Why Publishers Should Think More Like Ted Lerner

By Jack Limpert

In 2006 Ted Lerner, then 80, bought the Washington Nationals baseball team for $450 million. For an older man known to be careful with each dollar as he built a local real estate empire, $450 million must have seemed like a lot to pay for a locker room full of guys who play ball.

Today, looking at the franchise values of Major League baseball teams, Bloomberg says the Nats are worth $850 million.

How did Lerner take one of the worst teams in baseball and make it a lot more valuable? He didn’t look at how much profit he made each year—he took the long view, building a good team and growing the fan base, thus increasing the franchise value of the Nats.

Phil Merrill bought The Washingtonian in 1979. When he arrived, I had been at the magazine for 10 years, and while circulation had been increasing, the only financial feedback I got was how much money the magazine had lost that year. There didn’t seem to be much strategy beyond looking at ways to cut our losses.

I soon heard Phil talk about the franchise value of the magazine. He was thinking long-term: What did we have to do to make the magazine better? He was looking five or ten years down the road. He wanted the magazine then to be worth a lot more than what he’d paid for it.

Phil died in 2006 and I’m not sure he ever had any long talks with Ted Lerner but I think they would have pretty much agreed on how to build long-term value.

Contrast  the strategies of Ted Lerner and Phil Merrill with what’s happened to most newspapers—and some magazines. When I worked for UPI in Illinois in the early 1960s, almost every newspaper was locally owned. Sure, those hometown publishers wanted to make money, but they weren’t looking at quarterly numbers and demanding that profits increase by 15 percent every year.

That insanity arrived as one after another local newspaper owner sold out to Gannett or one of the other chains. Some of the sales were triggered by the need to pay estate taxes, but mostly it was the lure of selling out at a big number to a public company that had stock that might keep increasing in value and could be bought and sold anytime. That  trend may have been good for newspaper owners and Wall Street but it’s been a disaster for everyone else in journalism, including the readers.

Gone was the idea of making the publication better and increasing reader and advertiser loyalty, thereby increasing the franchise value. To please the MBAs of Wall Street, publishers had to focus on this year’s earnings—to increase this year’s profits we’ll cut spending and let somebody else worry about the numbers ten years from now.

And that’s one of the big reasons why over the last 20 years most newspapers got weaker. By not taking the long view and investing in good people and a better product, they cut and cut, becoming more vulnerable to digital competition. Now most publishers run papers that are a lot more like Jeffrey Loria’s losing Miami Marlins than Ted Lerner’s winning Washington Nationals.

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