Newspapers: They’re *still* dying
Moody’s debt analyst John Puchalla analyzed the state of newspapers today. Conclusion: The sun rises in the east, usually in the mornings. In other words, newspapers are still doomed.
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.
“Ultimately, we expect the industry will need to reverse the vertical integration strategy through cross-industry collaboration and outsourcing print production and distribution processes,” said Puchalla. “Although newspapers may lose some of their in-house control over press time, they would also release resources to beef up investment in content and technology.”
While Moody’s does not anticipate a widespread shift by issuers to an online-only business model as the revenue loss is too significant at this point, such a change would meaningfully lower operating costs. Reducing the frequency of print editions is a hybrid approach that may result in cost savings while preserving newspapers’ value-added service for advertisers, said Puchalla.
The upshot? Newspapers must “monetize” their online content (can we think up a real English word instead of “monetize?”) at the same level as print and keep cutting costs, or else their credit ratings will suffer and more of them will shutdown.
News Corp shareholder fails to make the cut
Today’s important lesson for shareholders: If you want to try to change the way things work at News Corp, you’d better make sure your paperwork is in order.
News Corp publicized in a government filing on Thursday an effort by investor Kenneth Steiner to force the media conglomerate to change the way it counts shareholder votes. Steiner outlined the proposal in a letter to News Corp that asked that his proposal be included. Here is what he said:
RESOLVED, Shareholders request that our board take the steps necessary so that each shareholder voting requirement in our charter and bylaws that calls for a greater than simple majority vote be changed to a majority of the votes cast for and against related proposals in compliance with applicable laws. This includes each 65% shareholder voting provision in our charter and/or bylaws.
Why?
Currently, a 1%-minority can frustrate the will of our 64%-shareholder majority. Our supermajority vote requirements can be almost impossible to obtain when one considers abstentions and broker non-votes. For example, a Goodyear management proposal for annual election of each director failed to pass even though 90% of votes cast were yes-votes. Supermajority requirements are arguably most often used to block initiatives supported by most shareowners but opposed by management.
Steiner provided a number of pieces of evidence showing what he said was evidence of News Corp’s chummy board and potential conflicts of interest, all geared toward giving Chairman and Chief Executive Rupert Murdoch carte blanche to do what he wants with the company — shareholders be damned.
There’s only one problem, News Corp and its outside counsel, Hogan & Hartson said in the correspondence that it filed with the Securities and Exchange Commission:
I will prepare and some day my chance will come.
-Abraham Lincoln
http://www.allthequotes.com/Practice.php
McClatchy: What happens to a delisting deferred?
McClatchy Co is one newspaper publisher that knows how to set up a good cliffhanger.
The owner of the Miami Herald and Sacramento Bee said in a press release on Tuesday that it once again meets the New York Stock Exchange’s listing standards.
In other words, it gets to keep playing on the big board.
McClatchy was in danger of having its stock delisted because it failed to meet the minimum requirements that the NYSE has for a company’s stock price.
But now there’s good news, the company said:
The NYSE received approval from the Securities and Exchange Commission to amend the NYSE’s continued listing standard… The average market capitalization requirement has been lowered from no less than $75 million over a 30-trading-day period to no less than $50 million over a 30-trading-day period and the stockholders’ equity requirement has been lowered from no less than $75 million to no less than $50 million. As a result of these changes, McClatchy is now considered in compliance…
The company is also getting a temporary pass from the requirement that it trade over $1 a share. Normally, if a stock’s price falls below $1 over a 30-trading-day period, it gets a finger-wagging from the NYSE. That rule, fortunately, has been suspended for now. As a result, McClatchy has until December 7 to get its share price back up. (It’s at 81 cents now after briefly going over $1 last week.)
Philadelphia papers will charge for Web news
Elton John and Bernie Taupin might have to consider rewriting “Philadelphia Freedom.”Brian Tierney, chief executive of the company that owns The Philadelphia Inquirer and Daily News, plans to begin charging for news online by the end of the year, he said in an interview with a local Fox TV affiliate.
“I think by the end of this year we’ll starting doing what a lot of other newspapers are looking at doing and charging something for it,” Tierney said. “We can’t spend $53 million on newsroom costs and give it away on the back door in terms of things. There will be a small charge for that.”
When asked by Fox 29′s Steve Keeley when such a charge would go into effect, Tierney said “by the end of the year.”
Tierney also said he plans to take on Google over possibly getting money for Philadelphia Media Holdings from its content that resides on the search engine’s site.
Tierney discarded a move to an online-only product, saying that his company needed print journalists to be profitable. He also said he expected to be printing newspapers for the next 20 years.
