Post Scripts: Newspaper survival

"It’s the latest, and biggest, sign of duress for the newspaper industry yet" said Michel de la Merced in The New York Times recently. A few days later the venerable Los Angeles Times, Chicago Tribune and Baltimore Sun, filed for Chapter 11 bankruptcy protection.

The company which owns a dozen newspapers and 23 TV stations, is $13 billion in debt, most of it taken on during its purchase by Sam Zell.

Zell, bought the company for $8.2 billion last December on what was described then as "the transaction from hell." His words turned out to be prophetic. Since the takeover, Tribune Company has been flattened by what Zell now calls "a perfect storm" of plunging advertising and declining circulation, coupled with a worldwide credit shortage.

Unfortunately, that storm is spreading, says David Olinger in the Denver Post. From Los Angeles to New York, leading newspapers have slashed newsrooms with buyout offers, and when those failed to reach budget-cutting goals, with layoffs. More than 10,000 employees have lost their jobs in the past year and more than 30 daily papers are up for sale, including such stalwarts as the Miami Herald and the Denver Rocky Mountain News. Even The New York Times says it is borrowing $225 million to ease a cash crunch.

Well, maybe no one should be surprised. As their advertisers and readers were seduced by the speed and edginess of the Internet Web, publishers developed no strategic response. To those of us who love newspapers, the statistics are chilling.

Back in the 1970s, 80% of adults read newspapers. Readership today is below 48%. That’s not good news for newspapers since without a sustainable revenue model, the companies that provide some of the world’s greatest journalism can’t hold on much longer.

Let’s face it – "newspapers are done for," said Andrew Sullivan in The London Times. "Print and paper and delivery by truck are quite cumbersome and expensive compared to a modem." Some papers like The New York Times and The Washington Post have responded to the threat with sites offering information and advertising. But on-line advertising, while growing, is not nearly as lucrative as print ads, nor is it growing enough.

The recession has taken its toll on newspapers. Consolidations might help but does not solve the fundamental problem. Only major innovation will head off the extinction of traditional media. Who really knows? I’d like to think that in the future there will be fewer dinosaurs like The Tribune Company and a lot more energized little guys.