- McClatchy's September print advertising sales dropped 23 percent year on year (YOY).
- The entire industry is forecast to lose 16.5% of its annual ad revenue from 2007 to 2008.
- Q2 industry statistics show overall revenue dropping 13.9%, with a whopping loss of 27% YOY in classified.
- Gallup's polling shows that 52% of the American public do not trust news media.
As it turns out, they could get worse, and quite suddenly. Like the housing bubble and the financial crash, the signs are already there, and visible to those paying attention. It could be the credit crunch that puts the capper on the trends above and drives an entire industry sector over the brink. It couldn't happen to a more deserving bunch.
To understand why and how, a brief detour into the financial model of newspapers is necessary.
The Ups and Downs of Subscribership
Newspapers are the paradigm case of a subscriber business model. Financiers generally love subscriber business models because of their predictability. People being creatures of habit, they tend to persist in their behaviors and in their purchasing habits, once established. A stable subscriber base can turn into a reliable cash cow, and such businesses are often able to attract equity and debt financing on favorable terms.
Subscriber businesses can get even better as they grow. A growing subscription base means corresponding increases in some variable costs: newsprint, ink, physical distribution. However, the fixed costs associated with the business - e.g., print plant, news room and other staff, office space - are amortized over a larger revenue base. This nice little bit of leverage means margins should grow as the business expands. A business valuation that looks at the future cash flows thrown off as margins increase can be quite attractive, let's say.
There's a catch, of course. Subscribers don't just magically appear and sign up. The reality is called 'subscriber acquisition', whether done by advertising, annoying phone calls, or kids knocking on doors in the old days. So before you can get the annuity income of the subscriber model, you have to pony up cash in advance to attract them. But, if you can make a good enough case of their long term value, you can likely get financing to not only acquire them the hard way, but even buy them outright (in other words, do a takeover on another newspaper). Remember, the bigger you get, the better the margins, so a consolidation of similar subscriber businesses makes sense on the face of it.
But then there's the word that subscription businesses, and their financiers, hate: churn. Churn is subscribers that leave - moved away, now use the Internet instead, or cranked off at the latest editorial. For whatever reason, they're gone, and with them the future cash stream ascribed to them. So to keep the business at the same size, they must be replaced. Incurring another subscriber acquisition cost, which just as before has to be paid up-front. That cost may even have increased, if the same market forces driving up churn are also making it harder to find new subscribers.
Churn is what analyst types call a highly sensitive variable in the on-going financial model of a subscriber business, and in its long-term valuation. If churn goes too high, all of the sudden the favorable model begins to run backwards. The acquisition costs that were paid up front no longer yield enough discounted cash flow over the long run to cover them. This nasty reality may not appear for some time after those costs have been sunk.
If keeping the subscriber base growing, or even steady, can no longer be financed, then the leverage model also starts to run backwards. Fixed costs eat up margin, cash flow per subscriber falls, and being able to cover new acquisition costs becomes an ever-receding goal. Slashing at fixed costs may delay the downward spiral for a while, but if it further damages the value of the product, the churn rate may rise further.
The Debt Bomb
All this should sound familiar to anyone with a modicum of business savvy who's been following the newspaper industry, or any of the legacy media for that matter. And it's been going on for several years, so why an impending crash just now?
Let's go back to that revenue forecast for the threats to the industry's ad bookings:- Retailers who are seeing consumer demand dry up...
- Auto dealers who can’t sell cars because many potential buyers are postponing purchases...
- Real estate agents who can’t find buyers because no one knows what anything is worth...
- Employers who aren’t buying help-wanted ads because their businesses are shrinking...
- Retailers... struggling to borrow the money they need to make payroll and stock their shelves.
- Auto dealers ...scrambling to finance the fleets of unsold vehicles clogging their lots.
- Real estate... buyers... generally have found mortgages difficult or impossible to obtain.
- Employers ...report difficulty borrowing the working capital they need to buy raw materials or make payroll.
That's all a result of the credit crunch, and it's the force that may put the newspaper industry down sooner than later.
