AND it was not the purchase of the Reader that sank the company, it was Ben Eason taking on over $40 million of corporate debt just as the “dead tree media” market cratered. The debt was not just from purchasing newspapers – which he apparently bought at top dollar, btw – it also involved restructuring of current corporate debt he had existing from previous deals and expansion. He built himself a mountain of debt the company could not climb over. I read earlier he was never able to make a payment on any of it. He tap danced as hard as he could for a year and then filed for bankruptcy.
This story is no secret and can be found online if you look for it.
He was very ambitious and extremely optimistic and he was able to convince some people with deep pockets to go along with him. Venture capital firms tend to be smart businesspeople and they believed it was a good deal so they gave him the money. If he had been able to pull this off everyone would be saying how brilliant he was. Now he’s the goat. I’ll leave it to others to determine the fitness of that role.
I am not speaking for anyone here – not Ed, not the Reader, not CL, not Ben Eason, not anyone – but I would think the smart thing to do is to sit tight and see what happens. Don’t speculate on what you don’t know. Hope for the best and let this story unfold in the fullness of time.
Where do you get this idea? AFAIK, there is not a single profitable website in the entire world that makes on money soley through advertising. The profitable ones are selling RW products, not audience. Even Amazon operated at a loss for several years until finally getting into the black.
Can you cite a single “highly profitable” message board, anywhere in the world?
With respect, leander, I don’t know what line of work you’re in, but in my line, we call a “money losing asset” a “liability”. There are times when a company will subsidize a money losing venture, for a variety of reasons. But if it is losing money, then it is on the balance sheet with other liabilities, and it is on the P&L statement as a negative number.
Dropping the board wouldn’t be carving up anything. It would just be closing a part of the business that is draining money from the corporate pot.
If the decision is made to close the board, it will likely just go dark. Which is what happened with the Washington Post’s board. It eventually reorganized and reopened, but most regulars had already moved on.
Not disagreeing with your overall point, but I suspect there are a substantial number of people (dare I say a majority of active posters?) who participate in the SDMB but care little or not at all about The Straight Dope.
Sorry, I should have been clearer. Yes, the board is a liability for the overall business. But the membership base is an asset with (IMO) strong potential for creating profitabilty. Obviously at least one person disagrees.
Look at Facebook - that monster is losing heaps of money every quarter but no one would deny the potential earnings and value of the member base.
As far as just shutting it down, why would they do so when they could easily get *something *for it in a sale?
You’ve answered your own question. This site has to do more than just rely on advertising. What that is, I don’t know, but when you have a captive audience you don’t (a) piss on them all the time and (b) wander around in the dark looking for useless ideas.
Because if this site is the incredible money-loser, money-pit-sinkhole that no-one: not the Chicago Reader, not Creative Loafing, not AOL, not the Teeming Millions…hell not even Cecil himself have been able to fix–not make a profit, even: just stop the hemmoraging of money as we’ve been told for the last 10 years, they’d probably get more selling the servers for scrap metal and the hamsters to a fur-trapper.
I’m not saying they should, just that this is how they very well might look at it.
Now see, this is exactly the kind of speculation we shouldn’t be doing.
It’s based on no facts and a whole bunch of attitude and does nothing but get people worried and upset. And to what purpose?
We’re here today. We will probably be here tomorrow. Maybe even the day after. Why not?
When real information is available you’ll know what’s going to happen. This is all very early in the process and there’s lots more to go in this story. Nobody knows because there is as of yet nothing to know.
Keep in mind that upper management is now gone and a whole new publishing group must now be assembled and they have to get up to speed. While this is going on all those newspapers keep on having to be printed and published and the business – including this part of the business – keeps ticking along. It’s going to take some time for all this to settle out and for management to get to all the pieces of the Creative Loafing empire. I note that it took the previous management 10 months to get around to even looking to the online part of the business. Not saying the same thing will happen here and the past is no predictor of the future but there is obviously much that needs to happen before changes occur. Even at this early stage of things Atalaya is saying this is going to be a journey and that it’s going to take a while.
