5 ms·

Just a few years ago, Bezos bought the Post for half that. I don't understand how any of this stuff is valued.

mbreese 4y ago
The Axios newsletter first model is pretty good. They have direct access to subscribers without the baggage of actually printing anything. They’ve also done a good job of matching news content to attention spans. You get bullet points for the news with the ability to followup on what you want. It does mean that it’s not as good for long-form journalism, but that’s not where the market is headed (for better or worse). One of the other areas where Axios was moving (and where I think the valuation is coming from) is that they have expanded their DC insider model to more local sources. In an era where local news is struggling, having a setup for high quality local news without the overhead of a physical paper is great.
- esel2k 4y ago
  Is the reason for the value based the good usability, the user base or the content that is existing? I wonder as I am leading a content platform and was asked to think if we should sell it, but totally inexperienced in this.
  - peytoncasper 4y ago
    I'd be interested in others take. However, I have to believe there are really only a few things that matter in deals like this. 1. Existing user base 2. Subscription price 3. Churn rate 4. Growth rate Maybe the content ranks somewhere in there, but I doubt it. Primarily, because objectively you should be able to judge the content based on the metrics above.
  - smitty1110 4y ago
    The user base is the value. Every staffer on the shill, in the West Wing, on K street and Embassy row, and every non profit in D.C. is a subscriber. It’s the same reason Axel Springer bought Politico ostensibly for the Playbook newsletters, it’s all about influence with power.
    - esel2k 4y ago
      So that if they check user base - would it matter the amount of active/engaged users? Because forcing people to signup for one arcticle or even for a voucher is simple, but I wouldn’t really think this user base is of any value. What does Axel get out of lets say a couple 1000s or million user? Upselling other newspaper?
onlyrealcuzzo 4y ago
Everything is valued based on growth - because capital gains tax is so much lower than income tax. Share buybacks make this a lesser issue for megacap stocks with massive profits and margins. When you're talking about two companies with small profit margins and profits (or negative profits / losses) - if Company A is growing much faster than Company B - the valuation comparison might seem ridiculous. Here's a spreadsheet that makes it clear why the multiple on growth is so high when you consider tax and inflation: https://docs.google.com/spreadsheets/d/1Q00Y8PEyQaiahEvJN0Aq6XI1qlYkFFABBwIlz11i8n4/edit#gid=0 https://docs.google.com/spreadsheets/d/1Q00Y8PEyQaiahEvJN0Aq... It's obviously a flawed analysis, because stock prices are unpredictable (and, to a lesser extent, future revenues and margins). But it should make it clear why growth has such a high multiple.
- colechristensen 4y ago
  Dividends and increased share value through buybacks are taxable as capital gains (usually).
  - onlyrealcuzzo 4y ago
    Most dividends are ordinary / ordinary income. > Dividends are the most common type of distribution from a corporation. They're paid out of the earnings and profits of the corporation. Dividends can be classified either as ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates. https://www.irs.gov/taxtopics/tc404#:~:text=They're%20paid%20out%20of,at%20lower%20capital%20gain%20rates https://www.irs.gov/taxtopics/tc404#:~:text=They're%20paid%2.... When are dividends qualified (capital gains)? > For a dividend to be qualified, there are certain criteria that must be met, according to the IRS. For stocks, the criteria is: The stock must be held for at least 61 continuous days, unhedged, out of the 121-day period, beginning 60 days before the ex-dividend date. This covers most passively managed funds (most 401k funds these days), but still eliminates nearly all actively managed funds (the majority of capital invested). That's the whole point of share buybacks - it's a way to transfer value to shareholders that definitely isn't considered income.
coverband 4y ago
A couple of data points of relevance: * Axios revenue for 2022 projected to be $100 million, up from $85M in 2021 * WP revenue in 2012, last year before its sale was $4.01 billion, down from $4.13B of prior year. However, this includes all WP Co. properties, not just the newspaper. * Axios staff: ~60. WP staff: ~3,000
- rchaud 4y ago
  Those staff numbers look good, until you realize how many more people will be required to grow their revenue to where WP is.
  - texasbigdata 4y ago
    The investors (generally, abstracting here) in mature-ish assets want a 20%+ gross IRR they can transact on and actually exit so they can return $ to their LPs and therefore get their fat bonuses. Aspiring to reach some arbitrary milestone is likely not on their radar; just doubling revenue might get them there.
- swyx 4y ago
  sorry but no way was the relevant revenue number $4b when the asset sold for $250m. unless it was bleeding money, that fails the sniff test. https://www.vox.com/2016/6/28/12050416/jeff-bezos-saving-washington-post-but-not-newspapers https://www.vox.com/2016/6/28/12050416/jeff-bezos-saving-was... > . The last time total operating revenue for the paper was published, in 2012, it was $580 million; one former executive estimates today it’s probably closer to $350 million. Another Post veteran told me that Bezos said in a meeting that the company’s annual budget, currently around $500 million, will have to be cut by 50 percent over the next three years. there. better. --- edit: jeez, the axios numbers are way off too. they had 60 people in 2018. now it stands between 380 (https://www.comparably.com/companies/axios-media/headquarters https://www.comparably.com/companies/axios-media/headquarter...) and 520 (https://craft.co/axios https://craft.co/axios)
  - nazka 4y ago
    Revenue is just one metric among many others like net income, debt, free cash flow… You can have massive more revenues than your competitors but if you lose a lot of money it’s still not a good business.
scifibestfi 4y ago
The broad money supply increased 2x since he bought it in 2013. That could explain a lot of it. Today it would take $500M to have the same purchasing power as $250M did then? https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
snowwrestler 4y ago
I think it’s simply that the Post was saddled with high legacy overhead costs and slow digital growth at that time. Whereas Axios today is basically the opposite: strong digital growth with zero legacy overhead.

