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HR: Buying A Newspaper
By Harun Rashid
25/6/2001 10:59 pm Mon
[Rencana ini sedikit terlambat diterbitkan di KM2 kerana
EGM MCA sudah pun selesai dan Ling telah mendapat hasratnya itu.
Tetapi dia sebenarnya mendapat Nanyang yang sudah koyak rabak
kerana semua penulis dan editornya yang hebat-hebat sudahpun
tiada lagi. Nanyang sudah tidak seunggul dulu lagi dalam waktu
yang sebegitu singkat sekali. Sekaligus harga belian tidak
berbaloi kerana semua permata di dalamnya sudah tiada lagi
dan itu semua sukar dicari ganti - tambah lagi kerana mereka
perlu menulis dengan tangan yang terikat nanti.
MCA sekarang sudahpun berbelah dan berbahagi hanya kerana ingin
membeli satu akhbar yang sudah tidak berisi. Lihatlah nasib akhbar
milik Umno yang sudah tenat sekarang ini - apakah MCA tidak takut
Nanyang nanti memufliskan MCA sendiri? Baru beberapa hari ia sudah
muflis karyawan yang bertahun-tahun menulis dengan penuh dedikasi.
Mereka sanggup hilang kerja kerana tidak sanggup bersekongkol untuk
menjajah minda anak bangsa sendiri - tidak seperti wartawan melayu
yang tiada maruah dan harga diri. Akibatnya orang melayu menjadi
me-layu sampai kini walaupun tuhan menghadiahkan banyak isu yang
mahal-mahal selama ini. Apakah kaum Cina juga akan menjadi me-layu
nanti? Itu semua terletak di hujung jari..... tapi kali ini tiada
upah ataupun gaji namun ia lebih mulia dari segala-galanya sebelum ini.
Buying A Newspaper
by Harun Rashid
Jun 23, 2001
First let us examine the purchase as a business transaction.
There are readers, or at lest there were readers. And there are advertisers,
or at least there were advertisers. The readers and the advertisers
pay money to the business. The total sales should be enough to cover
the salaries of the employees and the cost of the newsprint. There
should also be some money left to pay the rent and utilities.
The newspaper is a public corporation. Sometimes the shareholders
get a dividend, and sometimes they do not. This a risk businessmen
take. In the present purchase there was a lot of cash in the till,
increasing a valuation based on net tangible assets. A buyer would
expect to get this fat cash hoard. But he might not.
Buying a business with your last cent is risky, because there
should be some capital left to operate the business. Buying a business
entirely with borrowed money is less risky, unless you plan to pay
it back. If you don't, that is a problem for the lender. Lending
money to buy a newspaper has its risks. Lending ALL the money to
buy a newspaper carries a lot more risk. Having a federal agency
at hand willing to assume a rotten loan removes this risk.
The Malaysian people do not know what happens to their money. It
is kept from them as an official secret. And when on the rare occasion
they find out, they only stay mad for a few days. And the thieves
get to keep the money, no thanks to the party-in-power and the prime
minister, who has castrated the police and the Anti-Corruption Agency.
Don't ask the finance minister. He has turned in his croupier and
gone jet-setting. But that is tangential.
A business that is making a profit, and is expected to continue
making around the same profit, can be evaluated on the basis of its
earnings. In this case the newspaper is earning around RM 4 million
per annum. Risk-free bonds will return over 5% with no management
required, so a reasonable expectation would be a return of 10-12%
on the invested capital. The present earnings represent a 10% return
on RM 40 million, so that is a fair starting price to offer. If you
hold out for a better return, then the price would be less.
The price paid (or nearly paid, so it seems) is said to be RM 230
million, and this is for only about 73% of the shares. If all the
shares were bought, the total price would be around RM 310 million.
This amount of money is spent to buy a newspaper that is returning
RM 4 million annually. The rate of return is in the neighborhood
of 1.3%. A return that low is not an attractive business deal, and
anyone who tries to tell you it is has been too long at his cup.
