Via a source comes this memo from Robert Allbritton, top boss at Allbritton Communications Co., which owns Politico as well as a number of television properties. The news: The company is checking into a sale of the television properties, with an eye to using “the resources and expanded mindshare” to boost the company’s commitment to Politico.
The news site, which launched in early 2007, “continues to carry no debt, funds all investment with operating income and will still turn a profit, again, in 2013,” Allbritton says in the memo. Accordingly: “there is no chance, none, I will sell POLITICO as part of the deal,” he writes. (Politico all-caps in original).
There was a time when folks could confirm whether Politico was a highly viable business, as Allbritton contends. The company’s annual report filed in December 2009, for instance, has some juicy numbers regarding Politico’s finances. For instance: Revenues rose from $11 million to nearly $19 million from fiscal year 2008 to 2009, according to the report. In those two years, the company reported operating expenses of $14.2 million (2008) and $17.2 million (2009).
The report also cited Politico’s Internet savvy:
Internet revenues increased [$4.4 million], or 80.7%, during Fiscal 2009. This increase was primarily due to an increase in issue-oriented advertising demand on politico.com, which represented 63.7% and 73.5% of consolidated Internet revenue during Fiscal 2008 and 2009, respectively.
Subsequent annual reports from the Allbritton folks haven’t contained such material, thanks to a handy bit of corporate maneuvering. In November 2009, the company spun off Politico’s “equity interests” to another enterprise. As detailed in the 2009 report, “the operating results of Politico after November 13, 2009 will be excluded” from future annual reports.
The absence of hard data has reduced Politico’s profitability to a grand topic of guessiping in and around Washington lunch spots. Are they really turning a profit? With all that staff? Is Politico Pro really doing that well?
We’ll never know the answers.
What we do know is that this isn’t a bad time to put local television stations on the block. Those stations include WJLA/NewsChannel8 here in Washington; WBMA in Birmingham, Ala.; WJSU in Anniston, Ala.; WCFT in Tuscaloosa, Ala.; WHTM in Harrisburg, Pa.; KATV in Little Rock, Ark.; KTUL in Tulsa, Okla.; and WSET in Roanoke-Lynchburg, Va. They’re all ABC-affiliated stations. Have a look at the revenues that those stations have helped to generate over the past several years:
2005: $194 million
2006: $216 million
2007: $219 million
2008: $205 million
2009: $181 million
2010: $201 million
2011: $197 million
2012: $214 million
As the Project for Excellence in Journalism has noted, “unprecedented” levels of political advertising boosted local television stations last year.
There’s a symmetry to the goings-on here. As reported by the Washingtonian’s Harry Jaffe, Robert Allbritton in the mid-2000s mulled over the purchase of nine television stations from the New York Times Company. His peers at Allbritton wanted to pull the trigger. The boss said no.
That decision freed the company to burrow into the Politico project, which started out as “The Politico,” as one critic loves to remind the world. By unloading his existing stations, Allbritton can re-commit to the national media platform that has given his company cachet in the country’s most elite environs.
The family of television stations in Washington and various smaller markets is the work of Robert Allbritton’s mogul father, Joe Allbritton. The patriarch also owned the Washington Star and Riggs Bank, a property that succumbed to scandal, hefty federal fines and a 2004 acquisition by PNC Financial Services Group.
Joe Allbritton, who died in December, won’t have to witness the possible contraction of the TV footprint he built. Says a former executive at the company: “If his father were alive, think it’d be less likely that [Robert] would sell, but it’s still a great time to sell.”
Here’s the memo:
I want to share some important news with all of my POLITICO friends and colleagues. This spring, after careful deliberation and discussion with my family, I have decided to explore strategic options for our television station company, including a potential sale of WJLA / NewsChannel 8 here in Washington, as well as all of our owned and affiliated stations as a group. As part of this process, we have retained a financial advisor to evaluate what we expect will be robust interest from blue-chip media companies in our broadcast properties in seven markets around the nation.