Lots of newspapers are trying to find ways to get people to pay for the news that they put online, but so many papers have offered free Web access for so long that no one is sure that anyone will keep coming to the sites.The upside: They might make some more money if people feel like they can’t get the news they need and want anywhere else. The downside: If fewer people start visiting the website, advertisers will start demanding cheaper rates online. And it’s not like people will necessarily go back to the print edition either. Print ad sales are plummeting because people are going online for news, and there’s no guarantee that people will reacquire a print habit if they decide that they don’t want to reach for their wallets every time they log on.On the other hand, newspapers don’t have a lot of options. In the case of the Philly papers, Tierney’s company is going through Chapter 11 bankruptcy reorganization proceedings. With the company’s life on the line and a $53 million newsroom to run, what’s the harm in trying?And here’s one other thing to think about: Newspaper publishers are loath to discuss whether and how to charge. If they show up in a room and do that, they run the risk of being accused of collusion by the Justice Department. Should one or two papers do it, and then another paper should happen to start doing the same thing… where’s the proof of bad behavior? Prepare to see more of this, and soon.(Photo: Philadelphia’s William Penn shows off his Hockey colors. Reuters)
Newspapers plot survival as quietly as they can
Newspapers are in the business of making information public so readers can benefit. Newspaper publishers are in the business of revealing as little as possible unless someone springs a leak.
In the case of the two-dozen newspaper publishers who met in the Chicago area to discuss ways to get people to pay for the news they read online, the leak landed in the hands of The Atlantic. Here is an excerpt:
There’s no mention on its website but the Newspaper Association of America, the industry trade group, has assembled top executives of the New York Times, Gannett, E. W. Scripps, Advance Publications, McClatchy, Hearst Newspapers, MediaNews Group, the Associated Press, Philadelphia Media Holdings, Lee Enterprises and Freedom Communication Inc., among more than two dozen in all. A longtime industry chum, consultant Barbara Cohen, “will facilitate the meeting.” …
There was a dinner Wednesday and, according to the agenda, Thursday begins with a quick declaration of goals at 8 a.m., then an 8:10 a.m. session labeled, “Fair Syndication Consortium/Attributor.” …
That first session is followed by “Journalism Online: Presentation on proposed service to charge for access to newspaper content and to license that content that (sic) online aggregators” (the assistance of at least one of the many copy editors sent packing by the attendees might have been sought).
It’s now safe to wager that most attendees, who were scheduled to include Michael Golden of the New York Times, Gary Pruitt of McClatchy and Tom Curley of the Associated Press, will be dragged into charging for at least some online content.
In other words, the papers are trying to figure out how they can charge people for news on the Internet after largely giving it to them for the past 10-15 years. They have to do this so they don’t have to shut down when print advertising revenue gets so low that they can’t afford to stay in business anymore.
Newspapers still fail to understand the nature of the internet and, in doing so, have revealed their elitist attitude, not to mention their lack of business savvy.
Here’s a quick primer:
Information = Free (because that is what draws the audience)
Advertisement = Charge (that is the revenue source)
Trying to charge for subscriptions to online news is ludicrious– it’s like trying to charge for air. Go ahead and try. But most people will take the free air over the charged air everytime. Case in point, WSJ.
It makes much more sense to give the news for free and cash in on a newspapers reputation by charging for advertisement. Even if they just added an adsense ad, they would join the Fed-Ex club in no time.
The only real trouble is, the newspapers have been “double-dipping” (i.e., charging for both) for so long and now they have to suck it up like the rest of world. Elitist pigs, that’s what they are.
And, by the way, their level of writing has gone down as much, if
not more than, the rest of the world– enough, so that they can stop pretending to be better than anyone else. They aren’t.
Period.
Murdoch says no to U.S. government newspaper bailout
News Corp Chief Executive and newspaper empire builder Rupert Murdoch showed up on the Fox Business Network (which he owns) on Thursday to talk about the future, or lack thereof, of newspapers.
Two key points: News Corp’s papers, which in the United States include The Wall Street Journal, the New York Post and the Ottaway chain of local dailies, will not take government money to help them stay afloat; and there is private financing for media companies out there. Here’s what Murdoch said on those topics, and more. (Thanks for FBN for this transcript)
On how newspapers will make money in the future “Newspapers will make money the way we make it now – from our readers, from our advertisers. Newspapers may look very different. Instead of an analog product printed on paper, you may get it on a panel which will be mobile, which will receive the whole newspaper over the air, and be updated every hour or two. All of these things are possible and some of the greatest electronics companies in the world are working on this right now. I think it’s two or three years away before they get introduced in a big way and then it will probably take ten to fifteen years for the public to swing over.” …
On the future of newspapers on the Web: “You’re going to have to pay for your favorite newspaper on the Web. [Free content online]…that’s going to stop. Newspapers will be selling subscriptions on the Web. The whole thing [premium content] will be there. The Web as it is today will be vastly improved, they’ll be much in them and you’ll pay for them.
