The 2009 Newspaper War: Where Are The Generals?

Edison Plant
The newspaper war in 2009 is not among  competing newsrooms and it's not a squabble over scoops. It's a war against declining revenue.

Total ad sales reached almost $50 billion a year as recently as 2006. Last year the figure dropped to $38 billion. This year, with another 17 percent drop expected, at least one estimate forecasts total 2009 sales at $31 billion.

Total newspaper employment is down, but the drop is not keeping pace. New numbers, which should be available in April, are likely to show 5,000 fewer jobs for reporters, editors and other journalists — for a new total of around 47,000 remaining news jobs at newspaper companies.

But with circulation declines and rising newsprint prices, the falling ad revenue means executives of newspaper companies will have to make more cost-cutting moves, and make them soon.

For several years, these top executives have made modest course corrections. For example, The New York Times, after spending $1 billion for a new printing plant in Edison, N.J., closed the plant last year. The photo above, though, shows the Times company has not had much luck getting a tenant. (Photo by Lauren Shay Lavin.)

In Philadelphia, the owners of The Philadelphia Inquirer and Daily News haven't sold the headquarters building in Center City. If they had done a sale-leaseback, the bankruptcy filing for the holding company might have been delayed.

Profits are so low, that a US Senator, Benjamin Cardin, has proposed legislation allowing publishers to reorganize as nonprofits.  Any income they can earn would be free from taxes. 

All the noise about the end of newspapers ignores one fact, though. With $30 billion in ad sales, it is possible to make a profit. It's not possible to make a profit while paying for big empty printing plants or offices, while continuing to employ 50,000 journalists, or while moving slowly to take other needed steps.

Some companies will move fast enough to find a cost structure that works at the new revenue levels. Some companies will move fast enough to innovate new product lines, on and off line. A very few companies will do both. Those will be the companies that will start to collect larger and larger shares of that $30 billion.

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2 Comments

Filed under Business models

2 responses to “The 2009 Newspaper War: Where Are The Generals?

  1. peter tobia

    Carl,
    The generals are in the tent trying to figure out the plan of attack. It’s pouring rain, there’s a leak in the tent and their imaginations are blank because they’ve never fought a battle like this before. Hope all is well.

  2. Florence

    I am wringing my hands over the possible demise of newspapers. It’s more than headlines. It’s information of many interests. If I find something I want to read on the Internet, I print it out. I need the feel of paper in my hand when I read.
    Florence Shay

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