Media Central Corp. FBOP

Fair valuation for NOW and Straight; odds for survival

[PitchinPennies]

Will someone step up to make an offer for the assets of Media Central? On surface, the restoration of NOW and the Straight would make a fine "passion project" for somebody somewhere. It's an opportunity, the argument goes, to save two significant cultural resources and lead the revitalization of two once-powerful voices in arts and politics. It's possible to envision the kind of individual who might find that challenge appealing, along with the reward of emerging as a saviour of the remnants of the counter-culture.

Standing in the way is... reality.

The estimated debt of $2 million is probably underreported. Claims by the unionized and non-union staff will add up quickly, and these are unavoidable obligations in B.C. and Ontario. The Straight is being sued by one long-term employee for $250k. That's not too far off the going rate for a severance payment to senior (>20 yrs) sales staff. There will be other claims. Reducing headcount to make the operation viable means writing more checks for similar amounts. That will sting.

Still interested?

The newspapers' street boxes all need to be replaced. They haven't been refilled in more than two years, and the ones that haven't been removed have been damaged and defaced. Back when the street boxes were operational, NOW had a team of six to eight full time employees driving vans and working as "hoppers." The distribution arrangements with the Toronto Transit Authority will need to be renegotiated as well, since Media Central no doubt breached the terms.

Supplier relations are exactly what you might expect after the client doesn't pay his invoices. There's currently a worldwide paper shortage that has pushed up the price of newsprint through the roof. The content of the papers and websites has fallen and the brands are no longer taken seriously by advertisers.

So, what are these properties worth on the open market? For the hell of it, I called someone who answers questions like that for a living. She deferred, which is what I expected, basically saying you never know and there are a lot of people with more money than brains. Sure, sure, I said, but what would you think a fair price might be? Her compensation depends on getting the best price possible, and she is an optimist, as you need to be in that line of work. 

Any guesses on the number she eventually coughed up?

[Reallitycheck]

Depends on the buyer. If it's not someone, a company already in the business with back office functions and sales force already in place then the price is $1. Yes ONE DOLLAR as any stand alone buyer would be required to spend more to prop up, set up and/or expand the support and infrastructure. Let's face it, the buyer would also have to cover/pay for losses until a turnaround if it ever

[PitchinPennies]

Very good. Thanks, MC, for a cogent analysis.  First thing is the similar companies are unlikely to want to buy these brands. Torstar once ran a NOW competitor that lost tons of money over a couple of decades. So did Postmedia, except theirs was a daily freesheet. I'm struggling to think of a media company that would want this headache.  Next, the valuation. Assuming there's no

[Tigers22]

There is still life in print. The Post City papers seem to do well. They're chock full of ads. But they have a large ad sales team to fuel it. NOW seems to have one person who does everything. At a weekly! Now's best hope is an outfit like that — but can they afford Now's employee obligations? Do they want a union? I miss the olden days of magazines being run by bratty scions of

[PitchinPennies]

Hi, Tiger. This is bound to be torture for the employees, but you should know that your skills are very much in demand in the current economy. You'll need to be resilient, but that's the anthem for our age. I, too, miss the fun of the old days in the magazine biz. Those days are gone and aren't coming back. But you can still thrive and have a few laughs now and again. Lorne London