Return to the deteriorating business model above, and consider the problem of debt. If the newspaper in question went on an acquisition binge, either a subscriber or a whole company at a time, they likely sold bonds or took out bank debt to pay for it. In so doing, they (and their lenders) made a futures bet on the value of the subscriber base built with those funds. Right now, due to Internet competition, churn and decreased advertiser demand, those bets are looking about as good as a portfolio of BBB-grade mortgage backed securities. We're not talking trivial sums: Tribune Co. is still carrying almost $12.5 billion in bond and bank debt after it was taken private late in 2007.
Spent profitably or not, the interest costs on the debt must be paid, and that digs ever more deeply into free cash flow being generated by the business. That's already too much for a lot of papers to bear. The Minneapolis Star-Tribune, the Journal-Register paper family, and the Philadelphia Inquirer and Daily News have all skipped interest payments in October. Technically, any of these papers could now be forced into bankruptcy by their creditors, if they thought there would be any value to be realized by doing so. Instead, they are largely renegotiating the debt terms to require the sale of assets such as real estate, or to place constraints on dividend payments or operations.
But that's still not the big problem.
The Crunch
Just like any other business, a newspaper has to roll over its debt periodically as loans and bonds come due. Sooner if it's a bank loan or line of credit, usually later if it's in the form of bonds. Recall that many of these bonds were issued, or loans and credit facilities extended, a few years back when credit was running like water, and when a modest, mid-2000's uptick in advertising revenue made it look like newspapers might have weathered the storm.
Things are rather different now. It would be hard to imagine a more hostile credit environment for a borrower who's losing money and whose fundamental business metrics are in deep trouble. This is already forcing newspapers whose debt is coming due to make large concessions to persuade lenders to carry them.
Back in 2006, the McClatchy chain took out $3.75 billion in bank loans to buy a string of papers from Knight-Ridder, which was exiting the business. In spite of selling off some assets to cover the loans, McClatchy still carries $2.1 billion in debt on its books, of which nearly $1.2 billion is term bank debt. At the end of September, the company was forced to agree to new conditions on the debt from its lenders. In spite of some sighs of relief that the company had survived the crisis, Moody's continues to rate the company's debt below investment grade, and the liquidity of the overall business as 'speculative'.
The details of the McClatchy loan rewrite make instructive reading:"The pricing on all outstanding loans was increased to include interest at the London Interbank Offered Rate (LIBOR) plus a spread ranging from 200 basis points to 425 basis points, based upon the consolidated total leverage ratio.... increased to allow indebtedness of a maximum of 6.25 times cash flow (as defined in the Amendment) through the Company's fiscal quarter ending December 2008; stepping up to 7.00 times cash flow from the fiscal quarter ending in March 2009 to the fiscal quarter ending in September 2010; and declining to 6.25 times cash flow as of the end of each fiscal quarter thereafter."
One thing to notice here is the pegging of the loan to LIBOR, the London interbank lending rate which has fluctuated all over the place during the credit crunch. McClatchy now has no defense against short-term interest rate variations; they have effectively taken out an ARM on their entire business. The other interesting point is a cap on the borrowing as a multiple of free cash flow in the business. This goes up at the start of 2009 (one might guess as a result of already foreseen declines in cash flow) but then back down in 2010. So it's not just an ARM, it's an ARM with a balloon two years away.
Nor is McClatchy the only large newspaper chain in this mess. At the end of September, Gannett drew $1.2b from a bank revolving credit line, raising its borrowings under the facility to $1.9 billion. Why did it do this? From the filing: "...to repay commercial paper at scheduled maturity." Gannett is seen as one of the most stable companies in the business, but also being forced to replace longer term bonds and commercial loans with spot rate money. Gannett has a total of $4.32 billion in debt outstanding, so there's plenty more that will have be rolled over in the coming months.
The Tribune Company, now private, no longer publishes its financials, but its bonds are rated as junk. It's now scrambling to sell properties such as the Chicago Cubs to cover the bonds due for payment in 2008. The next big tranche of this debt must be covered in the fall of 2010. And the bonds of the once-mighty New York Times have been reduced to junk status as I write this.