My plan is to use the resources and expanded mindshare that such a move would make available to increase my commitment to POLITICO. Then we can plunge in further on a variety of other potential investments that intrigue me as I contemplate the next chapter for our business. As you might imagine, this is a thrilling moment for me – and for the entire POLITICO team. So I wanted to take the time to walk you through my bullish thinking on the publication, as well my hope to find and nurture future media enterprises infused with a similar journalistic and business spirit.
As you well know, the passion for media runs deep in the family. My dad bought the television stations some 30 years ago as part of a deal to get The Washington Star, and, ever the smart business mind, kept the stations instead of his beloved Star when the government instituted rules against cross-ownership in large media markets in the 1970s. Our shared passion for Washington and nonpartisan media inspired me to invest in the idea of POLITICO three decades later. I take tremendous pride in that decision.
Let me be unmistakably clear to you and potential buyers: there is no chance, none, I will sell POLITICO as part of the deal. My future is POLITICO and companies like it. In fact, my plan is to invest even more in POLITICO and to place additional bets on media companies that meet my definition of successful journalistic and business enterprises. POLITICO continues to carry no debt, funds all investment with operating income and will still turn a profit, again, in 2013.
That is the textbook definition of a thriving, sustainable new media company. This is the Golden Age of new media innovation, and I intend to stay on the leading edge of it. So, I will be looking to invest in or launch media companies that follow the POLITICO model of dominating targeted coverage – and then using multiple revenue streams to profitably fund it. I see a very bright future for media companies like this and plan to show this with substantial investment in coming months and years.
My immediate focus is growing POLITICO. I have spent the past year creating long-term agreements with our leadership team, including John Harris, Jim VandeHei, Mike Allen, Kim Kingsley and Danielle Jones, as well as most of our management team and top journalistic talent, in preparation for our next big burst of growth. I firmly believe we have the most talented team in media.
We’ll have a chance in the coming days to talk about the next chapter for POLITICO. As you all know, there are big plans afoot about how we make our journalism better and more relevant, and our business bigger and even more responsive to the wealth of opportunities before us in this new media landscape. My direction to every person at POLITICO is to continue setting the agenda for journalistic and business innovation in the nation’s capital in coming years. As excited as I am about my future and the company’s, it is not an easy decision to contemplate a break from something that is such an important part of our history. I love the television business, and am deeply appreciative of the success I have had in it. I have treasured working with the media professionals at all of our stations, and in recent years, I have especially enjoyed watching the collaboration here in Washington between POLITICO and WJLA / NewsChannel 8.
I have always respected the deep connections with communities that our stations have, and am always humbled by the responsibilities—to citizens, to our employees, and to the next generation—that come with ownership. Those responsibilities are what led me to consider a sale now. This industry is in the midst of rapid consolidation and there are some clear advantages that come with increased scale. I want to ensure that our stations are well-positioned to continue their extraordinary success and participate in all of the new prospects for broadcasting going forward. The media business is changing rapidly. POLITICO is a success story because we believe that in order to thrive, you must live in a state of constant innovation. We always have chosen – and will choose – innovation, because few things are more central to our city and a functioning government than a vibrant – and profitable – free press. We have learned so much from the
POLITICO experience about how to do this, and that knowledge will infuse the next generation
All of our ambitious plans rest on two pillars that aren’t changing, and never will. One is firstclass journalism, produced by recruiting and retaining the best reporters and editors of this generation. The other is making POLITICO home to the industry’s most ambitious and creative team of business professionals. In other words, none of this works without all of you, and all of you are the reason I feel so confident in this fun adventure.
At age 44, I’m more enthusiastic than ever, and more appreciative than ever that you are joining me in building a profitable future for journalistic greatness.
Let’s prosper and make a difference.
More to come on this. Disclosure: I formerly worked at Allbritton Communications Co.