Mr. Marquardt's Dilemma

Dear Readers:

Mr. Marquardt has a problem. The ground has shifted under him and he doesn't know what to do. Except the same old thing.

About three years ago Landmark, the owners of The Capital after the death of Phil Merrill, tried to sell their paper. It was the height of the financing craze and before the market crash of October 2008. With $2 to $3 million in adjusted profits plus being a media property, they expected to get a good price.

A offering memorandum on The Capital was produced and a number of buyers said they looked at the deal. Landmark's expectations were purported to be $25 to $30 million. Yet no one had any interest at that price level and Landmark pulled it off the market.

Then the market crashed. Anything involving print was heavily discounted. The Internet continued to make inroads. And The Capital's operations purportedly began to hemorrhage cash.


Through draconian cuts – foisted on Annapolis by Landmark management in Norfolk - the paper returned to cash flow neutral. Since then, some advertisers have also returned, albeit in a limited way. And a semblance of order has returned to the operations.

The problem is they returned to their old business and editorial model and have hit the ceiling.

Lead by Mr. Marquardt, they have exhausted their aging white male demographic, which will continue to slowly decline. An editorial policy, to cover certain things in certain ways, has also begun to break down while unparalleled negativity has infused its pages. The policies of the paper have actually increased this trend through editorial voices like hate blogger Paul Foer and the vicious news coverage of last year's city elections.

Mr. Marquardt's own self dealing has also fed this. One example is his famous personal editorializing for third span of the Bay Bridge. If that ever came to fruition, then it would certainly significantly raise property values on the Eastern Shore.

A place Mr. Marquardt has much of his net worth tied up in real estate.

Oddly, in the middle of this, The Capital attempted an expansion into four color magazine print pieces. An ill advised attempt to compete with the 'What's Up Annapolis' franchise, it is likely to take years to get to a true break even at its current run rate. This effort is draining important resources and attention away from their core asset, The Capital, and will surely deplete additional value for Landmark.

There is little likelihood the newspaper can regain financial value – even to where it was a few short years ago – with this existing business model and management practices.

Under the leadership of Frank Batten Sr. and now Jr., Landmark has proven itself to be a deft manager of media properties time and again. It's success with creating value and liquidity at The Weather Channel was extraordinary. They get it. And they know how to do it.

Time is getting short. Landmark's manager, Mr. Marquardt, has a nearly impossible task. This, added to his own purported lack of imagination and recent financial challenges, will make the task for Landmark clear.

Change.

King of George