The Demise of the Newspaper Business. Another Corporate America Blunder.
Posted: Monday, April 13, 2009
by Mike Fak
http://mikefak.com
I follow all the news about the newspapers across the country having all kinds of trouble.
We have seen major papers like the Chicago Tribune and Sun Times and chains like the Journal Register go into bankruptcy. There have been papers all over the country including major ones in Denver and Seattle that simply stopped the presses.
I am fascinated when I read how the production costs of printing and the delivery costs have caused a certain paper to cut back or go online only or to fold. Production costs and delivery costs are other words for print paper and ink and the paperboys. Does anyone really believe those are the reasons for all these papers folding?
The real reasons so many papers are in trouble is because they didn't follow any of the best business practices' that are as basic as running a small candy store.
First, you don't buy other papers with no money down and then saddle that paper with an enormous debt that can't be repaid except through growth of advertising revenue and readership subscriptions. You also don't gut the staffs so that you can't bring the same quality of news to the readers. You can't raise advertising rates by as much as 50% when businesses are struggling. And you can't raise the price of a now smaller newspaper at the newsstands and not expect to lose readership.
Yet in almost all the cases of newspapers going under, several or all of these things occurred leading to their closure. It makes a person shake their head.
Locally we are seeing the same thing. A neat little 150-year-old paper was bought out by Gatehouse Media. They cut staff by two-thirds, sold the printing press and even the old building they had on the square.
The price went up for the paper and ads costs skyrocketed in just two years.
Now the paper has to fight to survive and it is being blamed on the recession by Gatehouse.
Gatehouse went on a buying spree a few years back, buying up all the papers they could without a dime of equity. Now the company has become delisted from the stock exchange trading as a penny stock. The geniuses at Gatehouse now have a stock that is worth 8 cents a share with over a billion dollars in debt that Standard and Poors says is unsustainable. Yet as with the papers in Iowa and Kansas that Gatehouse bought, gutted and then closed, they will issue the blame on the economy and the paperboys.
To be sure, the Internet has had a hand in newspapers falling on tough times but the Internet has been around for over two decades and the industry just didn't take a moment's time to prepare themselves for the loss in hands-on readership to that of the computer screen generation.
And now that there is a mad dash for internet advertising dollars, the papers are forgetting what their job always was. It was to deliver the news.
There are so many papers that have all kinds of junk in the Internet versions that it takes a half minute to load. They have audio and visual graphics, giant pop up ads and swirling graphics. They have chat rooms and rate this story' silliness that has nothing to do with what their original mission is: to tell us the news in print, whether on paper or on the web.
I enjoy the competition in my town between the Lincoln Daily News and the Courier. It is competition that makes us all better. It makes us work harder. In fact I root for every in-the-hand newspaper everywhere. I believe there will always be a place and a time to carry that physical bit of news and print and paper out on the porch or to the table or to read in that favorite chair.
I also know that several of the smaller mom and pop papers throughout the land are doing just fine. They are doing just fine because they work hard to improve and expand and not to retract and cut jobs.
In my mind, one of the most telling reasons Gatehouse is in difficult times is because of the way they treat the newspaper business in general. In their annual report that showed disastrous results they often used per store' analysis in their breakdowns. A newspaper isn't a store. It is a newspaper. It deserves to be run like one. Until these mega- corporations, like Gatehouse understand that, newspapers in print will have tough times. But I have my fingers crossed that they will survive. I enjoy holding something that tells me the news. I just wish the news didn't tell me more of my peers have lost their jobs due to corporate stupidity.
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Top-level comments on this article: (5 total)"But I have my fingers crossed that they will survive. I enjoy holding something that tells me the news. I just wish the news didn't tell me more of my peers have lost their jobs due to corporate stupidity."
Class act, Mike. No pun intended. For you, it's not an act. You're a businessman/writer with heart! You shared so many nickle 'n dime basics that were overlooked because of greed and pride. I support and agree with you on the quoted statements.
Thank you! Take good care.Thanks Avis. It just gets me mad when these big corps by an old paper that was making money and then they ruin them, close them and blame everyone but themselves.Mike
I am an oddity among my age group - I love my morning newspaper! I've been a subscriber for most of my adult life. I love the paper and my morning coffee, in any chair I please, anywhere in my house indoors or out. I read a lot of internet news too, but I just can't get over my love affair with the printed newspaper - even though it makes my fingers black!I am with you, Jean. From the local paper to the Wall Street Journal, news takes on a special feel after hearing that snap, something a monitor can never give you.Me too Jean. That's why I root for my competitor because I don't want a world without in hand papers, magazines and books.Mike
Mike, it saddens me to hear about these publications going under. Folks will not even know what is missing.You are right Ken.Decades from now when nothing is in print, people won't know what it was all about.Mike
Hey Mike. You knew I'd have to comment on this!Coming from a family which sometimes has to buy a second copy of the daily newspaper so there's enough to share, I've been following this issue for a long time too.There is a saying in business that your "brand image" is your greatest asset. I believe that there is not a more universally trusted source for local news than a local newspaper, and I just can't believe how many local papers are allowing their great brand image to go to waste. There's a huge distrust of things written on the Internet, and rightly so, so where does the public go to read from a trusted source? The web site of the local newspaper.The problem is that the web site of the local newspaper usually is more like a printed piece of paper than a web site. For some reason, these newspapers are having a hard time transitioning to the new medium of the Internet, but I think it's not only possible, it's inevitable, so they better figure it out.Yep Bruce, they better figure it out.The other day I waited and waited for a major newspaper to load. It was waiting for Digg IT to be loaded that was holding it up.Papers need to learn that there are tremendously neat new things possible on the internet but not all things are for all people.Especially all on the first page.Searchwarp loads nice and clean and fast because it has a purpose and the purpose is words.Maybe they will get it.Maybe not. After all I know of five papers that were making good money until bought out and "streamlined". Now they are gone.Mike
Mike,Some good points here about a fading media. I wonder if some of the problem has to do with lack of interest in harder news. Seems people have gone soft and care more and more about Britney's babies and Dancing With the Stars wardrobe errors. It also may have to do with competition for our over demanded attention. I know I used to read the paper every day, but with everything else I read and watch (business, money, investments magazines; history, science, nature shows) and now three kids later, I just don't have the time for reading the paper, never mind pages and pages that alone would take my time from my other inputs. But that's just my ten cents. Thanks for the article.Good points Jeff. There sure is a lot of news about nothing isn't there.Sometimes I wonder if people prefer real stories or just like to read about personal, celebrity trainwrecks.ThanksMike
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