NP Refugee

High Operating Leverage Pressuring Newspaper Companies

The impediment facing the newspaper industry is not with it's operating cash flow, but rather, with the debt load. Servicing the debt as part of the cost structure is crippling the newspaper industry's ability to create new forms of content, and thus, create value. Until newspaper companies can shed debt, they are going to struggle--plain and simple.

On the Constitutionality of a Newspaper Bailout

Sorry, dude. Things get twisted all the time. How we went from allowing freedom to worship in the 1st amendment as a constitutional ban on any reference to religion is exactly why the slippery slope rule applies. After all, they "dumped a bunch" of money into GM, and the next thing you know, the president is firing the CEO. So the editorial board of newspapers will all of sudden be full of ACORN.

No thanks. The day they accept a dime from Uncle Sam is the day I'm an ex-newspaper reader because any sliver of credibility they have will be gone. Then they can dump all the money they want into it and it will be "red all over."

And if the newspapers accept a dime, they might as well be Robert Johnson at the Crossroads because their editorial souls will be gone. As it is now, they're teetering--maybe that's part of the problem.

Some Stats on an Unsustainable Model: Print

So... I didn't see anything about the insert business. We've known for quite awhile that the bread and butter for newspapers is now the insert business. The good news is that they have it. The bad news is that it, too will go away with much of the other advertising. After all, I can see the Best Buy circular online anytime.

Rescue vs. Reinvention: For Newspapers or Banks, Bailouts Reinforce Status Quo

If it passes, we can all kiss the 4th estate bye-bye.

Too Many People Don't Care If Newspapers Die

Within the news ecosystem, there are many parasites who exist off of newspapers and their editorial departments. People just don't realize the vacuum that will be created. At the same time, newspapers may have to die in order for news to become resurrected in other forms (not unlike the big auto guys). News has become commoditized in many markets, but the source is usually the newspaper. There's not a local radio station who doesn't start their day by opening the newspaper to write their scripts. Same for broadcast TV.

How the news business will be resurrected will make for an interesting case study. There will be winners and losers. I don't believe that the insert business will all go direct mail, either.

This Week in Saving Newspapers

I grieve the death of the 4th estate. Talk about being too important to fail...

Like watching the Senate go away, or something. Removing an all-important leg of the stool. They are too important to democracy. Don't count on radio, tv, or Inet to do what the papers do. I just wish they would take their responsibility more seriously and report with less bias and a mission of fairness over their own political ambitions. Of course, it's been that way since the 1800s, so it's unlikely to change anytime soon.

I don't mind the collusion thing, but nobody seems to be talking about the arcane cross-ownership rules. Let the NPs work with and own TV stations. Both are in real peril. Allowing cross-ownership could be a real shot in the arm. The FCC, through the cross-ownership rules, imposes barriers that are not only unnecessary, but they also are incremental acid eating into the 1st amendment.

Many forget that most television stations were begun by newspapers in the first place.

Several newspaper companies have sought to have the cross-ownership rules overturned, yet, those in power have no incentive to have the watchdogs get stronger. They use the unique, independent voice argument as though media is limited in the same way it was in the 1950s. They're really just fine with being able to control the press.

That's the story that's not being told in this whole argument. We should certainly start there. By having one news department for television stations and newspapers, the cost would be contained and the reporting might be better--but the goal at this point should probably be existence.

And exNewspaper is obviously bitter, lacking understanding that most of the news that is read over radio, put into television newscasts, and blogged, all comes on the backs of an editorial dept somewhere. Without newspaper editorial departments, democracy is toast... and the bloggers would have to become investigative reporters. I love the blogs, but let's face it; they would have to put on clothes and get out and do the work of the newspapers in order to have any sort of future in a post-newspaper world. They would face the same economic challenges in a world of entitlement, where everything on the Internet is free. Who would pay their travel expenses? How would they be compensated?

