Tuesday, July 1, 2008

Newspapers in Trouble?

Online publishing is cutting deeply into revenues for newspapers. In June 2008, the newspaper business went through one of its most severe retrenchments. Half a dozen newspapers said they would slash payrolls, one said it would outsource all its printing, and Tribune Co., one of the biggest publishers in the country, said it might sell its iconic headquarters tower in Chicago and the building that houses the Los Angeles Times.

The increasingly rapid and broad decline in the newspaper business in recent months has surprised even the most pessimistic financial analysts, many of whom say it's too hard to tell how far the slump will go. Analysts are saying things like, "Newspapers are in survival mode" and "We have very grim expectations for newspapers". The situation is even worse than had been predicted.

Deep staff cuts have been made at newspapers in Maryland, Connecticut, Florida, Michigan, Massachussetts and New Jersey. The (Chicago)Tribune has already reached a deal to sell one of its largest newspapers, Long Island-based Newsday, and is trying to sell assets they own like Wrigley Field and the Chicago Cubs. Tribune's troubles reflect broader problems in the industry, where a deepening economic downturn is worsening losses from a long-term shift away from print advertising toward online, especially in classified categories like help wanted, autos and real estate, where rivals such as Craigslist, Move.com and AutoTrader.com are thriving.

Advertising is by far the most important source of revenue for newspapers. And in the first quarter of 2008, their overall ad revenue slumped 12.9 percent, led by a 24.9 percent drop-off in classifieds, compared with the same period a year earlier.

The industry group that compiles and releases ad revenue figures, the Newspaper Association of America, this month stopped putting out quarterly press releases with the numbers, though it quietly updated them on its Web site "to keep the market focused on the longer-term industry transition from print to a multiplatform medium."

Some say complacency in the industry about the threat the Internet posed is to blame for the current quagmire. Newspapers have historically been "monopolies" in their local markets and protected from "economic realities".

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