Archive for the ‘Newspaper Industry’ Category
These sorts of comparisons always do depend on what it is that you decide to compare: Google certainly doesnt employ more people than the US newspaper industry and its certainly worth much more in terms of corporate value. But a useful and sensible measure could be revenue and on that measure Google is now larger than the entire US newspaper industry:
This would mean that US newspapers are a $34bn (£21.6bn) industry. By contrast, Google alone recorded revenues of $37.9bn (£24.1bn) for 2011.
Its not an entirely fair comparison, the newspapers revenue is almost entirely domestic (believe me, near no one outside the US reads US newspapers) and much of Googles isnt.
This, as the Italians would put it, Sorpasso has come about because US newspaper advertising and circulation revenues are declining while Googles advertising revenues are rising.
However, the thing I think interesting is that it isnt really Google that has eaten the newspapers lunch. Its certainly the internet, yes, but not specifically Google.
Back in the day, only two decades ago in fact, US newspapers had three sources of revenue. For someone like the New York Times, they were of roughly (do understand, roughly) equal value to the firm. There was subscription revenue, classified advertising and display advertising.
What has gutted the economics of newspaper is not so much falling circulation, nor the falling display advertising revenues that follow that. While these are worrying, while they do spell the ultimate end of the physical newspaper industry at some point in the future, that isnt really what is causing all the pain at present.
What is causing the pain is the way that the internet has stolen the classifieds. Everything from Craigslist, to Monster.com for job adverts, e-Bay as a way to get rid of the kids bikes and prams as they grow out of them, these firms and the myriads like them are what have swallowed one third or so of the newspaper industrys traditional revenues and thats why theyre hurting so bad.
Its interesting to note that the US newspapers are, in economic terms, much more like the local newspapers of my native UK. That reliance on that classified ads income stream: the UK nationals havent really dealt with classifieds since they went national a century or so ago. And yes, the UK local newspapers are finding themselves being gutted by exactly the same firms on the net taking that revenue stream. The nationals are doing quite well comparatively.
That the UK nationals are surviving (indeed, some like the Mail are thriving) shows that it is possible to run a newspaper with only the two income sources, subscriptions and display advertising. Which means that theres quite possibly a fortune to be made in the US newspaper industry: if you can carve out one third of the cost base you should be able to deal with the loss of the classifieds income. Sure, this will only delay the inevitable, as the whole business moves online, but there is a whole lot of money to be made in sweating a business for a couple of decades even as it progresses into irrelevancy.
The big question is though, which one third of the cost base can be eliminated?
JEFFERSON CITY, Mo. — Newspaper publishers in Missouri could have to pay more to buy paper, ink and other supplies under a measure endorsed Wednesday by a House panel.
On a 7-5 vote, the House Tax Reform Committee backed a proposal to eliminate sales tax exemptions on newspaper equipment in order to help fund state medical subsidies for people who are blind. The measure now goes to the full House.
The result is that newspaper companies would have to pay sales tax both on the supplies used to produce their paper and on the retail sale of the paper — a double hit not applied to most manufacturers.
The House is debating a budget this week that would eliminate a $30 million program that provides medical care to about 2,800 blind people and instead set aside $6 million for a slimmed-down aid program. Some House members want to use the money saved from those program cuts to reduce cuts to the states public colleges and universities.
A financial estimate included with the newspaper legislation approved Wednesday projects that bill could generate up to $4.2 million of additional money for state aid to the blind.
House Budget Committee Chairman Ryan Silvey, who sponsored the measure, said newspapers should give up their tax exemptions because some editorial boards have called on lawmakers to eliminate tax breaks as a way of balancing the budget.
The fact that they receive this corporate welfare while advocating for the end of it for others is a bit hypocritical, said Silvey, R-Kansas City.
Silvey also said he does not think eliminating the tax exemptions would interfere with a newspapers right to press freedom.
To say your medium is so unique that it needs a tax subsidy or its infringement on First Amendment rights, I think is just illogical, he said. Its not their right to have a sustainable business model.
To calculate how much tax revenue the legislation could generate for aid to the blind, legislative analysts estimated the total annual revenue of the newspaper industry and estimated how much of the revenue is spent on newspaper supplies. The fiscal estimate projects that revenue for newspapers sold in the state totals between about $120 million $208 million each year. The estimate cites an annual report filed by the New York Times Co. for 2011 that said costs for raw materials and other costs are equal to 17 percent to 50 percent of the newspapers revenue.
