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The Media Oxpecker: Groupon’s Bullshit Accounting

Every Friday we round up media & tech industry news you may have missed while you were busy being awesome.

  • Four months after the introduction of its paywall, The New York Times‘ latest earnings report announced that 224,000 readers are paying for digital access, 57,000 are subscribing via the Kindle and Nook, and Ford’s Lincoln division (?!?!) is sponsoring subscriptions for an additional 100,000 readers.

    So mission accomplished, right? Not so fast, says Felix Salmon:

    Total digital subscription revenues are still going to be a drop in the bucket — if the NYT gets 500,000 digital subscribers at say $200 a year each, that’s $100 million a year, which is a lot of money in absolute terms but still just a fraction of the more than $2 billion that the NYT sees in total annual revenues. Digital advertising revenues alone are running at about $350 million a year. The subscription revenue is nice, but it’s not in and of itself going to allow the Sulzbergers to start paying themselves a dividend again.

  • Gannett — which did such a great job when it took a stab at the free weekly business — wants more of the daily deal space and is planning to expand its DealChicken service into 50 cities by the end of 2011.

  • And what exactly does “success” mean in the daily deal space? Groupon, the supposed big kid on the block, is losing money, though you wouldn’t know that by reading their IPO filing, in which the company has essentially invented an accounting term in order to mask the fact that it’s unprofitable.

    Business owners everywhere should acquaint themselves with the term “adjusted consolidated segment operating income” (CSOI) which magically turns red ink into black by excluding marketing costs. Or as the Wall Street Journal matter-of-factly puts it:

    Groupon said it generated $81.6 million in adjusted CSOI in the first quarter of 2011, though if marketing costs are taken into account that figure would be a loss of $98 million.

    Emphasis added.

    Always delicate, Gawker calls out Groupon for its “Bullshit Accounting” and concludes that the IPO is simply a way for the owners to cash out before the whole thing collapses:

    If you look at Groupon’s accounting by generally accepted principles the online coupon firm spends $1.43 to make $1, has losses that are mounting rather than improving, and desperately needs cash from its IPO because it spent most of its last funding round on bonuses for CEO Andrew Mason and his backers.

  • Not content to dominate the web, Google is launching a quarterly print mag:

    Though the online version is lovely enough, with a snazzy navigation bar and a clean design, the print version is something of a luxury product. With Think Quarterly, Google is promoting itself not as the familiar search giant but as an elite band of thinkers and strategists who are changing how the world — and especially the advertising world — works. What Google seems to be saying with this product is that the Internet, that’s for everyone. But something special to hold, well, dear customer, that’s only for you. That may seem like a strange message coming from a company whose business is the Internet. But the Internet doesn’t pay the bills — advertisers do. Think Quarterly is Google’s love letter to them, reminding them of all the good times they’ve shared and dreaming of a future together.

  • A more appropriate title for this post, “This is Why Your Newspaper is Dying,” might be, “This is Why Your Newspaper’s Website Sucks,” but it makes some good points nonetheless. (h/t Terry Smith at The Athens News)

    Related link: Redesigning And Re-Thinking The News

  • Felix Salmon — who David Carr says “is right so often on so many things” — caused a stir when he said that Twitter “behaves in many ways a lot more like a newsroom than a newspaper. Rumors happen there, and then they get shot down — no harm no foul.”

    To which the Columbia Journalism Review‘s Dean Starkman replied (on his Tumblr!):

    I can see how Twitter may be a step short of publishing (or is it?), but Twitter’s not a like newsroom because those have four walls, while Twitter’s amplification power is potentially very large. Your “newsroom” has 25,000, sorry, *30,000*, people in it. It’s a lot closer to publishing than being in a closed news meeting. And while there was no harm done in the Piers Morgan case, it’s not at all hard to think of some harm resulting in truly stupid cases (bank runs is only one, and there are worse scenarios I can think of) if we applied your Twitter-is-a-newsroom standard.

  • McClatchy reported disappointing results for the 2nd quarter of 2011, and Poynter’s Rick Edmonds says “the basic story remains the same” as elsewhere in the industry:

    Print advertising revenues just keep declining. Growth in digital falls well short of making up the difference, so profits are off too.

  • And in other depressing news the non-profit Seattle PostGlobe, launched in 2009 after the demise of the Seattle Post-Intelligencer, will close.