The Outlook for Newspapers
They Might Simply Merge into Chain Papers with a Few Local Pages
Jul 13, 2008
American newspapers may not be dying, but most of them cannot survive many more years of double digit advertising, circulation and job losses. One of their more natural options is to simply merge into chain papers with a few local pages.
They would never be called "chain papers" because their owners do not like the word "chain." They prefer to be called groups.
The New York Times reported that American newspaper advertising revenue was down eight percent in 2007 and was down12 percent in the first few months of 2008.
"It’s inevitable that there will be closures in this industry, and maybe bankruptcies," Goldman Sachs analyst Peter S. Appert told the Times in June 2008.
Industry Layoffs and Cutbacks
Signs of the industry problems were popping up across the nation:
- The McClatchy Company, the nation’s third largest newspaper company, announced it was reducing its workforce by "about 1,400 full-time equivalent employees" in an effort to overcome a 14.2% decline in total revenues in the first five months of 2008. McClatchey publishes 30 daily papers and 50 non-dailies.
- In Minneapolis, the Star Tribune cut its employment from 2300 in 2000 to 1500 in 2008. It also put its downtown property up for sale in an effort to meet expenses.
- In New Orleans, The Times-Picayune, which won Pulitizer Prize recognition for its 2005 coverage of Hurricane Katrina, cut its comics section in half and discontinued its Monday Op-Ed page to save money.
- The Los Angeles Times announced in July that it was cutting 250 jobs, including 150 editorial positions, to balance expenses with declining revenues. Editor Russ Stanton said in a staff memo that the cuts reflected the "paradox" of the Internet revolution.
Internet Competing in Ads, Readership and Coverage
"Thanks to the Internet, we have more readers for our great journalism than at any time in our history. But also thanks to the Internet, our advertisers have more choices, and we have less money," Stanton wrote in the memo.
The Internet is now competing successfully with newspapers in advertising, readership and news coverage. Newspapers have made some progress in setting up their own web businesses, but so far those revenues are not balancing the losses in their print operations, even with the cuts in staff and paper sizes.
As they cut their editorial operations, the newspapers damage both their advertising and circulation advantages.
Consolidate Functions at Group Headquarters
Since many of today’s papers are owned by regional and national organizations such as The McClatchey Company, the problems are falling into their hands. Some may try to sell off their worst performing papers but it is not a seller’s market these days.
There will probably be temptations to consolidate functions in the group headquarters, using the digital production and communication technology that is now available. The Associated Press produces most of the national news, features and photos found in today’s newspapers and that content can easily be bundled in one section for use in all communities.
Those national sections can be supplemented with local news and pictures gathered by small community staffs. That content can be edited and packaged remotely from the group headquarters, perhaps behind the national news section, perhaps in wraparound pages that give the paper a local look.
Similar techniques and technology have been used for years by USA Today, the New York Times and national magazines and may be the eventual salvation of community papers. The technology is waiting to be used.
The arrangement presents a threat to local news control, but the national newspaper groups have worked with this sensitivity for years and most seem happy to focus on revenues and leave community news and editorial issues to local staffs.
References:
- Forbes.com July 2, 2008
- World Association of Newspapers, July 2, 2008
- The New York Times
National Newspaper Advertising
Newspaper Advertising Strategy
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