The tectonic shifts transforming the media and advertising landscape have always been fascintaing to me a stand as one of the central areas of focus of this blog. And while the earthquakes and volcanos along the fault lines are worthy of the headlines they grab, I am equally intrigued by the smaller events and more subtle (and not always so subtle) tensions that are constantly taking place as the traditional media plate gets subducted underneath the new media plate. This subduction zone seems to be generating peak activity these days (I’ll save the record-length list of story items for another post) and has now even been put to music. Mad Avenue Blues is a little long, but for anyone in the media, advertising, search, web, or tech/software business, it’s worth watching in its entirety.

(Thanks Lief for the link)

In honor of Paul Dailing, I am going to continue to be lazy on occasion and simply dump a pile of stories and headlines into a blog post regarding the death of the daily newspaper (and maybe on the recruitment classified front as well). It continues to be fascinating to me to watch an industry implode, and the story continues to evolve in interesting, educational, and amusing ways. So here are the most recent stories that caught my attention….

• The dailies’ problems may finally be solved! Washington is on the case, and bailout funds may be just around the corner…

• Another ‘Innovate or Die’ story (and some even have a decent idea or 2)

• John Henry, owner of the Red Sox, likes newspapers but only because they’re important to his baseball franchise. Strange timing that the New York Times (which owns the Boston Globe) is also looking to sell its stake in the Red Sox to generate some liquidity

• McClatchy is at risk of being delisted from the NYSE

• Winning the ‘No Shit’ award for the decade, Sam Zell declares that his acqusition of The Tribune Company was a mistake

• The idea of generating micro-payment revenue for newspaper content gains steam  with new venture Journalism Online

• Yahoo prepares HotJobs for eventual sale

• Shareholders of The New York Times are at risk of being seriously diluted….and there was also an excellent, excellent story about Arthur Sulzberger in the current issue of Vanity Fair

• The Cincinnati Enquirer is cutting the number of days that it runs classifieds

• The web tops newspapers as a source for news (didn’t this happen in like 2002?). Guess not….

• Newspapers are selling buildings to raise cash, but no one is buying….

Glassdoor received a nice review in the February issue of Portfolio (unquestionably the best business magazine on the newsstand today). In ‘Best of Times,’ Kevin Maney explores the impact of the current recession on the prospects for start-ups in Silicon Valley. As evidence that good companies can succeed in any environment, and particularly in tough times given the dearth of competition and the abundance of cheap talent, not to mention all the excess office equipment available for pennies on the dollar, the article cites Glassdoor’s recent raise of $6.5M from Sutter Hill Ventures.

I’d firmly echo Maney’s conclusion that a challenging economy presents an ideal opportunity for solid companies with a strong value proposition, not only for the reasons cited above but also because of the discipline, focus, and tenaciousness that is required. If companies can sell and grow in this environment, they will thrive in the better days ahead.

1) TechCrunch recently wrote about the worsening situation for daily newspapers and the abysmal 2nd quarter they have had.

2) The Economist reports that daily newspapers in emerging economies are thriving. As Thomas Barnett points out, the logic is that:

The demand for news tends to go up as people enter the workforce, earn more money, invest it and so begin to feel that they have more of a stake in their society. Literacy rates also rise in tandem with wealth. For the newly literate, flipping through a newspaper in public is a potent and satisfying symbol of achievement.

3) Gannett has acquired a majority stake in CareerBuilder by purchasing an additional 10% stake in the jobs classified company from Tribune. The $135 million that Gannett paid places a $1.3 billion valuation on the leading jobs classified company (I’d guess that the math and the actual valuation is probably more complicated than a simple x10, but it has to be pretty close). Gannett now owns 50.8%, with Tribune holding on to 30.8%, McClatchy 14.4%, and Microsoft 4%.

4) With the federal government stepping in to bail out Fannie and Freddie, legitimate questions are being raised about the new definitions of capitalism and a market economy. So, too, should questions about what other distressed industries might be next on the government’s list. The auto industry is surely on the list, but how about the daily newspapers? Maybe their salvation lies in being taken over and further mismanaged by the federal government…

5) ItzBig, an online candidate/job opening matching company, has officially shut its doors. The company was launched just over a year ago with much fanfare and instantly received a great deal of attention, even earning a spot on American Venture magazine’s list of 2008’s Most Promising Startups. Despite the gaudy name, however, ItzBig apparently wasn’t big enough.

