Newspaper Analysts Not Buying Zuckerman's 'Technicolor Fantasy'

The newspaper industry is facing an existential crisis, in case you haven't heard. Mort Zuckerman thinks he knows the secret of survival. But is he deluded?

Last week, Charlie Rose conducted a discussion on "the future of newspapers" on his PBS show with Zuckerman, Wall Street Journal managing editor Robert Thomson and Aspen Institute CEO Walter Isaacson (author of a recent Time cover story on the topic).

Zuckerman acknowledged that the New York Daily News, which he owns, sunk into the red -- the rival Post says it's losing $15 million to $20 million a year now -- but insisted that "we have plans for returning it to being profitable, which we believe will happen by the end of this year." It will happen, he says, as a result of two new presses that will allow the News to print entirely in color and with far improved efficiency.

Is Zuckerman onto something?

"That's fantasy land," says media appraiser Kevin Kamen. "It's nice to think that way, but it's 1970s or 1980s thinking. He needs to come up to reality."

Zuckerman told Rose that printing in color will allow him to charge advertisers higher rates. That would have been true a few years ago, says newspaper analyst John Morton, but the depth of the current recession makes it unlikely now. "Just because you suddenly have color doesn't mean that advertisers who aren't spending, or who aren't spending much, are going to spend more," he says.

"This is not a time to price up, no matter what you're offering," agrees Ken Doctor, an analyst with Outsell. "I'm sure they'll do some new business or they wouldn't be making the investment, but it does fly against the trends. The whole idea of being able to reach that mass market better is of declining value to advertisers." Doctor predicts that within the next few years, one of New York City's tabloids will disappear or merge with a competitor. (He predicts Cablevision (CVC) will rethink its purchase of Newsday and sell it at a deep loss to either Zuckerman or Rupert Murdoch.)

Kamen says Zuckerman's investment in color may eventually pay off -- but not until the ad market picks up on its own. "Long term, he'll have a better-looking product, and it could use it," he says. "But that's looking four to five years down the road."

Comments

[Donald Johnson:]

The Rocky Mountain News and Denver Post have new color presses. The papers look great but very thin.

Feb 18 09:53 AM

[Mad Hedge F...:]

Looks like the San Francisco Chronicle may be about to join the dustbin of history. The industry rag, Editor and Publisher, says that the privately owned Hearst Corporation has given the venerable paper an ultimatum to cut costs or close. The 150 year old Chronicle lost $50 million last year. Of course, this may all be a ploy just to beat up one of the last surviving unions, but they have made a similar threat to their paper in Seattle. Ironically, Hearst acquired the Chronicle and dumped the San Francisco Examiner in 2,000, which was then put on a crash diet and made profitable by its new owners. If the Chronicle goes it will join the Philadelphia Enquirer which went under last week, and the soon to be shut Christian Science Monitor. Google has been eating their lunch for years, and classified ads have migrated to Craig's List. It is tough to chop down a forest to make paper, get a union to print it, and manually distribute your product, and then compete against a one man email blast on costs. If the Chronicle goes it will be survived by a much smaller SFGate.com, one of the most successful web based newspaper portals out there. There could be a ninth earning save by a surprise buyer. But moguls willing to hemorrhage






money just to promote a political view are a dying breed. Rupert Murdoch has been the only recent buyer of newspapers, and something tells me that a match with the Chronicle would not exactly be one made in Heaven. In five years there will probably be only two mass circulation papers left, The New York Times and the Wall Street Journal, with the Washington Post as an outlyer. Thousands of small, local, niche publications will take up the slack. As a long time print journalist dating back to the typewriter days myself, I am sad to see newspapers go. But you can’t exactly sit like Denmark’s old King Canute and order the tide to stop rising. Journalism is degrading into an army of guys banging away at the computers at 3:00 AM in their boxer shorts. Trust, accuracy, objectivity, style, and taste will be the victims.

Feb 26 12:15 PM