Are We Running Out of Alternatives?
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The September 22 announcement by Stern Publishing that it is putting its stable of alternative papers on the block sent shock waves through the alternative media industry. The pending sale raises serious questions about the survival of politically activist, advocacy journalism for wide audiences. Stern's holdings include (ital)The Village Voice(ital) and (ital)LA Weekly(ital), arguably the two most successful of the more than 125 alternative weeklies across the country. The (ital)Voice(ital), founded in 1955, is the cornerstone of a colorful and essential element of American writing and reporting that came of age in the rambunctious '60s.Stern Publishing, whose other holdings include papers in Seattle, Minneapolis, Cleveland, Long Island, and Orange County, California, boasts a circulation of nearly 900,000 readers weekly and enjoys revenues of $80 million annually. Based on the company's influence, profit, and ability to reach large numbers of young readers in key markets across the country its estimated price tag hovers between $150 and 200 million, according to (ital)The Industry Standard(ital), a magazine that covers Internet business.Given such a high price it's unlikely that any company that currently has holdings within the alternative industry will be able to afford it, and that includes long-time Stern rival, the New Times Company, which currently owns 10 weeklies but is likely too saddled with debt from recent acquisitions to make the buy. In the media market of old (say, five years ago), that would leave established print media companies like Gannett or Times Mirror to snatch up a profitable commodity like Stern, but in this age of online publishing, the outcome could be quite different. The Internet, with its new synergies, may have changed the expected dynamic of a traditional media company purchase. "Typically if you sell a magazine, a publisher is going to buy it," explains Robert Broadwater, the investment banker at Veronis, Suhler & Associates, who is handling the sale. "This is a company that, although it puts ink on paper, should be viewed as a communications, information and advertising vehicle that targets effectively a very desirable demographic."(ital)The Industry Standard(ital) concurs that the most likely contenders to buy Stern aren't traditional media companies, but instead Internet companies. They cite Yahoo, America Online (AOL) and Ticketmaster Online-CitySearch as likely to be at the top of the list of potential buyers.The reasoning makes sense as growth areas on the Web include event listings, ticket sales and classified ads, which plays to the economic strengths of the alternative weeklies. And all the Stern properties have developed Web sites. The (ital)Voice(ital) has even experimented with collaborating with Microsoft's Sidewalk New York. Additionally, thanks to the strong showing of Internet companies on Wall Street, deals that include stocks could send the value of Stern sky rocketing.The explanation for the sale seems straightforward. While owner Leonard Stern has called the experience of owning the papers (since purchasing them from Rupert Murdoch fourteen years ago) "a wonderful and creative business experience," his children aren't interested in running the business in the future. Stern's daughter, Andrea, 33, the only family member to work in the business, was thought to be the heir apparent but told (ital)The New York Times(ital), "Running the publishing business was never what I aspired to do as my life's work, even though it has been a tremendous experience." Stern's other business interests, including New Jersey real estate and the Hartz Group, known for its pet food, are worth hundreds of millions of dollars.The sale, expected to be consummated by the end of the year, represents a rapid trend of independent alternative weeklies being grabbed by larger media companies, including companies owning daily newspapers in the same market. Such buyouts raise some anti-trust questions, along with fears that the genre of the "alternative weekly" may be fast disappearing. This year, Times-Shamrock Group, owners of a number of small dailies and the weekly (ital)Baltimore City Paper(ital), bought Alternative Media Inc., which consisted of (ital)The Detroit Metro Times(ital), (ital)Orlando Weekly(ital) and (ital)San Antonio Current(ital). Then Times Mirror, owner of the (ital)Los Angeles Times (ital) and (ital)Hartford Courant(ital), gobbled up the Advocate chain, with five papers in New England, including Hartford. It's not far fetched to imagine all the profitable alternative weekly properties being sold to big corporate owners in the near future, given the new dynamics of the Internet. The Stern sale will set the standard for the kind of money the New Times chain could receive, as well as the few remaining small companies with valuable properties, such as the Reader Company with papers in Chicago and Washington, D.C. Some suggest that the Stern sale need not be the death knell of alternative journalism. After all, when Rupert Murdoch owned the (ital)Voice(ital) he didn't interfere with the content and still sold it for a handsome profit. Nat Hentoff, veteran (ital)Voice(ital) writer, told (ital)The New York Times(ital) that new owners have seldom been harbingers of interference. "This is not a place that responds well to rigidity," he said, suggesting that future owners may not want to mess with a successful economic formula.That position may be nave, however, since it's the online commerce of event listings, ticket sales, classifieds and sex ads that will likely fuel the economic future of these media properties. All these elements are best served in the rapid response capacity of the Web, and it's possible that at some point the journalism will take a back seat to, or be gradually replaced by, a much softer entertainment and personality-oriented journalism to better support the online commerce. This trend hasn't yet pervaded alternative weeklies as much as it has other forms of mass media. While the announcement has sent anxiety through the more than 500 employees of Stern newspapers, David Schneiderman, the company's president, sent a decidedly upbeat and reassuring memo to staff:"Stern Publishing is very healthy....Our newspapers are producing absolutely wonderful and important journalism. The company is extremely attractive and we expect a considerable number of qualified suitors. Stern Publishing is poised to be the leading national media company for young adults. We have plans to expand into other markets through acquisitions and start-ups. We have ambitious and creative Internet plans." This all sounds like a sales pitch, and an attractive one at that. But who will bite? Who will step in and grab Stern, and what will the consequences be? It's an important story for the future of independent journalism. Stay tuned.