speak about Paton and Trump in the same sentence is not a stretch (in the US we had the venerable founder of the long gone, but not forgotten vendor SII, Jim Lenane run for president).

Both Paton and Trump rely heavily on personal brand marketing to establish valuation. Each has seen the market disagree, in Donald Trump's case resulting in multiple bankruptcies, and in John Paton's most recent turn at bat the difficulty in finding buyers for the DFM colossus.

While Trump and other players on the American popular culture stage invest other people's money, it seems that smaller players, like the executives at Tribune Publishing, must make do with their own cash.



Six or seven years ago I attended a WAN-Ifra conference in Macau. The travelling circus of American speakers arrived and started through their programme of standard presentations of cherry-picked facts that I had seen presented on that year's tour of Gothenburg, São Paulo and then Macau.

One Asian speaker breathed fresh air into the proceedings by asking the brash question, "Why are we paying so much attention to the Americans?" He went on to say that the American newspaper industry has the complete trust of the American people and had done a remarkable job of convincing the American people that newspapers were irrelevant and that the American newspaper industry was paying the price of such trust.

Yesterday I received a congratulatory email from my investment advisor lauding me for not panic-selling my stock investments in light of the recent stock market correction. A few days prior to the correction an article by one of the major media outlets pointed out that given the market had been performing well for 1400 days, was it time for a correction? While I know that China in devaluing its currency has introduced instability and uncertainty into the evaluation of all stocks, I can't get that number 1400 days out of my mind as the starting gun for this race downward.

As the many very bright people at Tribune Publishing and its high profile properties work very hard to make the enterprise a success, we'll see what valuation the market places on their efforts.

I've never believed that newspapers should be publicly traded corporations. The men and women I know who work at newspapers, both very senior men and women, and young men and women entering the industry, take the responsibility of their place in society very seriously.

The mantra of a publicly traded company in American society is responsibility to the stockholders. Valuation, versus value, becomes the master. (The New York Times Company has handled this conflict by severely limiting the number of shares that can vote).

The family-owned newspapers that I often write about are better able to weigh the obligations that they feel to their community and society versus valuation.

Once upon a time the reason given for taking a company public was to gain access to capital to grow the organisation. In recent generations, the reason for taking a company public was to cash out and hopefully tap dynastic wealth. The American newspaper industry, to the casual observer, would seem to have it entirely backwards as corporations and executives put cash into their own stock.

The articles I read lead me to believe that the role of the American newspaper industry in American society is as strong as it ever was. It is the trusted source for news across generations and demographics. It has an undisputed value; it's merely its valuation that is weak.

• Newspaper systems industry veteran John Juliano writes regularly for GXpress Magazine. He is North American vice president of business development at Miles 33. Contact him at john@jjcs.com

Sections: Columns & opinion

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