Tuesday, December 9, 2008

Untold story: Newspapers still profitable

Reports of Tribune Co. entering into Chapter 11 and The New York Times being forced to mortgage its new headquarters, overshadow the fact that most newspapers are still making money. Santa Cruz Sentinel Editor Don Miller writes in his column:
    ...[T]he untold story about newspaper companies is that most continue to be profitable -- although today they're not making enough money to satisfy lenders and investors. According to industry analyst John Morton, revenues at publicly traded newspaper companies for the first nine months of 2008 are down nearly 11 percent and operating profits are down nearly 40 percent. Overall operating profits for these companies are slightly above 11 percent -- about half of what they were at the industry's peak, reports Morton.

    Nevertheless, many businesses -- hello, automakers! -- would crawl over broken glass for such a margin. Profitable businesses are nothing to sneeze at in the current economic climate. This would suggest the industry, although financially weakened, indeed does have a future, even as it adapts to changes in how readers and advertisers read and use their products.

4 comments:

Anonymous said...

While Miller is correct, the future for newspapers isn't bright because they haven't been able to make money from the Internet. Their websites just don't bring in enough dollars to support their current newsrooms. In hindsight, it seems newspapers were premature in teaching their readers to find news online without having a game plan for their online operations. Newspapers have traded their print markets, where they are one of maybe two or three players, for the online marketplace, where they are one of a several million websites.

Mooncloud said...

The newspapers had no choice but to put their news online - for competitive reasons. The media technology environment gave them no choice as our culture rapidly embraced personal computers and the internet. Without newspapers and their reportorial/editorial infrastructure the web portals such as Google and earlier on, Yahoo, could not afford to acquire (smooch off) the news offerings of the print media and give "users" the content.

Deregulation all around combined with publishers having to go public in stock ownership (and capitalization) and the rapidly revolutionizing economic environments globally have broken down the old media structures.

Anonymous said...

Miller is misleading. The only reason that American newspapers have been able to maintain that profit margin of 11 percent -- half of what it was a few years ago -- is that they have been relentlessly firing journalists, closing bureaus, shrinking the size of their print editions and selling their office buildings.

This is not sustainable. It is the equivalent of burning your furniture for firewood.

Anonymous said...

Singleton's approach is to "harvest" a paper's assets -- take as much money as possible with deep budget cuts and high ad rates -- and then let the rotting remains die a slow, miserable death.