With the announcement that JobDig is launching its next market in Indianapolis on August 4th, I came across Indianacareerconnect, a job board operated by the state of Indiana. I have been tracking Minnesota’s job board, Minnesotaworks.net, for years and I have been continually baffled as to why states feel the need to offer this service to jobseekers and employers in their states. Bafflement would turn the frustration and anger if any of these state operated, publicly funded job boards actually attracted any traffic or offered a viable alternative to the for-profit boards that offer job listings on the web, but luckily they do not. In this case, I am quite happy to report yet another example of government incompetence.

But why do states feel the need to be in this business? Most state boards I’ve seen do not charge for their listings, so they are not generating any revenue. In fact, they are simply undercutting and competing against the for-profit sites and publishers in their state that could be generating additional tax revenue and job growth. The states are not filling a need that isn’t already being met by other free and paid listing sites around the web. And they certainly are not improving on the service that those other service providers are delivering. No state operated, publicly funded job board I’ve seen offers anything unique in the way that they attempt to help employers and jobseekers. On the contrary, most state operated, publicly funded job boards are pretty mediocre, run-of-the-mill type sites and many are a complete disaster.

The obvious conclusion is that these state operated, publicly funded job boards are the result of a bunch of feckless politicians and clueless government bureaucrats who think that operating these sites is actually a good use of taxpayer dollars. I have been told that Minnesota is investing $20 million into its job board – a complete and utter waste of money. This boondoggle is especially atrocious when one considers all the things the state should be doing that it currently isn’t. And once a government program is created and funded, entrenched bureaucrats will see to it that it’s never eliminated or shrunk, no matter how ineffective or counter-productive it might be.

The other likely, more cynical possibility is that state operated, publicly funded job boards offer politicians and bureaucrats something tangible to point to when asked what they are doing to create jobs and help local businesses in their states. Of course, pointing to these boards is a complete joke, but that’s never stopped a politician’s propensity to spin, especially around something as challenging as creating jobs and building a healthy, supportive environment for business.

My recommendation for Minnesota (which applies to other states as well) is to cut the investment in their state operated, publicly financed job board by $15 million and either return the money to taxpayers, or reallocate it to something that is actually going to generate a positive ROI for the state and its citizens. With the remaining $5 million, the state should evaluate and partner with a handful of talented, intelligent, knowledgeable stakeholders in the space from the private sector. Iideally, these partners would be located in the state and would include both for-profit companies and non-profit organizations who work in the jobs and job training space. A thoughtful collaboration among qualified players in the space and a prudent investment of $5 million in those companies and organizations would, without question, result in a better, more comprehensive solution, a unique offering, or at least unique aspects integrated into the overall solution(s),and a service that would truly help jobseekers and employers alike.

Surprising no one since all of the other bidders had dropped out, NBC, with support from Blackstone and Bain, purchased the Weather Channel and Weather.com for just under $3.5 billion. Landmark Communications, a private equity group owned by the Batten family and owners of the Weather Channel as well as a number of daily and weekly newspapers including the Employment Guide, had expected to sell the cable channel for $5 billion when they placed it up for sale in January. It’s unfortunate that they had to sell in such a dismal capital markets environment, but still a very nice return for a company that was started in 1982.

And now the real fun starts – seeing what kinds of prices their daily and weekly newspapers will fetch. Of particular interest will be the Employment Guide. As I’ve written previously, my guess is that Landmark would be happy with anything even close to $30 million.

Always one step ahead of everyone else, Cheezhead has declared that he has moved beyond ripping Monster, declaring in an early June podcast that he no longer finds it sporting, fun, or even interesting. I still, however, cannot resist. Monster has lost its leadership position in online classifieds to CareerBuilder in large part because the company has persistently neglected its users, always considered short-term revenue to be a far higher priority than long-term revenue and a quality user experience (annoying pop-up ads, job scams, etc.), and failed to transition from a 1.0 job board to a 2.0 job board. Furthermore, the company has made a pile of suspect acquisitions and engaged in illegal activity to enrich its executives through options backdating. It’s been one blunder after another for Monster over the past 5 years or so, and while it may no longer be surprising to anyone that the company is mismanaged and well on its way to being an ‘also-ran,’ Monster remains a large company in the space with decent mindshare (albeit largely negative).

