Last Chance for Newsprint and Local News

It was fun to work in the newspapers world…a long time ago.  Times have changed, and things aren’t just the same.  Circulation is down, ad revenues are down, and most of my friends who are still in the business aren’t having much fun.  It is with this in mind that I came across a recent article that gives me a little hope that someone might have an answer that could work.

David Carter wrote a timely article in the New York Times on John Paton, the new leader of MediaNews Group, the second-largest newspaper chain by circulation in the country.  Formerly lead by Dean Singleton who fashioned MediaNews into the giant that it is today.  Long known as a very costly effective (cheap) operator who bought distressed papers Dean was dethroned by the board, and the the note holders (banks) who had backed his grand plan.  I never competed with Media News, my newspaper days ended before they hit the stage, but many of my former associates have gone onto careers their.  Some are still breathing, others not so much.

Mr Carr does a terrific job in profiling John Paton, and the challenges MediaNews, and every other newspaper faces in today’s digital world.  The biggest challenge is that the new owners of many of these papers are now banks and hedge funds, and they are not patient people.  Talk about your perfect storm – declining circulation, decreased advertising revenues, and the banks want more now!

Newspapers in the U.S. hit their peak in the 90’s and carried the good feelings and profits into the 00’s.  The results and profits, and the chance for market dominance lead to a major buying spree by a number of chains who managed to hit the jackpot.  They won on “Black”, but soon the real number came up and it was “Red.”  Mid way through the 00’s they could see that everything was melting down.  The Knight-Ridder chain had been gobbled up, and the remains were hitting the skids in terms of circulation and advertising dollars.

MediaNews was one of the big buyers, along with a number of hedge funds, like those who purchased Freedom Communications (The OC Register).  The family sold out after a small group wanted to cash out.  The early sellers from the family still have a lot of cash to count, those who stayed and took stock with the new buyers, are looking very sad, and their purses are bare.

What happened?  Demographics and Digital.  The world for newspapers will never be the same.

Demographics changed and the those in the post Boomer groups never became the consistent readers and consumers of daily newspapers.  They never picked up the newspaper reading habit of their parents.  Those of us in the newspaper world at the time thought that this would change as they got older and took their real place in the world…but it didn’t happen.

Digital also happened, and this meant that there was a whole new alternate universe of communication going on.  News could be had, without having to get ink on your hands.  It was on your computer screen, and it cost you nothing.  Hey, you could also text your buddies at the same time if you found something worth sharing, something you couldn’t do with newsprint.

There are other trends that have played into this transition, but this is a post, not a term paper.

The Digital Challenge that the newspapers were faced with was that digital revenues could never replace those of the print world.  Why?  This happened because the newspaper charged extraordinarily high rates – because they could.  They were the dominant media, and generally had a monopoly like position in their markets.  Rates went up every year, and advertisers really had few options.

When digital came along there were real options, and most were free.  In order to compete the newspapers had to offer similar services for free.  Newspapers are only now attempting to offer real paid services, and showing the discipline to effect a transition.  Even I now pay for a number of services I used to get for free.  I also used to get 2 daily newspapers, but now only one, and that only for the 4-day weekend special rate.

So the real challenge for newspapers is that they used to make money hand over fist and were the only game in town.  Now they have to compete for a slice of the pie, and that hurts.  Many are trying to lead the transition, and perhaps John Paton can make it work for MediaNews….and for his role in Digital First.

In my next post we’ll talk about how Digital First, under John Paton’s leadership is trying to change all of the previous concepts about how newspapers can continue in the digital world…and actually make money.