The man who sold the newspaper is laughing so loud he can
be heard from Hong Kong to Kuala Lumpur. He not only has the cash
from the sale, he has paid out the retained funds (about RM 45 million)
in the form of a special dividend, 73% of which he is the direct
beneficiary. The new buyer, disappointed and out-witted, stands staring
out the window, wondering what happened.
No one can say what the lender is thinking, but it is easy to guess.
As collateral for the loan the lender has taken The Star newspaper,
along with the new newspaper shares. Since it is unlikely that the
buyer will be able to pay the interest, much less the principal,
the lender has an excellent chance to get the bundle for a song.
But now we are told it is a strategically important political
decision. The justification is to be political. That means the buyer
is a politician, and he has something in mind of a strategic political
nature. It is worthwhile looking to see what that might be. Relieved
of any necessity to make financial sense of the purchase, we may
turn our attention to what he now confesses to be his real motivation.
It is possible he wishes to educate the editorial staff to the admirable
principles of his party. But no, he has sent them all packing.
Perhaps he wishes to persuade the writers to prepare favorable stories
for the readers. But no, he has not discussed this option with them,
and being suspicious of his future interference into their creative
freedom, they have all quit. Never mind. New editors and writers
can be brought over from The Star. They are seasoned and supple there.
If the editors can't edit, the writers won't write, and the readers
won't read, it is difficult to understand how the shrewd political
ploy is to work. And if the advertisers remove their support the
price is probably going to be a lot more than presently contemplated.
This is because the readers and advertisers of The Star are also
alienated by this masterful political chicanery.
The members of the political party are being called together
in one room tomorrow to give their approval, both for the purchase
and for the loan. It is not clear whether their approval is sought
on the basis of the business transaction or the strategic political
maneuver. This is an option of their leader, Ling, a man with long
and wide experience in the handling of Chinese money.
The raucous outcry over the purchase is completely unexpected,
says one seasoned political veteran. "I gave it the green light,"
he says. "We bought a Malay paper a few years ago, and the Malays
never said a word." The Chinese, it seems, have been stirred, somewhat
as a nest of hornets might be stirred, by public characterizations
as "terrorists and Communists." They have been denounced as unpatriotic
for defending their school properties, and ungrateful for demanding
an accounting of public donations intended for relief of Chinese
pig farmers. Fondling the favorite newspaper is the final affront.
The seller, approached to buy the newspaper back, offered to pay
only RM 100 million. Pressed for an explanation, he said, "Look,
I sold you a going concern. Now what is it? My editorial staff is
sacked, the writers have quit, the readers are boycotting the paper,
and the advertisers are alienated and withdrawing their support.
You have destroyed my newspaper, and now you want me to buy it back.
You should be glad I'm willing to give you RM 100 million."
The leaders of the party are seriously divided over the entire
issue, and there is to be a bloodbath later, no matter how the newspaper
purchase goes. For the members, if they support the purchase they
are buying a dead cat at a ridiculously high price, one they cannot
afford. To do this they are putting their prize possession, The Star,
at risk. The purchase is to require large sums of money for years
into the future. All this for what? Will the readers ever return?
Will the advertisers revolt against sister newspaper, The Star, also?
Will the new newspaper bring back the Chinese vote, as planned? Will
a vote of approval mean the bankruptcy of the MCA?
Yet if they vote to kill the transaction, there will be a personal
price to pay. The leader, Ling, will be rebuked, and probably he
and all his friends will eventually be forced from the MCA. The party
itself will lose further face with the Chinese community and Malaysians
in general. The ministers who oppose the purchase have been told
their fate is sealed. They must succeed to survive. They appear to
have the Chinese community behind them. The BN cannot survive without
the Chinese vote. For the party-in-power it is a desperate and serious
situation. It will be an interesting meeting.
Link Reference : Harun Rashid Worldview: Buying A Newspaper