I so want to see newspapers survive, but they have so many fundamental flaws that are deeply rooted that anything short of radical metamorphosis will be woefully short of the necessary transformation required to survive.

Newsday et al: Too Little, Too Late

Jeff, as usual, your insights are dead-on. The time to change was back when NPs were all in a state of denial and arrogance. So many problems--I don't know whether they can get out of their own way.

Here's my short list recommendations:

1. Kill the AP. It's outlived its usefulness and commoditizes the content of the member papers. While the AP does deals that make money for the AP with the likes of Google, the member newspapers don't understand why their papers aren't able to maximize their editorial content. Wake up, for heavens sake! The AP is, and has been a clear case of the tail wagging the dog.

2. Get rid of debt. Close papers, sell assets. Circle the wagons. Do whatever it takes. Those who continue to borrow money deserve whatever they get. Many of us saw this coming and pointed out the absolute stupidity. But then, they were in denial. Get whatever the market value is. It's not as though they're not taking write-downs on the impaired assets anyway.

3. Take the companies private. I know Tribune wanted to; they were on the right track; I hate that it's turned out the way it has. The only way NPs can reclaim market share is to operate on paper thin margins for which shareholders will have no stomach. The road to reclaim market share will mean cutting rates to rebuild circulation; then the advertising MIGHT have value to the limited number of advertisers who appreciate a mass audience in a world of behaviorally targeted media. Once private, establish ESOPs to retain talent--but keep it in the family. Props to the Newhouses of the world who cared enough to ignore the intoxication of public funding. Their products reflect the commitment as a result.

4. I don't know how much adversity will be necessary to force NPs to work together, but we'll likely find out in 2009. Screw Google and Yahoo! and create a news search engine owned by the NPs. Sell contextual ads for searches. Do it right. Create a whole new entity with its own profit goals. If only 20% of any NP's web traffic comes from search engines, it's really not that big of a sacrifice and will likely pay huge dividends. Over time, many of the searches will return anyway through a news search engine. Gannett has topix that would be the perfect vehicle. What in the world are they waiting for? Google has to be laughing at the money they've made on the backs of all the editorial depts in the country.

5. Take their responsibility seriously. There's a real credibility issue when 60% of readers do not trust the news they read in the local paper to be the truth and absent of bias. It grieves me that we may be witnessing the death of the 4th estate in this country--all due to a combination of laziness that has caused editorial departments to cease to be the watchdog for the common man, satisfied in regurgitating talking points that are fed to them--and blatant sychophantism, becoming fawning lapdogs who are more interested in getting praise from those they are charged in holding accountable than having an insatiable desire for truth. We have all entrusted them to safeguard democracy. They are failing miserably.

Even that, though, may just prolong the inevitable. I've heard it argued that one medium, when introduced, doesn't replace the previous medium. For example, radio didn't kill newspapers, and TV didn't replace radio. That's really limited thinking and is quite naive. Such a position fails to recognize a cumulative effect. Radio didn't kill newspapers--but perhaps radio, TV, cable, and the Internet WILL kill newspapers. Each new entrant erodes all previous media to some extent. The real question is, "how much new media does it take to bury an incumbent?" History shows it takes more than one, but in my thinking, "four" may be answer.

Newspapers and the Internet: Opportunities Lost

Sorry, but the edge NPs had is gone. Who, other that cave-dwellers and mushrooms truly considers any NP an unimpeachable source for news anymore? Every study I see shows that most people find them lacking in credibility and don't trust them. Ship's already sailed. What used to set them apart just makes them a "me too" these days.

The 2008 presidential election is a case in point.