In any event, Monster has been in the news recently with two significant announcements. Monster announced that it was shuttering its social networking site Tickle.com, a company that it had acquired for $70 million in 2004. That’s $70 million in shareholder’s money that they flushed down the toilet. Whether the idea was bad from the start or poorly executed after the fact (I suspect it’s a lot of both), the fact of the matter is that the Tickle debacle is another black eye for Monster. The $61 million acquisition of Affinity Labs will undoubtedly share the same outcome.

Monster also announced this week that it had formed an ad network with 19 newspapers. I am not sure yet how this announcement differs from Monster’s previous announcements that it was working with local daily newspapers (here and here and here). As I have said in the past, these partnerships between print and online media companies make sense in theory in that jobseekers and employers can access and deliver job classifieds across multiple media channels depending on their preferences. Unfortunately in practice, however, neither Monster nor the dailies deliver value to either party. And these partnership deals are miserable for the companies striking the deal. The dailies who sign on with Monster are simply throwing in the towel on a vital revenue stream, and Monster is tying its fortunes to a sinking ship. As the saying goes, mating two dinosaurs does not result in a gazelle.

As I have written about previously, Landmark Communications has put its media assets up for sale. In addition to The Weather Channel, the crown jewel of the group, the private equity firm owns a bunch of small and medium-sized dailies and community newspapers, shoppers and weeklies, and the Employment Guide. Lehman Brothers, who is handling the transaction, has split the assets into two groups – The Weather Channel and Weather.com in one group, and eveything else in the other.

Bids for the The Weather Channel were due a few weeks ago, and according to Multichannel.com, Time Warner has dropped out of the auction and Landmark has entered into exclusive negotiations with a consortium that includes NBC Universal, Blackstone, and Bain. Their bid reportedly included $1.8 billion in equity and $1.7 billion in debt for a total of $3.5 billion, well below the $5 billion asking price.

If the top bid for a premium asset like the Weather Channel was 30% below expectations, wait until the bids come in for Landmark’s daily and weekly newspapers. I’d be surprised if the print assets end up being sold as a block, and my guess is that the Employment Guide will fetch a price somewhere between 25-50% of the asking price. Using a very quick and crude, back-of-the-envelope calculation, I’d guess that that number is somewhere between $25-$35 million (my best-case estimate is revenue of $50-$60 million, slightly positive EBITDA (maybe) although they get favorable distribution subsidies from Dominion, the distribution company also owned by Landmark, and break-even or negative net income. I will say, however, that if the Employment Guide is struggling as badly as they appear to be in the markets where we’ve seen them, these numbers are all way too optimistic). The numbers are obviously just a guess, but it will be interesting to see what happens in the next few months.

Rich Barton, the founder of Zillow, a site that publishes information about specific home values, has launched his next site which aims to do the same thing to with salary information. Glassdoor.com, which launches today, publishes salary information on specific positions within specific companies. Much like Jobvent.com or TheFunded.com, which provides user-submitted reviews of venture capital and private equity firms, Glassdoor also publishes reviews of companies. The company, which has raised $3M from Benchmark Capital, does not currently publish job openings or allow people to apply for positions within companies, and revenue is generated strictly from advertising on the site. Without a doubt, if the site can gain traction with users and provide a wealth of accurate information on a ton of companies, it will be a successful little niche site. I am not sure it will ever become a wildly successful, stand-alone site, but it could certainly be an attractive content category within another job or career site.

Jeff Taylor, not satisfied with having dealt just one body-blow to the daily newspaper industry in the form of Monster.com, wants to land another in the form of Tributes.com. With $4.3M in seed funding from the Wall Street Journal, Tributes.com aims to bring the obituary page and all the revenue it generates to the web (yes, of course the dailies charge per line for obituaries). The new site is a spin-off from Eons.com, Taylor’s last venture which is a social network for baby-boomers. Tributes.com currently sends visitors to the obituaries section of Eons, but the site will operate on a stand-alone basis in June. I certainly applaud the effort to strip every possible nickel away from the dailies, but I cannot imagine that Tributes.com can succeed in any meaningful way as a stand-alone company.

Tags: Jeff Taylor, Monster.com, Eons.com, Social Networking Site For Baby-Boomers, Tributes.com, Daily Newspapers Getting Hammered All Over, Another Body-Blow To The Dailies