The silver state. [volume] (Winnemucca, Nev.) 1909-1925, 1918-08-13
WRITES ON VALUE
OF A NEWSPAPER


George w. Wagenseller, publisher
of the Post. Middleburgh, Pa. and the
Tribune, Mifflintown, Pa, writing on
Fixing the Value of Newspaper" in
the American Press, says:
Determining the value of a news
paper and its accompanying printing
plant is constantly coming up for con-
sideration by owners, publishers and
prospective owners.
Within the past year / told a man
well versed in the status of country
weekly newspapers that | believed
not more than ten per cent of the
country weekly newspapers were
really profitable business ventures
He agreed with me. Most of them
may be making living for their own
ers, but business venture must show
a real profit after paying expenses.
interest, salary and taking care of
depreciation.
In order to be fair to the seller the
physical value of the plant must never
be lost sight of. However, there are
many cases where the physical value
of the plant may be less thans its in
trlnsic value, considering good will
and its earning capacity.
l once knew a worn-out electrical
plant which as second hand material
would not have brought $4,000. vet
the earnings were paying the interest
on million dollars. The physical
value of plant is more easily estab-
lished than the value of good will
Good will is an asset no seller or
buyer can ignore without losing con-
sideration of what is frequently worth
more than the mere physical effects.
During the past year newspaper
in Kentucky, with physical assets
worth $4,000 was sold for $4,000. and
the buyer knew what he was gettins.
He had owned the plant before and
discovered, after he had sold it. he
had sold too cheap, and he paid more
money TO get it back than he had re-
ceived for it.
| have been asked TO make an ap-
praisal of a country weekly newspa-
per with $4,000 physical assets, the
net earnings of which have been
$4,000 for the past ten years. The
depreciation had been taken care of
by buying new material and keeping
the plant up to date, and the average
Of $4,000 a year represented owners
salary, interest and profits. A number
OF the most successful weekly pub
llshers have been asked for their judg-
ment as to the value of this plant.
The figures varied from $4,000 to
$4,000 as the price at which the
owner could afford to sell and which
the buyer could afford to pay.
With net profits of $1,000 p.r year
allowing $1,000 for managers salary
would leave $2S00 for interest, which
would pay seven per cent on 40,0O0.
or little more than 51a per cent on
S50,000. The plant having continued
the earnings for full period of ten
years, its earning ability has been
fully established
Here are some of the different
methods suggested to arrive at a con-
clusion:
A going business is worth its physi-
cal value plus twice or three times its
average net annual profits.
The value of good will of a busi-
ness is twice its annual net profits,
but the value of good will of news
paper is worth three times its net
annual profits.
Eliminating the value of the physi
cal property, one man says that a
newspaper is worth ten times the net
annual profit produced by it.
One writer suggests that the good
will of newspaper is worth more
than that of any other BUSINESS. and
that is doubtless true. A badly man.
aged newspaper may be worth more
than ii appears to be for the reason
that with good management it would
earn more. A well managed newspa-
per may be worth more to the pres
ent owner than il would be to a pub
Usher who did not understand the de-
tails of successful management.
Taking the instance cited above.
what is the price at which the owner
can afford to sell his newspaper and
at the same time be the price the puu-
chaser can afford to pay?
Conditions. of course. would have
something to do with the price, but
when a plant has an unbroken record
extending over period of ten years
the conditions are pretty well estab-
lished.