Is Corporate Greed Killing Newspapers?

Here’s a continuation of thoughts Dick Jones wrote in his February guest blog on the role of newspapers.

Continuing the discussion on the future of newspapers, I read in the April/May 2008 issue of American Journalism Review a column by newspaper industry consultant John Morton who says that newspapers need to lower their profit-margin expectations.

Oddly, despite all of the bad things that have happened to them, the average profit margin of publicly owned newspapers is 17 percent, he says.  That is very high compared to most businesses.  Certainly way higher than my business.

And papers are used to that profit margin.  So in this economic downturn with classified advertising down by 16 percent and retail newspaper ad sales down five percent—and Internet revenue still amounting to only seven percent of the pie—they want to maintain that margin.  This  they accomplish by cutting costs.  (I recently visited the newsroom of The Chicago Tribune the day after it had been announced that 100 reporters were being let go).

Morton says that short-term high profit margins are being maintained at the expense of the long-term viability of the newsgathering organization, “…with inevitable damage to newspapers’ standing in their markets.”

He adds, “If newspapers hope to survive the Internet transformation, in which their brand name and reputation will be paramount to success, they must stop the ax wielding and accept that the era of exceptional profitability is over.  Or should be.”

If Morton is right, then newspapers could survive—and salvage a role as the “watch dog” of our society—simply by deciding to make money, but less money than before.  That might work if we can repeal the laws of human nature.  And maybe a few newspapers will go that route.  But with even The New York Times—which is shrinking its education coverage from seven reporters to three—succumbing to the trend, what hope is there for small town papers owned by national chains whose managers are judged by the financial performance of the last three months?

Maybe I was too optimistic in my predictions about newspapers before.

And if newspapers don’t survive as news gathering organizations, where will the news come from?  From bloggers?


One response to “Is Corporate Greed Killing Newspapers?

  1. Thomas Jefferson said, “The man who reads nothing at all is better educated than the man who reads nothing but newspapers.”
    Considering the bias, false and misleading “news” newspapers provide, that thought is truer than ever.
    If newspapers hope to survive as credible information sources, their writers, editors, and owners will have to change from advocates to conduits. I don’t think that’s in the curriculum at Columbia today.

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