Until we do know something the best thing to do is to look to the positive and be supportive of the Dope and the greater community, as I hope you do everyday.
TubaDiva - everything you say is correct, but the only thing we can be sure of about all this is that there will be endless speculation here. In fact, speculation *is *supportive; just think what it would be like if this annoucement was met with a wall of silence.
I get that, NineToTheSky – I’m glad people give a damn – but it’s all negative. Why assume the worst?
We’ve been here a long time and a lot of things have happened in that time, both good and bad, and we’re still here. There’s no reason to assume we won’t be here.
I’m not asking people to be Pollyanna here but to immediately assume game over is not helpful.
Well, the purpose is to discuss just like any other thread and the “facts” it was based on is exactly what you and Ed have been telling us from the beginning: the place is a money loser and we’re lucky they haven’t pulled the plug already. It’s not a huge leap of speculation that a hedge fund will be less tolerant.
**TubaDiva **- I’m not a great expert on message boards, but a major difference between SDMB and other similar boards is, as far as I can tell, that the other boards are run for fun, and/or by individuals, to do no more than break even. The SDMB has always been part of a business which had at least an ambition to be profitable. So not making money has an influence on whether the SD would continue.
So, we’re worried, because we like it here. If there were indicators that suggested that the SD has a future, I’m sure we’d be discussing them. At the moment, it seems that the future’s shakey, so that’s what will be talked about.
Personally, I hope that the future will be bright for you and Ed and everyone who has got any sort of stake (emotional, financial, whatever) in the Dope.
I don’t know that Atalaya would be “less tolerant.” They’ve already shown that they think there’s value here; they threw good money after bad to purchase the assets and they have stated that they intend to put more money into the business to make it profitable. Common sense would tell you that they will look at all parts of the business and do their damndest to get every bit of butter out of this duck. This includes the digital media section that is the Straight Dope. With dead tree media getting short shrift these days the Dope may even have a better chance than the newspapers in terms of being a worthwhile asset.
It’s difficult times for publishing. It’s a crapshoot any way you look at it. But to immediately assume the worst of the situation is scaremongering and is not useful. Why don’t you put off cawing over the bones until you’re sure there’s a corpse?
Yeah, we hope for the best, too. Most of us, anyway.
History and Mathematics? This type of purchases lead to very drastic trimmings of everything that is not making money. As for example, this board.
As has been pointed out. We are depending either on neglect or on the new overlords somehow valuing future potential over current cash flow.
True, the Pay-to-post experiment apparently got us to even but that’s not around anymore and regardless, I think calling my recollections “wildly incorrect” strays beyond hyperbole into the not really telling the truth zone.
Yes, I’m afraid that I reacted a bit overmuch. Simply because an item is a liability does not mean it is a bad thing. After all, investment capital is a liability, as is owner or shareholder equity. But nobody would say that equity is a bad thing.
And as I said in my previous post, there can be numerous reasons that a company will carry a liability — especially one with as little cost as this board. It can be what is called a “soft asset” — that is, it loses a bit of money, but not much, while providing intangible benefit to the company, like public exposure and that sort of thing.
While it may be possible that the tenor of the board might be tweaked, it is far too soon to be lamenting its demise. CEOs tend to make decisions based on more than just the bottom line. It’s the CFOs who push for cost cuts, but senior and executive vice-presidents, as well as board members with a background in sales, often understand the notion of a “loss leader”, meaning something that loses a little bit of money, but brings in greater revenues for other departments.
Having an Internet portal these days is seen as a necessity, despite that it is often a technical liability. Without it, a business cannot compete. I tell you the truth that I wouldn’t be at all surprised if the very opposite happened from what we’ve been discussing. It may well be that the new company puts more money into the board to bring it up to date.
This is all just speculation right now, and frankly isn’t worth squat. Let’s just wait and see what happens. We have an alternative if it comes to that, but in all likelihood, it could just as well expand. Let’s wait and see.
