Times Change–Prices Too

You get a more stations nowadays, but they’re nowhere near as profitable.

Back when I was searching for gainful employment I made a hard push for an opening at KGTV in San Diego. I didn’t get the job. In retrospect that’s fine. Actually, it’s now finer. McGraw-Hill just announced KMGH has been sold.

I wish the folks at KMGH the best. The period between this type of announcement and a transaction’s closing is often unpleasant. The seller has every incentive to take a short term attitude and spend as little as possible. The product (and morale) suffer.

McGraw-Hill is known as a good company. Maybe they’ll be different?

It was interesting to see what $212 million buys in 2011.

The Broadcasting Group includes ABC affiliates in Denver, Colorado (KMGH-TV), San Diego, California (KGTV), Bakersfield, California (KERO-TV), Indianapolis, Indiana (WRTV) and Azteca America affiliates in Denver, Fort Collins, Colorado Springs, San Diego and Bakersfield.

Here’s how that compares to 1985. That’s when WTNH was sold by CapCities.

An entity controlled by the partners of Whitcom Investment and Anchorage-based Cook Inlet Region Inc. has won the bidding for WTNH-TV, an ABC affiliate in the Hartford-New Haven area, for which it will pay about $170 million, according to the sources.

That’s one station, the building on State and Elm plus the transmitter facility in Hamden for $170 million. The Hartford/New Haven market is comparably sized to both Indianapolis and San Diego.

As the NY Times reported in 1985,

WTNH-TV’s 1984 operating income was $14.6 million on net revenue of $24.9 million, resulting in a 58 percent profit margin. Over the last five years, the margin has reached 62 percent and has never fallen below 58 percent. The station’s margins are unusually good.

Can you imagine?

Angry Geoff Writes About Economics

To me it is a prime example of what is wrong with the economic policies in this country. It’s part of why we’re in the mess we’re in.

I was reading the Times a few mornings ago. I got really upset. There was an article in the Business Section that described a deal in the making. To me it is a prime example of what is wrong with the economic policies in this country. It’s part of why we’re in the mess we’re in.

The latest — and biggest push so far this year — came on Monday, when the hedge fund Jana Partners, along with a Canadian pension plan, announced a combined 5.2 percent stake in McGraw-Hill. The investment could build pressure for a breakup of the conglomerate.

Jana Partners’ website is among the most beautifully cryptic I’ve ever seen. There’s a place to login, a place to register and a contact form. There’s no “About Us” or names or photos or address or phone number. The page is a little shy in the info category.

Luckily, you really don’t need to know anything about Jana because of the last four words in the Times’ story, “breakup of the conglomerate.”

McGraw Hill has a website too. Its “Corporate Responsibility” tab has ten submenus! I sense a difference in corporate cultures.

The McGraw-Hill Companies is driving the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education and J.D. Power and Associates.

If you work for McGraw Hill this is at best bad news for you. It’s possibly terrible news.

By splitting the company into bite sized chunks you’ll basically be chum in the water as Jana looks for buyers. In many cases those buyers are currently your competitors. When they buy you they might already have someone who does what you do.

Your entire business entity could just disappear. Poof. The valuable stuff will be sold, but without you.

I guess it’s a free market, so Jana or anyone should be able to buy and sell businesses as they please. I just want to make sure the tax implications match the actual circumstances.

This may be good for Jana, but it’s bad for the nation. Jobs will surely be lost. Businesses will be swallowed whole. There will be less competition.

We shouldn’t have tax laws that encourage this. This is only a good deal if you define good in a very selfish way!

And yet…

From Forbes: After tense moments in the great tax debates of 2010, two important tax breaks for hedge funds and investment managers survived repeal efforts from Congress and the White House. Although Democrats tried hard

Seriously, why would we make this a favored economic pursuit? Why subsidize this pillage? We’re pissing in the well.