The Crash
And here is where the downside of the subscription model becomes a horror. Unlike a manufacturing business, a newspaper can't just lay off workers, shutter factories, and hope for a better day. If the paper doesn't come out on a schedule, the business will collapse overnight.
And yet, the papers are in this mess because they borrowed to acquire subscribers based on a faulty notion of their long term value. Taking more money to acquire more non-profitable subscribers is just a way to dig the hole deeper. If taking outside money for acquisition is a losing proposition, then using internally generated cash for the same purpose will also destroy value long term.
Given this, how do the lenders ever get repaid? There's only one answer: Milk the current subscriber base as long as it exists. By slashing at fixed costs, and by eliminating the cash demands of new subscriber acquisitions, the business can be made to yield free cash flow as its size declines. But it's largely going to be covering debt service, not rebuilding the subscriber business or creating equity value for shareholders. (It seems the market agrees with me: 42% of McClatchy's share float is sold short.)
Newspaper subscriber counts have been falling even as they've been spending on acquisition to replace churn. With funds for acquisition drying up, look for those counts to drop even more precipitously. Newspapers will be trying ever more desperately to shift to the Internet or other businesses, looking for any way to get their cash flow positive before support from the old business dries up forever. Don't believe me? Try an industry insider who's drawing similar conclusions.
Putting In The Boot
One of the reasons that churn is up for the newspapers is the political bias. I'm with Orson Scott Card on this. The industry has abdicated its social function to support a well-informed electorate, and become a propaganda arm of the left. In so doing, they have sullied their brands and lost the trust of their readers. The economic consequences of this default of their value proposition are now becoming apparent. The Internet and an economic crisis together would be bad enough, but the industry has only itself to blame for the egregious behavior on display for the last few years, and at its worst right now.
This is a blog, and I make no vacuous claims to freedom from bias. You can check everything said above from public records, but I do have a dog in this fight. These people deserve to lose, and if the newspaper industry crashes as a byproduct of the economic crunch, then it's a silver lining for a dark cloud. They have done their level best to trash the political system of my country, and I will dance on their grave when they go.
Is that clear enough?
If you're part of the over 50% of the populace that have had it, then it's time to put in the boot and accelerate the crash:- Cancel your subscriptions, if you haven't already.
- If you buy advertising, move it to the Internet, and find out how to meet your customers 1-1.
- Keep your ads and clicks away from Internet properties owned by the papers, e.g., Careerbuilder, cars.com and about.com.
- Should you provide product or service to a newspaper, cut their credit or demand cash up front. You'll find plenty of reasons that this is prudent business.
- Help an older person find what they need online instead; they're nearly the only demographic the papers have left.
When the lights go out at the New York Times, our work will be finished.
I know a guy who is so ticked off at papers that he keeps subscribing, then canceling his subscription a month later. He then lets them deliver the 3 months of free service they offer to keep him, canceling again before he has to pay them. Lather, rinse, repeat. He is trying (though I don't think he can do it by himself) to bankrupt his hometown paper.
Like you said, couldn't happen to a more deserving bunch. Now, how do we bankrupt MSNBC?
Great post... I agree that major newspaper chains will become insolvent in 2009. Most likely McClatchy will be among the Biggest Losers in 2009. Over at my blog McClatchy Watch I document the McClatchy Train Wreck; I invite readers to stop by to witness the McClatchy collapse.
Big News services (very poorly) a very important niche, which is dissemination of basic facts to the populace.
Who steps in? (Sorry, Totten, been meaning to hit your tip jar for years, but I have new twins, etc.)
That last graf makes me feel bad, but it's honest.
When the lights go out at the New York Times, the real work is only beginning.
Well said.
According to the newsosaur article linked the publishers have been reaping amazing profits. If such had been the case in any other idustry, there would have been editorials denouncing the greedy capitalists.
I'm very happy that liberal media are under pressure (like the movie and music industry). It will probably take another 3-5 years for book reader technology to mature, and then p2p networks can start taking a serious bite out of book publishers as well. I will be more than happy to apply their socialist principles to their own products.
