Tuesday, November 18, 2008

I've Heard of Cheap Deals, but this is Ridiculous

In spite of how pathetic Michigan's economy has become, it still raised my eyebrow when I heard that a house was being sold for $1. I honestly thought I had seen it all in the world of transactions until I opened up my Mediabistro ezine today.

Bistro reports: "Yesterday, after hearing about OpenGate Capital's purchase of TV Guide we wondered why the company would buy the struggling pub, writing, 'Honestly, it's a little hard to understand what OpenGate sees in the magazine, even if the purchase was for an absolutely rock bottom price.'"

"Well, it turns out that was 100 percent the case. Advertising Age's Nat Ives found out that the investment company bought the mag for a grand total of $1. Furthermore, Macrovision — which owned TV Guide — will give OpenGate a $9.5 million loan at three percent interest, a great deal in these uncertain times."

"But still, the magazine lost $20.3 million in 2007. What is OpenGate thinking? Its managing partner Andrew Nikou told Ives his company's thought process: 'The reason we acquired this business is simple. It needed additional investment. We're investing in this company to take it to the next stage.' Good luck with that, guys"

Essentially, TV Guide has devolved into a venture capital deal. It is clearly more than an idea, since it has decades of history behind it. But it has such a terrible track record to stand on and is back to square one in making a case for its continued existence. TV Guide has all the elements of a free rag, but they are still trying to "sell it" as a viable subscription publication. Thanks to the large number of cable and satellite services, it is very difficult for a print publication to provide thorough information on specific programming. That leaves the Internet. Meanwhile, all of the companies that provide programming (like cable companies) gladly tell you what is on their systems. Better than a magazine or a website, they do it through the remotes they provide. It is simply too simple to use any other means.

I don't see how there is a market for a TV Guide and don't think there has been a need for such in years. But old business models die hard. Just ask the US automobile industry.
Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.
Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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