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'Old media' content remains king

Commentator Cody Willard

TEXT OF COMMENTARY

Kai Ryssdal: The future of The Wall Street Journal's being decided this afternoon at a Hilton hotel in downtown Boston. Members of the Bancroft family are being briefed on Rupert Murdoch's bid for Dow Jones, the company that owns The Journal. The Bancrofts own most of the voting stock in Dow Jones, so what they say goes.

The $5 billion Murdoch offered was well above where most people valued Dow Jones. And given all we've heard lately about newspapers being a struggling business model — how they're suffering at the hands of new media — it also raised a few eyebrows.

Commentator and hedge-fund manager Cody Willard says, actually, Murdoch is on the right track.

Cody Willard: We're constantly learning newer, quicker and better ways of consuming information and entertainment.

So branded, credible content becomes more valuable than ever as theconsumer needs a dependable filter for the data onslaught.

Superior content defines companies like The New York Times and the WallStreet Journal.

And now they can reach a greater audience, through more outlets — from PCs to radio and cell phones — with lower costs.

Just for starters, the number of people that newspapers can reach is exploding from a few million in the physical world to the 1.5 billion people now online.

Clearly, the ability to control the flow of information is dying.

But content remains king. That's all the more reason for media companies to keepup their brand credibility.

The New York Times and other venerable brands will lace their traditional stories with sponsorships and ads, so they'll be paid everytime someone views their content, no matter the outlet.

Let's be clear that the revenue generated per each ad from such digital sales is less than the typical revenue generated from say, taking out a full-page ad in the New York Times.

But revenues from such digital sales are essentially full profits, since they require almost no production or distribution.

The company's cash flow from its existing businesses funds the content creation already, so repurposing that content for other outlets simply boosts profits.

Yes, the market crushed these old-line media companies' valuations over the last few years as it recognized the end of their growth in traditional media.

The market has now priced in all the negatives but none of the potential upside.

More content, bigger audience, collapsing distribution costs — and a market that has priced in only the worst? — now that's a business I want to be in.

Ryssdal: Cody Willard is a principal at CL Willard Capital. That's a hedge fund based in New York City.

Tomorrow, we'll hear from someone who says, profits aside, something's gotta give between new media and old.

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