“But there will be other platforms…You’ll be able to get the guts or the main headlines and alerts and everything on your Blackberry, your Palm or whatever, all day long. People need news. Communities live on news about their communities to be able to live and enjoy the world.”
On whether newspapers will receive a bailout from the government: “We would never take money from the government. We’d give up our freedoms and everything else to criticize or to play our full role in the community. Nothing that News owns will ever take money from the government and I don’t believe even the New York Times would. I don’t think the government would even do it. They’d realize this would be the end of it.”
On whether there is private financing available to media companies: “There is private money. The people who have left, who put in the private money into these highly leverage situations have probably lost them and the banks that allowed them to leverage up, may have lost half their money. That’s life. That’s capitalism.” On mistakes made by print media companies: “There is a case of newspapers rushing on the Web to try and get a bigger audience, more attention for themselves, have damaged themselves. And now they’re going to have to pull back from that and say, hey, we are going to charge for this.” On the Tribune company: “I bet you they’re still making money individually but they can’t pay their interest bills. Bankruptcy doesn’t mean the end of a newspaper. It just means someone is going to buy them from a bank. … [In Chicago] one newspaper will go away. It’s very hard to see how the Sun-Times can keep going. I thought it was hard when I owned it ten years ago.”
all this is a smoke screen,there is no way the democratic party are going to let their best support become none existent.the obama government will give the same amount consideration it is giving to their union supporters,to the new york times etc.
Gannett watchdog will shut down his blog
Gannett watchdog Jim Hopkins has spent a lot of time and money running his blog dedicated to keeping a close eye on, and usually criticizing, the company. Not anymore. Come Oct. 1, Hopkins said on an entry on his blog on Tuesday, he will “stop active management.”Here are the relevant excerpts:
I had planned to post this on July 1, the start of the third quarter. In fairness to my more than 10,000 monthly readers, however, I’m moving up the publication date. …
My plan did not, however, anticipate the rate at which readers would post comments: I am now anticipating at least 50,000 over the next 12 months. For both news-gathering and ethical reasons, I am committed to reading them all.
That would be OK, except the tone of comments shifted in December — for entirely understandable reasons. Many of Gannett’s 41,500 employees came to understand what was taking place in the company. They are now fear-filled, desperate, angry — even suicidal, on occasion. Blogging can be very stressful, of course, Now, I’m finding it may be psychologically harmful, too.
This is not about Corporate winning or losing; this is about adhering to my plan. …
I intend to lock the blog in place, with all content and comments visible. No more comments will be allowed, nor removed. Basically, Gannett Blog will become a point-in-time snapshot of a Fortune 500 company in transition. I hope to find a permanent custodian for the content, in lieu of Google’s Blogger division.
Hopkins was a longtime Gannett reporter who took a buyout from the newspaper publisher. He started the blog as a watchdog project, applying his investigative skills to the company at a level that few other reporters do. His posts are usually critical of the publisher’s managers, and contain their share of vitriol, though not the kind of abuse that Gannett received on the blog from people — usually anonymous employees — leaving comments on the site. Some of those posts have relied more on rumor than fact, but it’s likely that Hopkins has more sources inside the company than anyone else who writes about it.I asked Hopkins some questions via e-mail, but haven’t heard back yet. I will update this post with his answers. I am also waiting for a comment from Gannett spokeswoman Tara Connell, the target of more than a few tomato tosses by angry readers. (No comment, says Tara Connell.)What I asked Hopkins:- How much of a role did money play in this decision? Can you not afford to keep the blog going anymore? How short did you fall of your quarterly/monthly/annual funding needs? (Hopkins previously said he was trying to raise $24,000 a year from various sources to supplement his income, and suggested $20 for readers as a “voluntary subscription fee.” In the spirit of complete disclosure, I paid one, as I am a regular reader of the Gannett blog, the same way that I am of The Wall Street Journal, which I also simultaneously cover and pay or. Either way, we don’t know yet if he met his goal.) ANSWER: Hopkins says he was on track to make $15,000 this year and was happy with that. It was not designed to make a profit, he told me, but to cover costs: “I never intended to make any money off it.”- What psychological harm is it doing to you? ANSWER: The kind that makes Hopkins not want to do it anymore.- What does stopping active management mean? It sounds like you are ceasing to manage it entirely, meaning no more new posts, etc. Do I read you correctly? ANSWER: Yes.(Photo: Reuters)
Keep on rockin’ in the fee world, newspapers
It’s refreshing to read some reasoned thinking about the future of newspapers that does not come from
- Newspaper executives whose cheerleading about how they will survive — somehow — gets undercut by reporting a 30 percent drop in profits one quarter later, or
- Internet Cassandras who want newspapers to burn and die because they hate editors who get precious about how the calling of journalism trumps the rules of free markets and (more typically) because they hold dear the tradition of thinking that newspapers only print lies.
