Pop Quiz on Competitive Advantages–What Would You Advise?

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QUIZ: Discuss in a few words the mistakes made in these recent acquisitions in the newspaper business. If you wanted to develop an advantage in newspapers how would you do it.  (Hint: What is the most profitable news magazine in the world–or close to it?)

How would you advise Bezos to enhance his purchase of the Washington Post?

Good luck.

Case Studies on Newsweek and Boston Globe

For those struggling, I suggest reading, The Curse of the Mogul: What’s Wrong with the World’s Leading Media Companies by Jon Knee and Bruce Greenwald

I will weigh in at the end of the week.

 

15 responses to “Pop Quiz on Competitive Advantages–What Would You Advise?

  1. Advantage in Newspapers – control the information source, establish pricing power. Be needed, no/few competitors.
    Most profitable newsmagazine – a racing magazine in the USA. You can’t bet on the races without it.

  2. Ayush Aggarwal

    John,

    Please let me know the mail ID you are using now. Last I know aol.com one got hacked.

    Regards.

  3. The most profitable publications are the ones with the most niche content. They might not earn as much on an absolute basis versus the NY Times, but their returns on capital are amazing because they have no competition and loyal readers. I can read the NY Times one week and the Washington Post the next. There are some industry journals that are absolutely essential and have no real competitor.

    In other words, the most monopolistic papers are the best! 🙂

    • Bingo! You got it. Better Southeastern Motor Cross or Skateboarder than the NYT.

      The problem with the NYT and Washington Post is that a lot of expense goes towards producing national or international content that can be found elsewhere for free.

      Better to focus on Washington DC are intensively with an obvious focus on politics/Congress/President. Where you can have economies of scale in generating content while building advert and reader loyalty. It won’t be easy with the Washington Post.

      You could have saved Barry Diller a few million!

  4. The Daily Racing Form

  5. Echoing what LC said. It’s niche content. Being in DC, it’s got to be politics. If you are a politics junkie are you reading the Washington Post? Maybe? But you’re probably reading politico on a daily basis. WaPo needs to move more in that direction IMO.To quote the great Munger:

    “And there are also disadvantages of scale. For example, we—by which I mean Berkshire Hathaway—are the largest shareholder in Capital Cities/ABC. And we had trade publications there that got murdered where our competitors beat us. And the way they beat us was by going to a narrower specialization.

    We’d have a travel magazine for business travel. So somebody would create one which was addressed solely at corporate travel departments. Like an ecosystem, you’re getting a narrower and narrower specialization.

    Well, they got much more efficient. They could tell more to the guys who ran corporate travel departments. Plus, they didn’t have to waste the ink and paper mailing out stuff that corporate travel departments weren’t interested in reading. It was a more efficient system. And they beat our brains out as we relied on our broader magazine.

    That’s what happened to The Saturday Evening Post and all those things. They’re gone. What we have now is Motocross—which is read by a bunch of nuts who like to participate in tournaments where they turn somersaults on their motorcycles. But they care about it. For them, it’s the principal purpose of life. A magazine called Motocross is a total necessity to those people. And its profit margins would make you salivate.

    Just think of how narrowcast that kind of publishing is. So occasionally, scaling down and intensifying gives you the big advantage. Bigger is not always better.”

  6. John – Great case study. My response is here http://wp.me/p3HHgD-1C

    • An even better response. I suggest that you share your thoughts with Bezos, the editorial page of the WPO or even your own local paper.

      Share your thoughts/wisdom as widely as possible.

      Good job and keep up the good work on your blog.

  7. Thanks, John. I appreciate the kind words. I have no idea how to get my thoughts to these parties, but I certainly appreciate the encouragement.

    • Ok, call or find out from the editor (usually go to the editorial page policy on the blog/paper. Then write within their limits 250 words or so.

      Contact Barrons as well. Go for it!

  8. I came to say that they should niche down either geographically or topically but it seems like others beat me to it. I did see an article today from the Economist recommending that media barons should not allow newspapers to become a niche product. Of course, the journalist never touches on how this would be profitable. I thought it’d be relevant to share given this discussion.

    Link: http://www.economist.com/news/united-states/21583274-new-wave-press-barons-should-not-allow-newspapers-become-niche-products-keeping

  9. Here is an interesting article on staying within a small, well defined niche in order to make money. Minimize space (probably biggest or 2nd biggest cost) in order to maximize sales per sq ft and keep a limited menu.

    http://www.crainsnewyork.com/article/20130811/RETAIL_APPAREL/308119972

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