Peter Kafka

Recent Posts by Peter Kafka

Cablevision to Investors: Sorry We Bought That (Really Expensive) Newspaper Last Year

What happens when you pay a whole lot of money for a newspaper as the newspaper industry is in freefall? You have to make an embarrassing admission to shareholders a year later.

Last week, we saw News Corp. (NWS) go through this exercise when it wrote off half the value of the $5.7 billion it spent on Dow Jones and The Wall Street Journal. Now it’s Cablevision’s (CVC) turn: The Long Island-based cable company is taking a charge of up to $450 million for its hometown newspaper, Newsday, which it bought from Tribune for $650 million last summer.

That’s a write-off of up to 70 percent of the purchase price. News Corp. had also wanted Newsday–in part so it could consolidate its back-end operations with those of its New York Post–but bailed out after the price climbed above its $580 million bid. (News Corp. is the owner of this Web site.)

Boilerplate “sorry about that” language from Cablevision’s SEC filing: “These impairment charges reflect the continuing deterioration of values in the newspaper industry and the greater than anticipated economic downturn and its current and anticipated impact on the newspaper publishing group’s advertising business.”

Not included in the filing: “We probably should have realized something was up when Rupert Murdoch dropped out of the bidding. If Rupe says a paper’s too expensive, he’s probably on to something.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik