Newspapers: Reinvent Yourselves... Or Else

The U.S. newspaper industry is facing tough times. The Tribune Company, the nation’s second largest newspaper publisher, filed for Chapter 11 bankruptcy protection. The company has been saddled with debt and declining sales since billionaire Sam Zell took the company private last year. I paid particular attention to this bankruptcy announcement because Tribune owns my hometown newspaper, The Baltimore Sun. Tribune Company also owns some of the largest newspapers nationwide including Newsday, L.A. Times, and the Chicago Tribune.

Tribune is not the only struggling newspaper publisher. Gannett (GCI), EW Scripps (SSP) and the New York Times (NYT) all face similar problems. The newspaper industry as a whole is in trouble. Newspapers are becoming increasingly irrelevant. Newspapers throughout the country have experienced declining revenue from subscriptions losses and lower ad revenue. Ad revenue declined 18.3%, 11.1%, 17% over the past quarter at the New York Times, Gannett and EW Scripps respectively.

Subscribers have abandoned newspapers for online content. Following this trend advertisers have moved ad dollars from print media to online media. The newspaper industry is at a crossroads. In the age of 24 hour news, newspapers seem out of date. By the time you read the newspaper you have probably already seen the news. National news has been replaced by CNN, Fox, MSNBC or your local news station.

Newspapers have become a niche item. People are no longer concerned with having a physical product to hold in their hands. Newspapers only sell well during major historical events. Special events such as this past presidential election demonstrate that people do still want a tangible product but only when a significant event occurs. Newspapers sold out of issues the day after the election.

I think the only hope for the newspapers publishers is to reinvent themselves. They should move their focus from print to online. Publishers should allocate more capital to their online websites. They need to get their online sites on par with the larger media conglomerates. They need to utilize their advantage over major news outlets which is in having the scoop on all local news. They need to focus on becoming a 24 hour news site on all things locally. They could use the print editions for special issues and weekend editions only.

Until newspaper companies can find a way to reinvent their business models, I wouldn’t buy these stocks even at these prices.

Disclosure: None

Comments

[John Peterson:]

The key word here is irrelevant. Newspapers exist to inform and it is imperative they reflect the communities they serve, not the world at large. Regional dailies need to learn their place. Newspapers also need to think of themselves as multi-media platforms. The franchise is the collection process; let readers choose their method of delivery. Eliminating print would be a mistake. Studies indicate that print drives web, plus print is the preference of Boomers who still represent the majority of wealth in the U.S. As a group they still have significant web issues. This 2008 survey by ThirdAge/JWTBOOM should give us pause. Ninety-three percent of 40+ year olds said they have read an article about a Web site in print (newspaper or magazine) and have later visited the site online. Boomers account for 78 million people in the US and control more than 83% of consumer spending. Can the industry afford to risk that demographic?

2008 Dec 16 10:15 AM

[Jay Small:]

Both the original post and the first comment read as though:

-- Newspapers don't already have thorough companion Web sites.
-- More and more of those sites don't already provide continuous news updates, mobile news and messaging, and tie-ins to major social networks.
-- Newspaper editors aren't thinking hard about the volume of non-locally focused news they print or post, and, in many cases, zeroing in almost exclusively on local-interest coverage.
-- Newspaper holding companies and individual properties aren't already, almost feverishly, working to reinvent the local advertising sales models to focus on interactive.

I can tell you all those things ARE happening. Reinvention under way, though obviously, gated harshly by the debt some media companies carry, and the pressure on print ad revenue.

The arguments presented here would be appropriate and valid if newspapers were not already undertaking the kinds of change prescribed.

2008 Dec 16 12:04 PM

[Backpack:]

If newspapers published drivel such as this piece by Mark Ridix, we would have been out of business long ago. I saw the headline and opened this hoping to find something news. Instead, it's simply a rehash of all that has been said about the newspaper industry for the past several years. Does Mr. Ridix have any original thoughts? Or is he simply satisfied parroting the work and comments of others?

Jay Small has it exactly right. Newspapers are in the process of expanding online offerings. In fact, most already have. The opinions expressed by Mr. Ridix are more outdated than anything I see in a local print newspaper today.

Please allow me to paraphrase:

"Until Mr. Ridix can find a way to offer new and ineresting information and opinion, I won't read anything else he writes -- even if it's free.

2008 Dec 16 12:26 PM

[David Andre...:]

Jay Small is correct, and Mark Riddix original premise is revealed as shallow and uniformed in the additional context he provides. This doesn't mean that the newspaper industry is not in trouble or in need of re-invention, but the few suggestions posed by Riddix are not at the crux of the issue. If they were, the industry, which has been doing all of these things for years, would not be in the state it is.

The main mistake that most casual analysts of the industry make is focusing only on the news content of the newspapers. News content costs the paper, and per-copy price of the paper only offsets the production and distribution costs of the product. Newspapers make money from advertising, either display or classified. During the good times, classified advertising was nearly half of the newspaper industry's revenue.

Unfortunately, newspaper classified advertising as a money maker is a business that is rapidly becoming obsolete and it will never come back in the way needed to support news gathering and reporting as it did. Just like yellow pages, large databases of information are more usable online than in cumbersome print products that evolved prior to data-driven Web products.

The situation is more similar to radio theater's demise when faced with the rise of television. People stopped listening to radio theater when they started watching television, because it offered a better user experience for the content.

The newspaper industry must meet the new challenge, but the challenge is not in news content, but advertising content, and the challenger is google adwords and online advertising networks that have built a better platform than the classified pages.

2008 Dec 16 12:46 PM

[NP Refugee:]

What a buffoon!

I'll admit that newspapers haven't been bold enough to go where they need to. Mark apparently is writing from a perspective devoid of history. He doesn't know about the many things that have been done and the way that newspapers have tried to reinvent themselves online--many times being successful. Ever heard of Cars.com, Mark?

Where I think David is going is the right question in need of a solution. I still believe the day when the newspapers can all get together, close the door on Google and start their own news search engine will be the day they can start getting the money that Google gets (or at least their fair portion). Frankly Google makes money at nps' expense. What a great gig--the newsrooms across america produce content for which Google pays very little, if anything, and makes gobs of money off it selling ad words. While the move may be bold, it's where the NPs need to be. I'm not suggesting the NPs have one more "hail Mary," but this is no time to be shy. Between Cox and Gannett, there are at least 2 pieces of technology already in place to make it happen. NPs still have the umph to make the marketing happen and establish brand recognition.

[The AP is NOT the organization to do this. Their agenda should make anyone dubious. They are proving to be fairly colonial in their pursuits under TC. I wonder which will occur first--will the AP outlive its usefulness or wear out its welcome?]

I do know that Gordon B. is right: you'll never be able to pour money in the top faster than it's going out the bottom without an initiative the likes of a news search engine.

The NP industry tried to do all this in the mid-nineties, as many-a-colleague will remember, yet the egos of the individual companies made it all collapse. Perhaps such times as these will make for an environment where such initiatives could be revisited. I doubt Mark is even old enough to remember the New Century Network. I've said many times that NCN was ahead of its time.

2008 Dec 16 02:39 PM

[BEIJINGYANK:]

Ah the good ol' days of fabrication. I miss the diatribe of brain injured reporters becoming the news by chasing under aged male prostitutes. Oh the memories of yellow agenda journalism of WMDs being in Iraq. The excitement of reading about Yellowcake forgeries! The whispers of the cocaine parties’ journalists headlined.

Those were the days when journalists were bought to shill for the CIA for a couple of hundred dollars a month. OH, THE GOOD OL' DAYS.

2008 Dec 16 04:39 PM

[Sketchee:]

On Dec 16 12:04 PM Jay Small wrote:

> Both the original post and the first comment read as though:
>
> -- Newspapers don't already have thorough companion Web sites.<br/>--

The thing here is that they are getting their primary revenue streams through print. And as the print revenue declines, these websites aren't going to sustain themselves. The amount of money it currently takes to pay someone to do the massive journalistic work that many newspapers do isn't yet supported by the web alone. Or much outside of print

2008 Dec 17 12:39 AM