Newspapers in an Economic Storm

Recent events in the newspaper business make it clear that newsrooms cannot escape market forces.

Stockholders forced the sale of Knight Ridder Inc., the nation's second-largest newspaper chain, with 32 papers. McClatchy Co. announced Monday it would buy Knight Ridder, but said it would sell 12 of the 32 newspapers -- the ones not making enough money and not in growth markets.

And Post editors announced March 10 that the newsroom will cut 80 of 870 newsroom positions. The New York Times, located in the world's financial center, announced on Tuesday that it will stop publishing daily stock listings.

Advertising revenue has fallen at most newspapers because of mergers of major retailers, lagging auto sales, the bankruptcies of major advertisers and a shift of classified ads to free Web sites such as Craigslist. Declining circulation and the defection of young readers to the Internet mean that newspapers can't raise their advertising rates year after year.

Newspapers are part of the civic glue that holds communities together. The turnover in newspaper ownership has been staggering to cities that wake up to find their newspaper sold and to employees who thought their jobs were safe. The Post, like most big-city dailies, has lost circulation -- a nearly 7 percent drop since 2003 -- and advertising revenue has been flat while expenses have risen, so The Post is trimming its budget sails. Newspaper journalism is labor-intensive and expensive; the two big costs are people and paper.

Here's Joe Strupp's (Editor & Publisher) spin on this story -

'Wash Post' Ombud Looks at Industry's Budget Woes

By Joe Strupp

Published: March 19, 2006 7:40 PM ET

NEW YORK Ombudsman Deborah Howell of The Washington Post takes on the newspaper industry’s latest woes in her Sunday column, noting the concerns raised this week about the print medium’s future following stories ranging from the sale of Knight Ridder to her own paper’s plan to cut nearly 10% of its newsroom staff.

But, in the end, she contends the Post will “be fine” if “Post journalists write every story, take every photo, compose every headline and design every page with readers in mind, and the newspaper is printed well and delivered on time.”

Still, before reaching that hopeful conclusion, Howell’s column declares that “recent events in the newspaper business make it clear that newsrooms cannot escape market forces....

“Advertising revenue has fallen at most newspapers because of mergers of major retailers, lagging auto sales, the bankruptcies of major advertisers and a shift of classified ads to free Web sites such as Craigslist,” she continues. “Declining circulation and the defection of young readers to the Internet mean that newspapers can't raise their advertising rates year after year.”

Howell, a former reporter at one of the nation’s best-known family newspaper groups, Newhouse, goes on to declare a changing view of the daily miracle. “Newspapers are part of the civic glue that holds communities together. The turnover in newspaper ownership has been staggering to cities that wake up to find their newspaper sold and to employees who thought their jobs were safe,” she writes. “The Post, like most big-city dailies, has lost circulation -- a nearly 7 percent drop since 2003 -- and advertising revenue has been flat while expenses have risen, so The Post is trimming its budget sails. Newspaper journalism is labor-intensive and expensive; the two big costs are people and paper.”

She does declare “bright spots,” noting that Knight Ridder buyer McClatchy “has increased circulation 20 of the past 21 years, achieved a 20 percent-plus profit margin and produces good journalism. The company did it by being focused and disciplined; it did not bulk up in good times but also did not cut staff or news space in bad times.

“And daily newspapers always have more reporting boots on the ground than other media rivals,” she adds. “Reporting is the essence of journalism, and The Post abounds with talented reporters. It is also, like most newspapers, heavily into the Internet, keeping readers informed more quickly and intensely than ever before. Other new ventures include a commuter tabloid, the Express, and the planned WTWP radio station. All the newspaper gurus I've talked to think newspapers and newsrooms have to change, and journalists at The Post talk about it every day.”

She also offers telling insights from three well-known newspaper industry observers: MediaNews Group CEO and vice-chair Dean Singleton; Tom Rosenstiel of the Project for Excellence in Journalism; and John Lavine, dean of the Medill School of Journalism at Northwestern University. Each shared concerns, but also hopes that the business will prevail.

"It's not that we're a declining business, we're in a changing business. It's finally becoming real in newsrooms,” she quotes Singleton as saying. “We have a generation of newspaper people who want to write and impress our peers and sources rather than impress our readers and get them to read us, whether in print or online. The economy of the newspaper today will not allow us to do that any longer. To operate more efficiently, we will need fewer editors and fewer process people and hopefully more people on the street gathering news."

“There's one big intangible in all this: a paper's connection with its readers,” she concludes. “Readers who feel respected and who love their newspaper don't depart easily.”

Joe Strupp (jstrupp@editorandpublisher.com) is a senior editor.

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