The Great Debate UK
Despite the report's obvious conclusion, it's worth reading for Puchalla's analysis of the cost structure that newspapers deal with. Here's an excerpt from the press release announcing the report:
Currently, a structural disconnect exists in the newspaper industry's cost structure. Just 14% of cash operating costs, on average, are devoted to content creation -- the primary value creation activity -- while about 70% of costs support the print distribution model and corporate functions. The remaining 16% of cash operating costs relate to advertising sales -- another critical task that drives the majority of newspapers' revenue. The overall imbalance limits the industry's flexibility to overcome competitive threats. ...
Most newspaper companies have moved only slowly away from in-house print production and distribution, said Moody's. Thus, high operating leverage for the industry remains, and is creating intense pressure on cash flow as revenue declines.