While I have no problem w/ your analysis of the economic model I have to disagree on tow issues you raised. One, the Newspaper chains are not all in thrall to the left. The Chicago Tribune is still the conservative paper in Chicago. There are numerous right wing papers in my area that work on the same economic model. They to will fail for the larger economic issues you cited you.
If I understand you correctly you are looking to the collapse of all newspapers. If people follow you plans that will indeed happen. So two is it your intent to destroy all newspapers? That would be a real disaster in that political parties once owned newspapers to further their political aims. I suspect as papers collapse parties will step in to own them. I would think that is not something you in favor of as you cite ways to keep the population educated.
Tim Oren: The industry has abdicated its social function to support a well-informed electorate, and become a propaganda arm of the left.
Milton Friedman: The social responsibility of business is to increase its profits.
I'm with Friedman on this one. Newspaper people don't owe you a damn thing unless you're a shareholder.
Ironically if a President Obama brings back the Fairness Doctrine and applies it to the internet (as some have speculated), newsprint may see a massive resurgence if only because its could be the only bastion of free thought left.
Mr. Donoghue;
You are correct in the most immediate sense. But a business can't serve its shareholders well unless it stays in business. The "social function" that Mr. Oren notes was a key element of a successful business model for newspapers. Further, any business that has the attitude "we don't owe you a damn thing" to its customers is not a business that's going to last.
The Chicago Tribune is still the conservative paper in Chicago.
Perhaps relatively, but not objectively. In response to Heller, the Chicago Tribune called for Repeal [of] the 2nd Amendment
So do we adopt a Brit model where there is nothing resembling "objective journalism?" Hmm...bit of a figure of speech that.
Gallup's polling shows that 52% of the American public do not trust news media.
You'll notice that newspapers and news media are not synonymous. The steady decline in confidence in the mass news media over the last 20 to 30 years has accompanied the rise of cable news, internet news, blogs, radio talk show news, etc., etc. As we have gotten away from the Walter Cronkite + New York Times dominance of news media toward a more fractured, democratic, partisan-based news media, confidence has dropped. It is probably at an all-time low right now, just as newspaper readership is at an all-time low. Clearly the source of the lack of confidence has to be elsewhere than in newspapers.
Newspapers will certainly disappear in the near future because of changes in communications technology, not because readers have come to the conclusion that newspapers are untrustworthy and are instead flocking to the trusted internet.
One of the reasons that churn is up for the newspapers is the political bias.
The implication of this theory would be that once upon time newspapers were not politically biased but has since become so. Where now are news-consumers turning for un-biased news? If you are correct, there must be a potentially hugely lucrative news-source for un-biased news that would get high-confidence numbers in Gallup.
You had me until "They have done their level best to trash the political system of my country, and I will dance on their grave when they go," and then your right-wing we're-gonna-lose-and-someone-has-to-take-the-blame-for-it attitude revealed itself, as I expected.
Name, you're mindreading, and that was what we call a drive-by. Please try to do better -- or take a seat on the bench.
Lots of stuff here and not enough time to respond to all. I'll pick a few points that haven't been engaged by others.
mark #12: The confidence drop is across all the MSM. The newspaper business is such a large component of that category that drawing the conclusion...
bq. Clearly the source of the lack of confidence has to be elsewhere than in newspapers.
...seems rather a reach. Among other examples, try the comments on this post of Jeff Jarvis' for some feedback from the customers. Newspapers do have the advantage - from my point of view - that there are a number of 'pure plays' where the financial situation can be analyzed, while (for instance) the cable networks are part of media conglomerates with lots of different properties.
I'm not suggesting that ideological bias is the sole or even dominant reason that newspapers are in trouble. I was pretty clear on that in the OP, and more reasons are brought up in the comments. It's not a case of either/or, it's...
The Internet has become an effective competitor AND...
Advertisers' budgets are in trouble due to an economic downturn AND...
The newspapers over-leveraged when credit was cheap AND...