On Jan 07 12:10 PM common sense 2 wrote:

> I know that everyone think that papers are dead because of the web.
> What they fail to take into account is that the news on the web could
> come from the back room at some 14 year old house, who thinks that
> he is god's gift as a tell all editor. In a lot of websites there
> are no checks and balances about the turth. Just because it's on
> print on the web does not mean it's true. Look how many "Urban Myth's"
> are sent out in emails and online at the whole truth. Since these
> webpages can be started for less than $100 everyone is a publisher
> if they wish to be.
> I am sure thaere are a lot of hate groups spewing there from of truth
> and half truths to an audiance that will believe anything.
>
> You can find all the rumours you wish on the web, but can you really
> trust the information????? I am sure that there is a lot of dis-imformation
> being presented also.
>
> In the rush to be first to publish information, the internet publishes
> more trash, read by more readers than any newspaper ever has.

>
>
> Just what are we letting the youth see on the internet... how to
> make a bomb, hate groups to brain wash them? Remember that for the
> most part it's a wide open frontier, and because of that quite lawless
> on what is given as fact.
>
> I wonder if during the 1800's that they considered the cities as
> bygone era because of the wide open land available, instead of the
> trash and waste running down the city streets.
>
> Not everyone trust the internet for good reasons, but through 100
> years of publishing most people feel they can trust papers, even
> if they don't always agree with them. They know who to complain to
> and hold accountable for there stories.
>
> That internet site could be just a group of college students from
> around the globe, each haing there own section to worry about. If
> you complained would they even read it? or would it just go in the
> wastecan of email or an automatic trash disposal.
>
> I would perfer my information to come from a reliable site, not just
> a teen editor.
>
> And one other point. If you have all the answers, why not start your
> own internet /or paper product rather than complaining about the
> ones that try. I don't mean just wrinting a column, slanted toward
> what will sell at this time. I am sure if you wrote the praise of
> newspapers no internet site would pay you for it.
>
> my 2 cents worth.

Newspapers and the Internet: Opportunities Lost

Agreed. But there are many examples where there was deviation from the normal NP model; and many times, the new models were met with resistance from guess who? The editors. To them, "new and innovative" is a new special section with the same old crap. Any attempt to do something different was always met with cries from the editorial tight-shorts who took any true innovation as irreverence to the craft.

Web opportunities still exist, but most editors are too mired in self pity to get off their journalistic rear ends to do something new and exciting. It's still not too late for newspapers, but it is high time to get the boring journalsaurs out of the picture and produce interesting content. Let's face it: even the "edgy" products that were supposed to be innovative are quite boring as compared with the truly edgy stuff that is more engaging.

But the problems aren't just with the content. That's a start. Bring me more options with delivery. History will tell us that the beginning of the end for newspapers was the death of the afternoon paper. NBC figured out that people don't stay up until 11:30 PM anymore to watch Leno. Can't NPs figure out the same thing? Logistical hurdles aside, if survival depends on it, they'll have to find a way. Imagine the immediate boost an afternoon paper would have on readership if it were fresh news from a fresh perspective, written for today's audience! They might find that 50% of potential readers don't have time for the morning paper but would appreciate an evening digest.

Telling Statistics on the News Business

As someone who was there in the NP online fray since late '95, I am of the opinion that there are some givens:

* An editorial dept will never be sustained by online ad revenue in neither the current online ad model, or the current editorial newsroom model-at least for most NPs that would be considered local and not national. For that model to work, CPMs would have to be multiplied by a factor of 10.
* The answer is/has always been there, but ego and arrogance have always kept the NP industry from solving their problem. They've never been able to get out of their own way.
* The traditional NP can't be fighting with the online group, whether the online is treated as internal or as an external entity.
* The NP industry has allowed the AP to sell its birth rite to the search engines where the money is being made. What a great deal! NPs pay to create the content, GIVE it to the AP (or pay the AP for the privilege for accepting their content), who, in turn, takes money from the search engines to undercut both the print and online editions of the papers.

The ONLY answer I see (trust me--14 years of experience here) is for the NP industry to create their own news search engine, market it heavily in a collaborative effort, etc. Their NP search engine should allow for search results to be organized by release date. Imagine the ad revenue that would shift from the search engines to the NPs!! Whatever they do---keep the AP out of the equation; they are part of the problem, not the solution.