TheGraphicOnline

After being quiet about “The Future of Newspapers” for about eight months, a recent happening impels me to jump back into the argument I was told to stay out of. What happened? The owners ofEditor & Publisher magazine have announced that they are closing their publication. Now that my not be Big News to many reading this, but anyone working with newspapers knows that is sounding a death knell, because – for 125 years –Editor & Publisher has been the “Bible” of the industry. The owners, the Nielsen Co., are saying that they 1) Aren’t making any money (or enough) from the magazine, and 2) Don’t believe there is a future for newspapers. I think they are wrong, but so far, no one has stepped in to buy them out. Newspapers, in some form, will be with us long after all of us are gone.

Another development – closer to what we want to talk about today – was the announcement that The New York Times will soon unveil a plan to start charging its core readers. In 2005 The Times bundled its top columnists and charged $50 a year for online access but found that their total revenue of “only” $10 million fell far below the $100 million they took in from ads for a larger audience when offered free. Just remember, as we get into this further, that The Times is not your typical hometown paper.

The underlying problem of ALL newspapers is that fewer people are subscribing to the printed edition, so the owners have been desperately (and wrongly, I believe) been trying to move their readers to the web sites. As I’ve said often before, I just can’t understand their business plan of chasing readers out of their printed product (which they charge for) and into the web where they give it away free.

Are daily newspapers really in that much trouble, financially? Well, they have undoubtedly hit some hard times, but ONLY is relation to recent years when they all lived in Fat City when their average operating profits were in the 20% range (compared with most industries that welcome 7-8%). And the big city papers you hear are in Big Trouble (Chicago, Denver, San Francisco, Minneapolis, etc.) got that way because their chain ownerships took so much debt that when the recession hit, they can’t pay-down the debt. Small and medium size newspapers are under pressure because their advertising bases have shrunk, but they are still making money, thank you. The local Pal-Item, I am told, is still making an operating profit, although a lower one than it used to make. This is true of most daily newspapers in small and medim-sized cities - “home town” newspapers. And it’s hard to believe that the Indy Star is not making a good profit, judging by their severe cost-cutting in personnel and the rise in their advertising volume.

So don’t cry yourself to sleep about the sorry plight of daily newspapers. Actually, as far as public relations go they’ve done it to themselves. They’ve convinced banks they’re a dying breed, according to the newspaper brokers (who really know what’s going on) so banks are not loaning money for new acquisitions. Larry Grimes, one of the leading brokers, describes it: “Because the newspaper industry has done such a good job of making everyone think newspapers are going to be extinct, the banks think newspapers are toxic assets.”

Daily newspapers re still dominant in the cities in which they operate. More than 104 million adults read a print newspaper every day; that’s more than watch the Super Bowl. How about young people? Some 61% of 18-24 year olds and 25-034 year olds read a newspaper in an average week. Advertising? It’s down, but Google research found that 56% of consumers researched or purchased products they saw in a newspaper. John Morton, the leading independent newspaper analyst, sums up: “Overall, the beleaguered newspaper industry’s financial health has been weakened but remains healthy by most measures.”

As I say, don’t cry yourself to sleep over the newspaper plight. What you can cry over (if you wish) is about how the industry is handling the decline in their position relative to electronics. It’s amazing (in my opinion) how newspapers are almost trying to put themselves out of business with their print product. Since this blog has gone on at least long enough, I’ll try to explain why this is so next week.

–Vic Jose

Vic Jose :: Feb.05.2010 :: Uncategorized ::

Trackback URI | Subscribe to the comments through RSS Feed