June 05, 2007

Psycho-economics

Michael Lewis (Liar's Poker) has an astute piece on the psycho-economics of trophy newpaper ownership.
The cachet of the New York Times is worth more to the Sulzberger family than to anyone else. The Sulzbergers' relationship to the Times is the chief source of their status; without it they are mere mortals with a bit of cash; and so the Sulzbergers cling to their control of the Times as tightly as ever.
Instead of getting out while the getting is good, they flop around looking for new ways to raise money without ceding control, and to make money without leaving the news business. Which is to say, they are working as hard as they possibly can to throw good money after bad -- with the predictable result that they have alienated their outside investors.
But...
The cachet of the Wall Street Journal to the Bancrofts, by contrast, is worth very little. There are too many Bancrofts, and they are too loosely associated with the paper: Even if they do theoretically control the Journal, no one but Rupert Murdoch wants to invite them to dinner to discuss the page one A-heads.
There's a word for an investor who clings to an asset whose chief value, its cachet, is of virtually no value to them: insane
I disagree with Michael Lewis that Murdoch is overvaluing the WSJ. The world is ripe for a print and web-based global clearing house for business matters and non-elitist opinion. The WSJ franchise can be vastly expanded, especially since Pearson has gone out of its way to ruin the FT.

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