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It appears that at least one noted media commentator shares the view I expressed in my September 4 blog post titled “Separation, or divorce?”, where I suggested that NOLA Media Group’s relocation to new quarters in Canal Place may be “a strategic move to allow the digital side of the house to easily separate itself from the print side in case of a future divorce.”

In a June column titled “The great newspaper liquidation”, Reuters columnist (and former Slate Editor at Large) Jack Shafer expounds on the following excerpt from Philip Meyer’s book, “The Vanishing Newspaper: Saving Journalism in the Information Age” (with emphasis added):

A newspaper that depends on customer habit to keep the dollars flowing while it raises prices and gives back progressively less in return has made a decision to liquidate. It is a slow liquidation and is not immediately visible because the asset that is being converted to cash is intangible – what the bean counters call “good will” [which] is the organization’s standing in its community.

In an explanation that includes specific reference to what the Newhouse family is doing with the Times-Picayune, Shafer says:

One reason an owner would want to extract a newspaper’s goodwill value before selling its physical assets – its real estate, presses, computers, trucks, paper, ink, etc. – is that traditionally, goodwill is where most of a newspaper’s value has resided. When Meyer asked two newspaper appraisers to estimate how much of a newspaper’s value was locked up in goodwill versus physical assets, both gave him the same answer: 80 percent goodwill, 20 percent physical assets.

Shafer continues:

Selling goodwill is a dangerous strategy because once sold, it’s difficult to reacquire. But a newspaper owner who feels trapped by losses … may feel he has no alternative but to cheapen his newspaper bit-by-bit, month-by-month. He may explain the goodwill sell-off … as the exploration of a new business model … But don’t be fooled.

Shafer’s column is worth reading in its entirety, as is the transcript of a Poynter online chat filed under the headline “Can a 3-day-a-week model work for papers like the Times-Picayune?” in which Shafer and Poynter researcher Rick Edmonds offer further insights into this topic.

For those who want to explore this issue in depth, an updated edition of Meyer’s book is available in both print and e-book formats at  Amazon.com.