The credit crunch means they will have trouble rolling over debt AND...
Perceived ideological bias has caused part of their customer base to leave AND...
Their customer demographic is starting to (literally) die off AND...
Younger demos are growing up with different habits for obtaining information.
The bias has a couple of outcomes. It has the marketing effect of tarnishing the brand/masthead. All of the problems above except the bias could be true, and the business model could be hurting, but the potential for a bounce-back could still exist if the company generally enjoyed the goodwill of its erstwhile customers: you find a way to move the brand onto other products and services. When you've got examples like #1 above, or a friend of mine who says "If the paper says the sky is blue, I'll go check", then that brand equity has been impaired, and the industry doesn't have the time to rebuild that trust.
The second outcome, at a personal level, is that it takes a competition that has been variably academic and professional over the years (I've been in new media in some form since the mid-80s), and makes it into a blood sport. At least I'm willing to own up to it.
I do suspect that the outcome suggested in #11 is part of the answer. It won't really be my all-encompassing newspaper apocalypse (though it may look like that from the POV of shareholders). There will be some survivors, they will (finally) be honest about their point of views and bias, and it will be a much smaller industry.
We've been there before - go back to the mid-19th century, and every middling sized city had at least two papers with their political stances openly stated, and reflected throughout the content. The business logic given in the OP, among other forces, caused consolidation over a century or so into papers that at least postured as having shed the political leanings. That's a pendulum that can and likely will swing back. Probably a few national scale voices positioned across the ideological landscape, with a tier of more localized outlets a la Jeff Jarvis' ideas. (The current Examiner business model bears watching.)
Keep in mind that newspapers are used for many other subjects beyond politics. Things like ads, travel, non-political content (restaurant reviews, travel-related articles, entertainment news, etc.) will still continue.
So they won't die, but will shrink to a small fraction of their previous size.
Also, newspapers consume a lot of paper, so the 'green' fad, ironically, will lead to a cancellation of subscriptions. I think 90% of paper consumed by the average household is newspaper. This amounts to millions of tons of paper per year, which are hundreds of thousands of trees per year.
So the best way to kill them is to join up with 'green' nuts and get a 'paper tax' enacted. Think of the irony there - one left-wing nut faction destroyed by another.
Note that the biggest impact on political brainwashing is the television media, not the newspaper media.
The low-IQ, lazy people most likely to get brainwashed into voting Democrat tend to be TV watchers, not newspaper-readers. Reading a paper, and going to the politics sections rather than the sports/entertainment/leisure section, takes more effort than watching TV.
Again, the strategy of 'cancel newspaper subscriptions because they are left-wing' is not that effective. That still leaves a portion of the population that actually wants it that way.
The strategy of 'cancel newspaper subscriptions as they destroy 250,000 trees per year' is better. It will turn the green nuts onto the newspaper nuts, as there is no effective counter-argument.
Leftist cannibalization is the best sort.
The idea that the greens would balk at hypocrisy has been tried and failed any number of times.
Per #5, how can the linked newsosaur post about high newspaper profits be correct if my crash-and-burn forecast is as well? The remainder of the newsosaur post does go into the tricks used to prop up profits, some of which I alluded to, and which are now running out. My best reply, though, is to lay out some of the logic I used when spelunking through the newspapers' corporate financial statements to develop my thesis. (I would have put some of this in the OP, but it was too long already.)
The best thing to have, of course, would be some actual churn, margin per sub, and acquisition cost figures. You can bet the newspaper know these. A decently managed subscriber business not only will track them in aggregate, but will stratify cost, churn and margin figures by source of subscription, age of account, and any other variable that seems relevant. Looking at them comparatively, or as a time history, is one of the most important tools for enhancing profitability overall, and figuring out where to grow and where cut back. Given how sensitive this information is competitively, and to future values, it never gets published openly. You have to make deductions based on metrics that must be publicized.
One of the most interesting is balance sheet 'goodwill'. Here's a nice layman's level article about goodwill The basic notion is:
bq. When recording a business acquisition, a company is required to recognize the assets acquired on its financial statements at fair market value.
