"Reviving the Economy: What Should Businesses Do?" -The Newspaper Fight For Survival
Friday, March 20, 2009SUSIE GHARIB: The recession has hurt virtually every industry, but for newspapers it's a fight for survival. Many papers are folding; others are filing for bankruptcy because of a big drop in advertising. The "New York Daily News," the nation's fifth largest paper, is attacking the problem in a unique way. Erika Miller explains as we continue our series "Reviving the Economy: What Should Businesses Do?"
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's the middle of the night and printing presses at the "New York Daily News" plant are rolling out newspapers at dizzying speeds. But there's big change coming here in the fall. These older presses will be replaced by state-of-the art new ones that can print every page in close to magazine color quality. Daily news publisher Mort Zuckerman predicts the upgrade will pay off on the bottom line.
MORT ZUCKERMAN, PUBLISHER, NEW YORK DAILY NEWS: On the revenue side, it's beneficial because, "A," we will attract more advertisers if we have more color. Advertisers want to advertise in color. They don't want to advertise in black and white nearly as much as they were willing to do before. "B" we get a higher rate from advertisers for the color. So we think it will enhance our advertising revenues.
MILLER: He also thinks it will enhance newsstand and subscription revenues. And because three older presses can be swapped for one new one, Zuckerman sees cost savings as well. The "Daily News'" focus on enhancing its printed product comes at a time when newspapers nationwide are facing increasing competition from the Internet. More and more Americans are opting to get their news free online rather than paying for a printed edition. That trend has led to predictions that printed newspapers could eventually become obsolete, especially now that there are Amazon's Kindle and similar devices. But analyst Alexia Quadrani isn't writing an obituary for printed papers.
ALEXIA QUADRANI, AD & PUBLISHING ANALYST, J.P. MORGAN: I don't think everything disappears. I don't believe the print product will disappear in aggregate. I think you will definitely have papers that will survive. You know, there's still a demand for papers. It's just unfortunately the business model is not attuned for what really is the reality right now and the reality is that most people are not picking up the paper anymore to gain their news.
MILLER: She predicts big name papers, like the "Wall Street Journal" and the "New York Times," will survive because they offer unique content. She also expects most small town papers will survive for the same reason. It's the mid-sized metropolitan papers that analysts believe are most vulnerable. Denver's "Rocky Mountain News" recently folded and the "Seattle Post Intelligencer" is leaving paper behind altogether becoming a smaller online news source. The "San Francisco Chronicle" has warned it might close, which would mean no daily paper in that city. The owners of the "LA Times," the "Chicago Tribune," the "Philadelphia Inquirer" and the "Minneapolis Star Tribune" have all filed for bankruptcy protection. Media analyst Ed Atorino of the Benchmark Company says many newspaper publishers made the mistake of taking on heavy debt loads when times were good.
EDWARD ATORINO, MEDIA ANALYST, THE BENCHMARK COMPANY: This is a brand new phenomenon. I've followed the industry for, you know, 30 years. You never really thought about balance sheets for this industry, a cash flow business, not a big problem. But now, it is a crisis.
MILLER: Most analysts don't see much hope for the industry until there is a pickup in advertising, because it typically accounts for 80 percent of a paper's revenues. Mort Zuckerman warns the trouble in the newspaper business has serious social consequences, including the loss of important investigative journalism.
ZUCKERMAN: The newspapers can no longer afford that kind of original reporting and longer pieces. And that is the real loss to the community, because that gives them an insight into what's going on and a check, I might add, on public officials that is just not going to be there in the future. So I think that's a huge loss.
MILLER: If he's right, that's bad news no matter how it's delivered. Erika Miller, NIGHTLY BUSINESS REPORT, Jersey City, New Jersey.
