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Weekly Update On The Dailies
It was another dismal week for the daily newspaper industry. Here in Minneapolis, the Star Tribune could only muster 6 pages of employment classifieds on Sunday for thye 2nd week in a row (actually it was about 4 with 2 pages of filler). At that level, the paper has got to be inching ever closer to bankruptcy (they stopped making debt service payments on their unsecured debt in June and their secured debt in October). At this point, the only thing keeping them out of bankruptcy has to be the fact that Credit Suisse wants to own a daily newspaper even less than Avista Capital Partners.
Other headlines from the past week or so include:
• The American Press Institute, during a closed-door “summit” conference, concluded that the daily newspaper industry is reaching “full-blown crisis” stage and will most likely be unable to turn things around without outside help.
• A Morningstar analyst reported that McClatchy’s stock “could be worthless.”
• Not surprising to anyone, Sam Zell’s purchase of the Tribune is proving to be among the worst investments in the history of media (maybe 2nd behind Time Warner’s ridiculous purchase of AOL). Revenue in Q3 was down 10% and nothing the company has tried has had even the slightest impact on plummeting readership. Even the Cubs & Wrigley Field, maybe the only two decent assets in the company, are proving hard to unload in the current enviornment. If Zell cannot sell the franchise as expected, he’ll have a tough time with a $500 million debt payment next Summer.
• Businessweek makes the case that a share of the bailout funds should be earmarked for the daily newspaper industry.
• In Rupert Murdoch’s mind, the cause for the decline/death/demise of the dailies can be pinned entirely upon a culture of “complacency and condescension” (thanks Nick for the article). Murdoch states that:
“The complacency stems from having enjoyed a monopoly–and now finding they have to compete for an audience they once took for granted. The condescension that many show their readers is an even bigger problem. It takes no special genius to point out that if you are contemptuous of your customers, you are going to have a hard time getting them to buy your product. Newspapers are no exception.”
• E.W. Scripps slashed its workforce by 400 people, and the Boston Globe did the same by 42 people.
• Phil Mushnik, in a piece in The New York Post, argues that if the dailies fold, they’ll take local TV news with them. I actually think that there’s a lot more to lose than that, perhaps even a healthy, fully-functioning democracy, but the editorial provides an alarming look at how far one has to stretch the definition of journalism to include local TV news these days.
….Just another busy week in the ongoing saga that is the daily newspaper industry.