Any excess of what the company paid beyond the fair market value of the assets acquired is goodwill.
So if one newspaper buys another for a price beyond its book value, the difference goes onto the balance sheet as 'goodwill'. The argument is the buyer is rationally paying a premium because it believes it can turn that asset into value down the road. It used to be that goodwill was amortized over 40 years, but that left too much room for balance sheets inflated by goodwill that was no longer 'good'. So in 2002 FASB changed the rules. Instead the business has to conduct at least an annual impairment review on its goodwill, and mark down the value if it looks like it can no longer be supported by future earnings potential. This has a downside that it can make nominal profit/loss 'lumpy' based on one-time events, but from an analytic point of view it helps because at least once a year you will see the conclusions drawn by an internal assessment of the ongoing business.
When buying a newspaper, almost all of the goodwill value will be due to subscriber lists and the 'masthead' (brand). Any physical plant assets will be included in the 'book' value anyway. So logically, the goodwill from buying a paper is a proxy measure of the potential future cash flows from the subscribers. As described in the OP, those are an outcome of churn and future margins (the acquisition cost is embedded in the goodwill and other purchase price.) So when the accountants and auditors do their assessment on the value of the goodwill, they are in effect giving us a surrogate measure for the business' own estimate of discounted cash flows from that subscriber base. They don't have to tell us the raw churn and margin statistics, but they do have to render an opinion from calculations that are inevitably dominated by those numbers.
What do we find? Take the current whipping boy of the industry, McClatchy. In late 2006, they bought the newspaper assets of Knight-Ridder, and leveraged up to do it. There was some stock in the deal, and they then disposed of a few papers, but when the ball stopped bouncing, McClatchy's accountants listed $3.56 billion in goodwill at the end of 2006, which should have some relationship to their estimated discounted cash flows from those subscribers in the future.
Then what happened? At the end of 2007, McClatchy listed only $1.04 billion in goodwill. In both Q3 and Q4 of that year, it had massive write-offs of goodwill, attributed to impairment of the mastheads and other assets they had bought. Since most of that value must be attributed to the health of the ongoing subscriber base, we're given direct evidence that margins and churn must be deteriorating rapidly, the more so since the company felt obliged to take write-offs in two consecutive quarters. This ties back directly to what newsosaur is saying about deteriorating ad revenues, which speak to margin. The company is next scheduled to report on goodwill impairment at the end of 2008. It will make interesting reading.
What about a healthier company? At the end of 2007, Gannett listed goodwill of just over $10 billion. In Q2, its internal review led to a mark-down to $7.87 billion. This was also an 'off cycle' review, due to "softening business conditions within the company's publishing segment..." Gannett will also have its next annual goodwill review at the end of 2008. The remaining goodwill represents better than half the company's listed assets, so it could be interesting.
Another financial worth investigating, but harder to describe simply, is the company's cash flows. Actual cash position, and the degree of management discretion over its use, is what you want to know when a company's back is to the wall. (Notional depreciation and amortization, among others, don't matter if you won't survive to see the next fiscal year.)
I like to find something akin to free cash flow though (as the wikipedia article describes) it's not always a formulaic process because you may be seeing side-effects of overall business growth or shrinkage or lumpy capital investments. Take out taxes, which are not discretionary, and you've got some measure of the actual cash that management can employ without hitting the equity or debt markets. Then take out interest and any other debt carrying costs. What you've got left is what management actually gets to use to build the business or keep the wolf from the door. If the debt service gets large compared to the discretionary cash flow, you're set up to get squeezed if either your debt costs go up, or your margins go down. Without going into details, by those measures McClatchy is in deep trouble, Gannett looks pretty good until they have to roll over debt, and NYT looks better because they didn't leverage up.
Oh, yeah, the latest subscriber numbers just came out WSJ and USA Today are hangin' in there. Everyone else is dropping.
I think trumpeting the compelling line of "Newspapers consume 250,000 trees a year" is compelling.
