Particularly cringeworthy is the $198 million it spent buying its own shares from 2006 to 2008 at an average price of $661 each, or roughly double what they’re worth today.
As its share price has continued to fall, the Post has doubled down on its buybacks. In the last two years alone, the company has spent $653 million on share repurchases, buying in at an average $383 a share, 12 percent above their current price (a $79 million loss as of today).
This is financialization at work. Instead of investing in its business operations, the Post is investing in its stock, which is a very different thing. The only way this bet pans out is if the Post’s shares rebound significantly in coming years. Would you put money on that? I sure wouldn’t (moreover, the company effectively levered up to buy them. The Post rolled over $395 million in debt in early 2009 to mature in 2019—at a 1.75 percent premium to its old bonds).
Where would the Post be if its parent company had invested even one-quarter of that nearly one billion dollars in its newspaper, or in some other profit-making, preferably non-predatory venture? That’s unknowable, of course, but it’s worth thinking about when you ponder why newspapers haven’t better adapted to the digital age.
While the company has been throwing cash at shareholders, it has been gutting the Post’s legendary—and critically important—newsroom, which, after the current round of buyouts and/or layoffs, will be a bit more than half what it used to be. This latest round of buyouts could reduce the investigative staff from seven to four.
By handing all that cash back to shareholders while disinvesting in its newspaper, the company is effectively saying that spending money on the hallowed Post is like throwing it down the rathole—it sees no possibility of making a return on any net investment there. That may actually be true, but it’s bad for the country, and it’s not very Swashbuckling Capitalist of them. The Post won’t take risks betting its cash on its namesake news organization’s future. It will unload nearly a billion dollars into its own pitiful stock. The “disgorge the cash” philosophy, which masquerades as flinty shareholder capitalism, is actually insecurity and weakness—an inability or unwillingness to invest that buyback/dividend money to come up with new products or to shore up old ones.
The Post would like you to think that it’s doing more with less, but that’s hamsterized nonsense. Then-managing editor Raju Narisetti’s assertion last summer, under a grinning mugshot and speaker-circuitese that “news brands need to get creative and make their content easier, more engaging and useful,” that he had slashed the newsroom by 25 percent “without overtly impacting quality” was as bogus as it was offensive. Ask anybody who read the paper before and after.
Narisetti wrote that those cuts helped the paper save $9.1 million a year on payroll and $14 million a year overall. Fabulous! But in 2010 and 2011, the Post handed $405 million a year back to shareholders through share buybacks and dividends. The losses on its share buybacks in 2010 and 2011 could have funded the savings from newsroom cuts in those years—three times over.
It’s not Narisetti’s fault, of course, that the folks in the C-suite told him to slash newsroom costs while they
spent squandered hundreds of millions elsewhere. But when senior editors argue that you can lose hundreds of journalists without impacting the quality of the product (“overtly,” anyway; whatever that means), they make those short-sighted moves much easier for bean counters to make—and they demoralize what remains of their staff.
Narisetti’s comments were made in a Forbes column arguing that the Post shouldn’t charge online. The Post has maintained its anti-paywall stance even as its circulation continues to collapse and the paper’s digital ad revenue, a relatively puny stream on which it has hung its future, goes backward. FONtastic.
In the first quarter, the Post’s newspaper division (which includes Slate) brought in $24 million in digital ads, down $2 million from the year before, and less than what it made in the same period five years ago (the company doesn’t break out Slate’s numbers from the Post’s, so we can’t tell from its filings whether one or the other was responsible for the decline, but I’d estimate very roughly based on Narisetti’s numbers that Slate accounts for about a quarter of the digital ads).
Last year, the Post brought in $106 million in online ads, less than the $114 million it collected in 2007. Here’s your “growth” story:
It’s even worse than that if you account for inflation. That $114 million in 2007 is $126 million in today’s money.