Audit Notes: Insert hospice joke here, Web pagination, too big to value

The Washington Post diversifies its business into end-of-life care

The Washington Post is getting into the hospice business, which prompted a few too many obvious jokes about death and newspapers. But lots of people are understandably wondering what the Post is thinking.

After the hospice surprise wears off, it seems like it could be a positive move, and the company has a track record of outside investments paying off. The Post’s Kaplan buy is what’s kept the firm afloat the past few years and Don Graham had a handshake deal for 10 percent of Facebook that would have returned 160,000 percent had he held Mark Zuckerberg to it—an amount that would have set up the company for, oh, a half a century or so. Its cable business makes good money too.

It’s better to use its cash to diversify the company and bring in new revenue streams than to squander it on dividends and share buybacks. Here’s the Post on the business its parent is buying:

Founded in 1996 in Mars, Pa., by Arnie Burchianti, a physical therapist, Celtic Healthcare has $43 million in annual revenue and serves about 2,000 patients from nine locations spanning western, central and northeastern Pennsylvania and Montgomery and Baltimore counties in Maryland. Celtic Healthcare employs proprietary technology and specialized chronic-disease management programs…

Jodi McKinney, director of corporate communications at Celtic, said the company hopes to tap The Post Co.’s “financial resources and long-term commitment” to expand and “eventually serve tens of thousands of patients with care in their homes.

— Back when the Intertubes started getting popular, we thought they’d free us from the tyranny of the newshole and from having to flip back and forth from the front page to A17 to read a story.

Then the Web (understandably) landed on pageviews as a primary measure of readership, and designers started gaming the system by paginating stories.

Slate’s Farhad Manjoo has an excellent piece on why this is counterproductive

Pagination is one of the worst design and usability sins on the Web, the kind of obvious no-no that should have gone out with blinky text, dancing cat animations, and autoplaying music. It shows constant, quiet contempt for people who should be any news site’s highest priority—folks who want to read articles all the way to the end.

I’m like Manjoo: When I go to the NYT site or even our own here at CJR, I automatically look for the “single page” button. Clicking and waiting a couple of seconds or longer (if you’re on the Washington Post’s site, say) for pages to load interrupts the flow of the story.

— The Bank of England’s Andrew Haldane, in an op-ed for the Financial Times, argues that giant banks aren’t just too big to fail, they’re too big to figure out. That’s a big reason why they trade at big discounts to their book value:

The problem for investors appears to be not so much too-big-to-fail as too-complex-to-price.

This was last the case in the depths of the Depression. Then, mirroring recent experience, US bank price-to-book ratios fell from above two to well below one between 1928 and 1933. This set the stage for the Glass-Steagall Act, a market-induced but regulatory-enforced unbundling of the banking portfolio.

Of course, that’s not the only reason for the discount. Haldane says that banks are lying about how good or bad their assets are:

The legacy is the overhang of overvalued bank assets. There are several reasons for this. One is forbearance on past loans, which appears to be both large and latent. Quite how large and latent is unclear. Near-zero global interest rates, actually and prospectively, have encouraged forbearance by lowering the costs of prevarication. Global accounting rules have also contributed to an overvaluation of legacy assets, as they prevent banks adequately provisioning for future loan losses. International efforts to rectify this are at risk of stalling.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,