Greens are hypocrites, to be sure, but keep in mind that most leftists don't know that newspapers are leftist. They think the media has a 'right-wing bias' if 20% of the media is right wing.
So getting leftists to turn against newspapers, particularly under the 'green' fad, could be useful.
"Newspapers consume 250,000 trees a year."
Here is a link that also suggests liberal papers are losing readership, but conservative papers are not. Link (I disagree w/ the classification to the extent that I would describe the Washington Post and Chicago Tribune as centrist)
I think there are more factors than simple ideological preference though. For one thing, there are more liberal papers and I think they are increasingly in competition with each other in a way they were not before. If Tim's prediction is correct ("a few national scale voices positioned across the ideological landscape"), then more liberal newspapers will fall.
How sad that those who would not hesitate to defend the Second Amendment would happily abandon the First, and dance on newspaper's grave.
As the editor of our 50,000-citizen community's free weekly newspaper, which has been around for over a century, I am proud to carry on the tradition of reporting on our local elections, school board meetings, little league games, church picnics, craft shows, PTO meetings, community theater shows, car shows, Boy Scout membership nights, police and fire promotions and awards, club meetings, volunteer drives, YMCA membership campaigns and similar small-scale, neighborhood events. This, to me, is not a job; it is a vacation. I enjoy what I do that much. At the same time, I realize it is a big responsibility to my community at large. My family scrapes by on the income I earn.
But no one person is irreplaceable. Some day I had hoped to pass my role as editor to another. After reading your comments, my fear is that many who feel as you do (of course you will claim legions) will wholeheartedly agree. Of course I have no idea if you will even publish my remarks as they go against the tenor and tenets of your anti-newspaper creed.
The internet, the blog you write, the email chains might very well replace what it is we weekly newspapers now offer. Like the weekly newspaper, the internet is affordable and, as you point out, the subscription model is outdated. Many in our town can subscribe to one or both of the daily newspapers in our immediate area, or to home-delivery service of the Boston Globe, New York Times or Wall Street Journal. But they all are suffering subscription losses.
But before you rejoice at these facts, and dance on graves, consider what will replace the so-called MSM or Main Stream Media. You can offer no guarantee that the same liberal or conservative forces won't also be at play in the gathering of what is considered 'news.' The best we have ever hoped for in our weekly newspaper is to provide a balanced view. When both sides of the issue are angry at us is often just the point where we are doing our jobs correctly. Don't confuse a search for the facts and what is true about an issue with an intent to make people upset. Anger is not the means to an end. The end should always be making our country the best one in the world where all people feel free to express their views. We need to respect one another, and listen to what they have to say. We might not always agree, but sometimes we will. So far that has resulted in a great democracy. Thanks, in no small part, to the role of the American newspaper.
No one is abandoning, nor failing to defend, the First Amendment.
When you start your comment out with such a blatently dishonest statement, it deters the reader both from reading the remainder of your comment and taking anything you say seriously. You might consider not doing so in the future.
Who said anything about abandoning the First Amendment? I don't see anything there that suggests we're obliged to tolerate and pay for propaganda disguised as news. Print what you want, some of us are done supporting it. The business consequences of that are your problem; I'm just pointing out how large it is.
Having not read your paper, and being far away enough geographically that I wouldn't have a reality base to judge it, I don't presume to opine on your bias or lack thereof. However, 70% of the public believes the media generally are in the tank for Obama so the story of objectivity has worn more than a bit thin industry-wide. Other examples are not hard to find.
None of us have a clear idea what will replace the papers or the MSM generally. Nor did Schumpeter ever guarantee that the creative destruction of capitalism meant that creation happened before or apace with the destruction. I'm specifically suggesting that we'd be better off if your industry died off sooner than later, so we can get on with the creation part. Demographics, technology and the capital markets all point in that direction anyway; ideology provides a reason to want it to happen.
I expect that what grows in your industry's place will reflect partisan opinion and bias, that's just human nature. But I think those successors will have learned to do so honestly and openly, rather than polluting the public discussion with bogus pretensions of objectivity.
