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Newspapers - Not a Poor Man's Game

For the time being, it looks like the only thing (or people) that can save the newspaper business from its impending doom would be well-heeled billionaires. It matters not what passports they carry. It only matters that they show up with suitcases full of cash.

And they arrive in many different ways - A Mexican bailed out America's leading newspaper by paying down $250 million. He doesn't want to have a say in how the paper's run, as long as he collects the sweet 14% interest. A Russian spent one pound (that's about a buck 40) to buy the last of the London evening papers and immediately he wants to make the paper more liberal. Oh, by the way, he used to work for the KGB.

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But hey, finding a sugar daddy to pay the bills beats getting thrown out on the street.

To be sure, appealing to the vanity of the wealthy isn't necessarily a bad business practice. For some, there's still prestige in owning a newspaper, especially one steeped in tradition and/or one with a sterling reputation. There is some parallel to owning a sporting franchise.

For a good while, a sports team - just about anywhere - was a lousy investment but the rich guys willingly paid for the privilege to be part of a distinguished club. They wrote off the losses year after year, taking hard-earned money from their core businesses to subsidize their plaything. Eventually, however, sports franchises became good investments because their values increased exponentially - whether it's an NFL or baseball team or a Premier League or Serie A soccer club.

Is there such a turnaround in the newspapers' future? That's doubtful. The economic model remains senseless. In the Economist, there was this shocking revelation:

The editor of the Los Angeles Times, Russ Stanton, says that its website's revenues now pay for the publication's entire print and online editorial staff. Publishing news electronically is also cheaper than printing and distributing it on paper. There is still huge demand for newspapers' product, the question is how to get readers and advertisers to pay for it.

If what Stanton said is actually true, then it makes little sense for the LA Times to continue publishing its print editions. It's ironic that the paper's parent, the Tribune Co., is trying to emerge out of bankruptcy by selling its most valuable asset: Not the LA Times, not the Chicago Tribune, but the Chicago Cubs baseball team and Wrigley Field, which fetched a cool $900 million.

About two years ago, that's about how much a good U.S. paper was worth. Even in 2007, the Boston Globe was valued at about $550-$600 million. Today, it's barely worth $20 million. Most other papers are worth far less than that, if anything at all.

Maybe the newspaper business really does need these rich guys. Not just for their money. But for some infusion of ideas as well. They must've done something right to make their billions.