Managing decline in the newspaper industry is a familiar story

MinnPost photo by Corey Anderson
Both the Star Tribune and Pioneer Press are privately owned, but it's likely that they're seeing single-digit declines in print advertising coupled with growth in digital that doesn't yet make up for the print losses.

I’ll probably read a print newspaper until I die. And that’s a problem for the newspaper business; its most loyal customers are closer to death than to birth.

The nation’s leading newspaper companies made their quarterly financial reports over the last couple of weeks, and the decline in print advertising continued:

  • New York Times: print ads down 7 percent
  • Gannett: print down 5 percent
  • Washington Post: print down 4 percent
  • McClatchy: print down more than 7 percent
  • Lee: print down more than 6 percent.

All these companies are furiously trying to transition away from print and into digital. But print advertising still accounts for the lion’s share of their business — anywhere from 60 to 80 percent of revenue. Although the decline in print advertising has slowed since the panicky days of 2008-09, when it was tumbling by double digits, it shows no signs of actually increasing.

So what most newspapers are doing is managing decline. One way they do that is by cutting costs.

Just last week, the Cleveland Plain Dealer joined several of its corporate brethren in cutting back both home delivery days and staff. The Plain Dealer, which now will deliver to homes only four days a week, cut about 50 jobs from its already depleted newsroom, leaving a headcount of about 110 journalists to cover a metro area of about 2 million. Its owner, Advance Publications, has already implemented the same strategy at newspapers it owns in New York, Alabama, Michigan, Oregon and Louisiana.

Gannett, the nation’s largest newspaper company, last week rolled out a series of layoffs at dozens of newsrooms from coast to coast.

What does this mean for Twin Cities newspaper readers?

Since both the Star Tribune and Pioneer Press are privately owned, we can’t look at their numbers. But it would be surprising if they were outliers, compared with the companies listed above, which collectively own a couple of hundred papers of all sizes from coast to coast. It’s likely that they’re seeing single-digit declines in print advertising coupled with growth in digital that doesn’t yet make up for the print losses.

And yet they could well remain profitable even amidst their long slide. The Strib’s publisher told me last year that the paper was running a low double-digit profit. That’s not the 30 percent margin the paper posted in its glory days, but it’s still a performance most businesses would be thrilled with. If the paper can be content with that kind of relatively modest profit, then it has a chance to avoid the cuts that greedier publishers are making.

Many newspapers are making great strides toward building their digital revenue — both from digital advertising and from making consumers pay to read the news online. But whether they’ll make enough money to continue as vibrant, influential news organizations is a question that ultimately might be settled only after I and other loyal print readers have landed in the recycling bin.

Comments (6)

  1. Submitted by Steve Titterud on 08/05/2013 - 09:23 am.

    “One way they…” (manage decline) “…is by cutting costs.”

    Another way is by selling out !!

    The NY Times bought the Boston Globe in 1993 for $1.1 billion, then a few days ago sold it, along with two small papers, for $70 million (a 93% discount from its purchase price).

    However, the purchase price reported would seem to inflate the value of the enterprise, because the NY Times had to retain the pension obligatons of the employees, said to be about $110 million. So basically, the sale yielded an enterprise value for the Boston Globe of a NEGATIVE $40 million. http://www.slate.com/blogs/moneybox/2013/08/03/pensions_included_boston_globe_sold_for_40_billion.html

    The NY Times sold at a loss to cut future losses. This is also a way of managing decline.

  2. Submitted by John Reinan on 08/05/2013 - 09:37 am.

    Great point, Steve

    Steve T says: “The NY Times sold at a loss to cut future losses. This is also a way of managing decline.” Very true.

    The Times hopes to make it as a national & global brand by charging readers for digital access. Dump all its smaller properties (it recently sold a bunch of regional papers, like the one in Sarasota, Fla., as well as About.com) and focus everything on the Times. It’s been very successful in that so far.

    But even the Times is struggling. Its digital advertising revenue in the last year has been flat or even declining. So it has to keep signing people up to pay for access to its news online. And eventually most people who want to pay to read the Times will have signed up, and then that subscriber revenue stream will stop growing.

  3. Submitted by Bruce Adomeit on 08/05/2013 - 10:32 am.

    $1.1 billion?

    The New York Times ponied up $1.1 billion for the Boston Globe 20 years ago, a transaction that, in retrospect, was incredibly stupid. However, it’s even worse: Adjusting for inflation, that 1993 price equals $1.78 billion in today’s dollars. (The number is from the inflation calculator on the home page of the Minneapolis Federal Reserve Bank, http://www.minneapolisfed.org.)

  4. Submitted by jody rooney on 08/05/2013 - 11:15 am.

    A couple of comments

    Many of the older readers – a lot of the home delivery folks need larger print. My mom reads the news every day but at 61 it is getting harder and harder. I would suggest that if they want to boost sales at home bump the font.

    Comparing sale price data over a 20 year period is not a really valid comparison for businesses particularly large businesses with multiple sources of income. That 93% loss may offset a number of gains elsewhere and you are discounting the revenue generated by the papers in the intervening 20 years. If the Globe was an entity into itself that would be one thing but it was part of a larger corporate structure. Good go though on finding the inflation number at the Fed, now a comparison on the time value of money would also be interesting.

  5. Submitted by John Reinan on 08/05/2013 - 11:38 am.

    The Globe was probably very profitable until 2005

    I’d be surprised if the Times didn’t make back a very substantial share of its $1.1 billion with profits from Boston over the 20 years it owned the Globe. The first 10-12 years it owned the Globe encompassed perhaps the most profitable period in newspaper history.

  6. Submitted by David Frenkel on 08/05/2013 - 11:57 pm.

    WA Post

    Maybe Bazos will buy up all the big market newspapers. I wonder what he has in mind for the WA Post? My suggestion would be to have a section just for ads for lobbying Congress.

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