If they weren't so bias, people would support them more. They need to address more than the socialist illuminati, and all of their positives. If you want all of America to support your newspaper, support all of America's views.
"The best we have ever hoped for in our weekly newspaper is to provide a balanced view."
As a consumer of news, i look for more. I look for an actual marketplace of ideas, where the best ideas germinate and spread and the bad ideas ideally wither. The MSM abhor that process and insist on being the arbiters of what IS news, and how it should be perceived. That could work in a genuinely diverse field where professionalism means examining and then limiting your own bias, but the MSM has resolutely refused to do that. Instead maintaining the mad fiction that they have no biases. That stance is as arrogant as it is absurd.
I suspect there will be a new media more structed than the blogosphere but less elitist than the MSM that will emerge. I bet it has voices from ALL differnt aspects of American life. Not just Manhattan and Los Angeles. People who have served in the military or driven a tractor.
Mr Buehner: A big problem (mentioned by Taleb along with others, but Taleb is the flavor of the month so what the heck)... ahem.
As I was saying: A big problem is that if media just reported facts they'd only have a fraction of the content they're expected to fill. So we get "story" -- "analysis" with only some bias at the very best -- not just "The Dow did x today" but BS like "The Dow responded to y, z and W by doing x today..."
And all that is strained through presumptions of what the grounds for the analysis are, which in many cases are indeed subject to overconfidence or oversimplification or just plain "asking the wrong questions" in Pynchon's old saw*. Bias with political consequences runs both deep and shallow.
[Sockpuppet drive-by post from someone who has contributed substance in the past. Deleted. If you care to post under your prior nick, go for it. --NM]
It's strange, but as I read your description of the financial woes facing the newspaper industry, and the constant need to find new subscribers, the first thing that popped into my head was the Social Security program. SS faces the same death spiral that the newspaper industry faces, the parallels are scary.
...and if only those so firm in their defense of the 1st Amendment were willing to even tip their hats to the 2nd...
A.L.
That's enough right there. The equation of your financial survival with 1st Ammendment rights is either profoundly ignorant or profoundly dishonest. The rest of the comment I passed over, just as I pass over the dead tree news outlets.
A Democratic Presidency with both houses the same, would in all probability need to show a sense of gratitude to those whose hard work ensured the seats. How about a "Wall Street" bailout to the newspaper industry.
"How sad that those who would not hesitate to defend the Second Amendment would happily abandon the First, and dance on newspaper's grave."
What a load of maudlin codswallop.
Why do so many supporters of gun ownership hate the mainstream media?
Because they see them as supporters of the anti-gun lobby.
I remember some years ago reading a full page article in an major Australian newspaper about how recent "research" had found thata most murders in Australia and New Zealand were committed by licenced shooters using legal guns. Unfortunately this "journalist" failed to point out that this "research" was carried out by the founding President of an anti-gun political lobby group. I spoke to the journalist who wrote the article and her reply was "so what, there's only so much you can fit in twenty paragraphs"
I wil presonally be glad when the last newspaper closes down and the last "journalist" is flipping burgers at MacDonalds.
Bill Doak, people like you disgust me.
Q2 industry statistics show overall revenue dropping 13.9%, with a whopping loss of 27% YOY in classified.
I remember when the employment listings of the local paper's classified section (SJ Mercury News) was the envy of the Bay Area. In the 90's, the part with the engineering jobs on Sundays was impressively thick, with page after page after page of engineering job listings. Nowadays, the entire employment section takes up just a small fraction of that space. One thing hasn't changed though - the Merc still leans reliably left.
Tim,
your thesis as I understand it is that newspapers, contrary to what their readers want, are adopting a left-wing stance. I don't live in the USA nor am I an expert on the newspapers there, but I would be surprised if it is true -- here in the UK there are a wide range of newspapers with a wide range of political stances.
If that isn't true in the USA it sounds like a clear case of market failure to me. You're a venture capitalist so I suggest you start a right-wing newspaper. If what you say is true, you won't have any shortage of readers.
But if you're not prepared to put your money where your mouth is, why sohuand anyone take seriously what you say?