The Axios newsletter first model is pretty good. They have direct access to subscribers without the baggage of actually printing anything. They’ve also done a good job of matching news content to attention spans. You get bullet points for the news with the ability to followup on what you want. It does mean that it’s not as good for long-form journalism, but that’s not where the market is headed (for better or worse). One of the other areas where Axios was moving (and where I think the valuation is coming from) is that they have expanded their DC insider model to more local sources. In an era where local news is struggling, having a setup for high quality local news without the overhead of a physical paper is great.

esel2k 4y ago
Is the reason for the value based the good usability, the user base or the content that is existing? I wonder as I am leading a content platform and was asked to think if we should sell it, but totally inexperienced in this.
- peytoncasper 4y ago
  I'd be interested in others take. However, I have to believe there are really only a few things that matter in deals like this. 1. Existing user base 2. Subscription price 3. Churn rate 4. Growth rate Maybe the content ranks somewhere in there, but I doubt it. Primarily, because objectively you should be able to judge the content based on the metrics above.
- smitty1110 4y ago
  The user base is the value. Every staffer on the shill, in the West Wing, on K street and Embassy row, and every non profit in D.C. is a subscriber. It’s the same reason Axel Springer bought Politico ostensibly for the Playbook newsletters, it’s all about influence with power.
  - esel2k 4y ago
    So that if they check user base - would it matter the amount of active/engaged users? Because forcing people to signup for one arcticle or even for a voucher is simple, but I wouldn’t really think this user base is of any value. What does Axel get out of lets say a couple 1000s or million user? Upselling other newspaper?

onlyrealcuzzo 4y ago

Everything is valued based on growth - because capital gains tax is so much lower than income tax. Share buybacks make this a lesser issue for megacap stocks with massive profits and margins. When you're talking about two companies with small profit margins and profits (or negative profits / losses) - if Company A is growing much faster than Company B - the valuation comparison might seem ridiculous. Here's a spreadsheet that makes it clear why the multiple on growth is so high when you consider tax and inflation: https://docs.google.com/spreadsheets/d/1Q00Y8PEyQaiahEvJN0Aq6XI1qlYkFFABBwIlz11i8n4/edit#gid=0 https://docs.google.com/spreadsheets/d/1Q00Y8PEyQaiahEvJN0Aq... It's obviously a flawed analysis, because stock prices are unpredictable (and, to a lesser extent, future revenues and margins). But it should make it clear why growth has such a high multiple.

colechristensen 4y ago
Dividends and increased share value through buybacks are taxable as capital gains (usually).
- onlyrealcuzzo 4y ago
  Most dividends are ordinary / ordinary income. > Dividends are the most common type of distribution from a corporation. They're paid out of the earnings and profits of the corporation. Dividends can be classified either as ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates. https://www.irs.gov/taxtopics/tc404#:~:text=They're%20paid%20out%20of,at%20lower%20capital%20gain%20rates https://www.irs.gov/taxtopics/tc404#:~:text=They're%20paid%2.... When are dividends qualified (capital gains)? > For a dividend to be qualified, there are certain criteria that must be met, according to the IRS. For stocks, the criteria is: The stock must be held for at least 61 continuous days, unhedged, out of the 121-day period, beginning 60 days before the ex-dividend date. This covers most passively managed funds (most 401k funds these days), but still eliminates nearly all actively managed funds (the majority of capital invested). That's the whole point of share buybacks - it's a way to transfer value to shareholders that definitely isn't considered income.

coverband 4y ago

A couple of data points of relevance: * Axios revenue for 2022 projected to be $100 million, up from $85M in 2021 * WP revenue in 2012, last year before its sale was $4.01 billion, down from $4.13B of prior year. However, this includes all WP Co. properties, not just the newspaper. * Axios staff: ~60. WP staff: ~3,000

rchaud 4y ago
Those staff numbers look good, until you realize how many more people will be required to grow their revenue to where WP is.
- texasbigdata 4y ago
  The investors (generally, abstracting here) in mature-ish assets want a 20%+ gross IRR they can transact on and actually exit so they can return $ to their LPs and therefore get their fat bonuses. Aspiring to reach some arbitrary milestone is likely not on their radar; just doubling revenue might get them there.
swyx 4y ago
sorry but no way was the relevant revenue number $4b when the asset sold for $250m. unless it was bleeding money, that fails the sniff test. https://www.vox.com/2016/6/28/12050416/jeff-bezos-saving-washington-post-but-not-newspapers https://www.vox.com/2016/6/28/12050416/jeff-bezos-saving-was... > . The last time total operating revenue for the paper was published, in 2012, it was $580 million; one former executive estimates today it’s probably closer to $350 million. Another Post veteran told me that Bezos said in a meeting that the company’s annual budget, currently around $500 million, will have to be cut by 50 percent over the next three years. there. better. --- edit: jeez, the axios numbers are way off too. they had 60 people in 2018. now it stands between 380 (https://www.comparably.com/companies/axios-media/headquarters https://www.comparably.com/companies/axios-media/headquarter...) and 520 (https://craft.co/axios https://craft.co/axios)
- nazka 4y ago
  Revenue is just one metric among many others like net income, debt, free cash flow… You can have massive more revenues than your competitors but if you lose a lot of money it’s still not a good business.

scifibestfi 4y ago

The broad money supply increased 2x since he bought it in 2013. That could explain a lot of it. Today it would take $500M to have the same purchasing power as $250M did then? https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL

snowwrestler 4y ago

I think it’s simply that the Post was saddled with high legacy overhead costs and slow digital growth at that time. Whereas Axios today is basically the opposite: strong digital growth with zero legacy overhead.