C I T Y L I G H T S NEWS TICKER
Gannett’s claw curls in deeper Giant newspaper chain hikes bid for Chicago-based tronc Just how much does newspaper giant Gannett Co. want to own the downtrodden dailies of tronc, proprietor of the San Diego Union-Tribune? Enough to pay a minor king’s ransom,
based on the latest news out of Wall Street, where tronc shares are soaring on word from media blogger Ken Doctor that Gannett has again upped its bid for the assets of tronc, this time to “the mid-$18-a-share range.”
C I T Y L I G H T S By Reader staff writers
may be far from over. Doctor speculates that tronc’s Hollywood
star-struck Ferro could seek to hold on to the Los Angeles Times, to which the San Diego U-T is now so tightly tethered that it would likely die if taken off L.A. life support. And any Gannett takeover — subject to
anti-trust review by the U.S. government — might not close until February of next year, leaving the U-T to continue to twist slowly in an uncertain wind.
Matt Potter Michael Ferro and Frank Gannett (founder of Gannett) “At the $18-plus price, Gannett would
have raised its price by more than 20% above its second bid. It delivered that bid of $15 quite publicly in May,” notes Doctor. “The May bid in turn represented a further 22% increase from Gannett’s first offer of $12.25 in April.” But that, says Doctor, is not enough for
tronc chieftain Michael Ferro, the Midwest wheeler-dealer who grabbed control of the company earlier this year. He may demand upwards of $25 a share to turn over the keys to the bedraggled kingdom. Even at that exorbitant price, Doctor
maintains, “the acquisition marks the big- gest win in Gannett’s strategy since it was spun off as a newspaper company from the larger Gannett media empire.” The secret, newspaper watchers say, is
Gannett’s projected ability to “roll up” the entire industry into a giant virtual monopoly, similar to Blockbuster Video, which ulti- mately went broke. During Gannett’s July 27 earnings call for
the second quarter, chairman and CEO Bob Dickey acknowledged, “Advertising revenue was down roughly 10 percent year-to-year on a same-property basis,” and “Print circula- tion volume was off roughly 9 percent daily and ‘a little less’ on Sundays,” according to a Poynter Institute report. Still, Dickey was upbeat about his acqui-
sition strategy. “We are bullish that local market expansion makes sense.” Even if the latest proposed deal between
Gannett and tronc is finally done, experi- ence of the past two years shows that the tangled ownership tale that has cost San Diego its locally owned daily newspaper
Taxpayers association nays in on Chargers proposal “
...increases to the hotel tax should be utilized for critical city services...” The San Diego County Taxpayers Association on August 22 stated its opposition to the Chargers proposal for a subsidized stadium downtown. Stated the association: “San Diego should not raise taxes to subsidize a billion-dollar corporation; increases to the hotel tax should be utilized for critical city services, like street repairs and infrastruc- ture improvements.” The study found that even under the
most optimistic assumptions, “The City of San Diego would likely have to service debt from the general fund, which pays for a wide range of public services, in order to maintain its credit ratings and avoid higher financing charges for future debt.”
Investing: Nothing
looks good Stocks, bonds, real estate expensive
By Don Bauder W
he re shoul d you invest your money thes e
days? A savings account? You will get almost nothing in interest returns. Bonds? Same problem. Stocks? They soared after the Great Recession ended in early 2009, but the economy has been weak. So even long- term bulls admit stocks are awfully expensive relative to their earnings and pros- pects. Real estate? Same problem: it’s expensive almost everywhere. “There is no cheap asset
Stadium proposal rendering (on left; Petco Park on right) The Chargers initiative would raise the
hotel tax from 10.5 percent (realistically 12.5 percent) to 16.5 percent. The money would go to paying debt on the subsidized stadium downtown. The combined stadium/ convention-center (“convadium”) expansion would cost $1.8 billion, according to the Chargers. But if interest on the bonds is included, the cost balloons to $2.3 billion, says the association. The convention-center- expansion part of the project would gener- ate merely $2.3 million a year in hotel-tax revenue, compared to $67 million in annual public costs. The study exposes optimistic assump-
tions of the Chargers plan. For example, moving the MTS bus yard would cost $70 million to $80 million. As a result, bus continued on page 31
class,” says Neil Hokan- son, principal of the Solana Beach office of Aspiriant, a money-management firm. “There is no low-hanging fruit. We just can’t stomach these low yields. It’s a hor- rible time in terms of find- ing something really attrac- tive.” He tells his clients to be patient — invest slowly and keep a lot of money in low-yielding money mar- ket funds and the like (often called “cash”). New Jersey–based econ-
omist A. Gary Shilling is widely followed these days because back in 1981 he pre- dicted the “bond rally of a lifetime.” Many thought he was nuts. At the time, long- term bonds were yielding 15 percent. Recently the 30-year Treasury bond has been yielding around a mere 2.3 percent. Because bond prices rise as interest rates go down, Shilling is consid- ered a prophet. Now, he feels United States rates will go even lower, so he is still buy- ing 30-year Treasury bonds, but he admits that this strat- egy is not suitable for inves- tors who need income.
Noting that banks in
Europe and Japan are pay- ing negative interest rates, he believes rates in the United States could go lower from current levels, although he is not ready to call negative interest rates in the U.S., since negative rates are not boosting economies that try them overseas. “Chronic deflation [prices declining] is increasingly likely,” he says. He would bet that American stocks will drop (a process called “shorting”) and would bet that oil will go even fur- ther down from its current level, perhaps as low as $10 to $20 a barrel, as other com- modities tumble, too. So, except for 30-year
Treasury bonds, he basi- cally agrees with Hokanson: no potential investment is a sure thing these days. Hokan- son disagrees with Shilling on bonds: “After inflation and after taxes, the returns are negative,” he says. Robert Snigaroff, presi-
dent of San Diego’s Denali Advisors, says those claiming that stocks are too expensive are wrong. “Stocks are not outrageously priced, given the low interest rates,” he says. With bonds and savings accounts paying such puny returns, stock+s may be the answer. Money from around the world has been poured into utilities and high-yield- ing, blue-chip telecoms, such as AT&T and Verizon. Sni- garoff, however, is not so bullish on utilities and tele- coms: too much money has already been poured into them. Denali doesn’t go fish- ing for bonds, but Snigaroff thinks it is possible that Shil- ling may be right: they can rise further.
A. Gary Shilling
C I T Y L I G H T S
Neil Hokanson
Robert Snigaroff
Ross Starr Ross Starr, professor of
economics at the Univer- sity of California San Diego, warns of risks in Shilling’s strategy. “Since interest rates are at historic lows, the best guess is that rates will go up within a decade, and when
2 San Diego Reader September 1, 2016
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96