The Financial Times is the bearer of these encouraging if cautionary words in an editorial that it ran on Tuesday:
There are legitimate concerns about the disappearance of general papers. The best dig up stories and provide coverage of local, national and foreign news that enlightens readers and citizens. It is easy to undervalue such news when it has been plentiful for decades, but society would feel its absence.
Perhaps some of the reporting done up to now by for-profit papers will in future be funded by foundations or trusts. But the industry should not lose faith in the free market. When people really want or need something, they will pay for it, one way or another. If today’s publishers cannot convince their readers to do so, they will be overtaken by others that can.
The FT is not saying that all newspapers have a future; it’s saying that the ones that don’t waste your time will survive because you will pay for them. To be sure, there is news that we want to know and news that we need to know (whether he want to or not). The question is: how many of our papers provide that? We would enjoy getting your response.
Seriously dude… don’t care if they go away.. Let’s not stiffle progress to preserve an old business model. If they can figure it out. fine. if not thats fine too.
The new generation does not need newspapers.. it is an old inefficient system to us. We just don’t care and we don’t get sentimental about them either.
Help a starving business reporter
They moved your markets. Now you can move their bank accounts.
The Society of American Business Editors and Writers, or SABEW, is hosting an event next week at Columbia University’s School of Journalism to help business journalists who have lost their jobs or found themselves in other tough straits because of the biggest story on every business reporter’s beat — the financial crisis. Here is the text of the invitation:
Former Wall Street Journal Managing Editor and ProPublica founder Paul Steiger, and New York Times Business Editor Larry Ingrassia invite you to join them at an event to benefit business journalism and the Society of American Business Editors and Writers (SABEW).
SABEW needs your support to help displaced business journalists and train business journalists for the digital age and new media landscape. Among SABEW’s programs are a revamped job listing site, a market for freelancers to find work, a mentor program for displaced journalists, teletraining on multimedia and business journalism topics, scholarships to attend conferences and training, and a revamp of our website to provide more robust services to members.
The event is free but donations to the SABEW Fund for the Future are requested as SABEW must raise $50,000 by August to qualify for a matching amount from four foundations.
Many of the business reporters who have recently lost their jobs worked at newspapers and magazines that have been shedding employees right and left because advertising revenue is plunging. Some of that is because of the recession, but much of it is because advertisers see fewer people reading those publications and are moving their ad dollars elsewhere.
Newpapers are obsolete, I surprised they lasted this long. you should pick a theme and commit to it, make yourself a media periodical
discuss music, movies, gaming etc. you will then become more viable with a larger consumer base
condense the nonsensical local stories, no on really cares about the flock of geese that nested on the highway or whatnot. no once cares about beatrice turning 150 years old. (hell beatrice doesnt even know she is 150)
if your content is more appealing, more people will purchase it, and you will get more money for ads, due to a higher consumer base simple math
but as for the news, its been done, daily at 5 and 10 repeated at 1
and can be found 24 hours a day on certain channels and online
your days are numbered paperboy! evolve or get out the way!
Dow Jones cuts back on benefits
The Wall Street Journal has been making plenty of hay about its rising circulation and the growing number of people online who are using the site, but parent company News Corp is cutting costs as the whole media business suffers from the recession. To that end, here is Dow Jones Chief Executive Les Hinton’s Monday memo on some benefits cutbacks that the company is instituting.
Dear colleagues:
Many companies are resetting their benefits in reaction to the economic challenges of the moment. Dow Jones has felt these same challenges and our business is far from immune to them. Unlike other media companies we have been able to avoid making changes driven by short-term necessity.
What we have done over the past year-and-a-half is to undertake a deep review of our entire benefits program. That review is complete, and today we are announcing a major change in our retirement programs. We are modernizing our approach to retirement savings and aligning our program with the market, News Corp. and our view of the future for Dow Jones.
Key changes include:
The Money Purchase Plan will be frozen as of July 3, 2009. The 401(k) Savings Plan will be enhanced. The net effect will be a lower rate of company contributions.
The retiree healthcare subsidy will be curtailed for most employees effective Jan. 1, 2010. Current retirees or those employees who on Jan. 1, 2010, will be age 50 with at least 5 years of service or have 20 years of service regardless of age will continue to be eligible for a subsidy in a revised retiree healthcare plan.
i keep hearing all this talk about the demise of the news paper industry,i am not a betting man but would risk a wager any time on the survival of news papers like “the new york times for services rendered to the democratic party.how will it be done?it will be called a national institution that can not be allowed to disappear and it will receive a yearly superscription from the government.like the auto unions for their continual support it is naive even think that any policy that does not benefit them would even be considered.