Missouri lawmakers codified the sales tax exemption for newspaper supplies in 1998, two years after the state Supreme Court ruled that computers used for newspaper pagination could not be taxed because pagination is part of the manufacturing a newspaper.
Other provisions of the Missouri law allow for tax emptions for materials used in manufacturing processes. Doug Crews, the executive director of the Missouri Press Association, took issue with Silveys characterization of newspaper tax breaks as corporate welfare, saying the newspaper industry is a type of manufacturing business.
Hannibal Courier-Post Publisher David Stringer said newspaper publishers might choose to have their papers printed in other states, potentially eliminating printing jobs in Missouri. The Courier-Post, which prints its own papers each day, is located about a few miles across the state line from Quincy, Ill., where the local newspaper also has a printing press.
The economic impact on the industry would be real and it would be significant, Stringer told committee members. The newspaper industry in Missouri employs thousands of people and the payroll is in the tens of millions of dollars. Youre putting all that at risk.
___
Newspaper taxes bill is HB1835
Online:
Legislature: http://www.moga.mo.gov
WASHINGTON, April 4, 2012 /PRNewswire via COMTEX/ –
James M. Moroney III, publisher and chief executive officer of The Dallas Morning News, has been elected to serve as the Newspaper Association of America’s next chairman. The gavel was passed to Moroney by last year’s chairman, Michael E. Reed, CEO of GateHouse Media Inc., during NAA mediaXchange 2012 held here April 2-5. Reed will continue to serve on the NAA Board of Directors as immediate past chairman.
Moroney became publisher and CEO of The Dallas Morning News in June 2001. A member of A.H. Belo Corp.’s Management Committee, he served as president of Belo Interactive Inc. from its inception in May 1999 to 2001, and as executive vice president/Belo with responsibilities for all of the company’s television stations from 1997 to 1999.
Other NAA officers elected were: Robert Nutting, president and CEO of The Ogden Newspapers, vice chairman; Robert Dickey, president of Gannett U.S. Community Publishing, secretary; and Donna Barrett, president and CEO, Community Newspaper Holdings Inc., treasurer.
Elected to additional two-year terms on the NAA Board of Directors were: Douglas Franklin, Cox Media Group Inc.; Christian A. Hendricks, The McClatchy Co.; Stephen P. Hills, The Washington Post; Tony W. Hunter, Chicago Tribune Co./Tribune Publishing; Marshall Morton, Media General Inc.; Greg Osberg, Philadelphia Media Network Inc.; Charles Peters, The Gazette, Cedar Rapids, Iowa; Michael Romaner, Morris Communications Co. LLC; and Steven J. Smith, Journal Communications Inc.
Mark E. Aldam of Hearst Newspapers and Timothy E. Stautberg of The E.W. Scripps Co. were elected to initial two-year terms on the NAA Board of Directors.
Aldam became president of Hearst Newspapers in 2011. He was named executive vice president/deputy group head in 2010, with oversight of eight Hearst properties. He joined Hearst in 2006 as publisher of the Times Union in Albany, N.Y., serving three years in that capacity. Prior to that, he was senior vice president/chief operating officer of the Hartford (Conn.) Courant.
Stautberg, senior vice president/newspapers at Scripps, served for three years as the company’s senior vice president/chief financial officer and for nine years as vice president of corporate communications and investor relations. He joined Scripps in 1990 and held various positions at the Rocky Mountain News in Denver before moving to the Record Searchlight in Redding, Calif., as general manager.
About NAANAA is a nonprofit organization representing nearly 2,000 newspapers and their multiplatform businesses in the United States and Canada. NAA members include daily newspapers as well as nondailies, other print publications and online products. Headquartered near Washington, D.C., in Arlington, Va., the association focuses on the major issues that affect today’s newspaper industry: public policy/legal matters, advertising revenue growth and audience development across the medium’s broad portfolio of products and digital platforms. More information about NAA and the industry is available at
www.naa.org .
View this news release online at
www.naa.org/press .
SOURCE Newspaper Association of America (NAA)
Copyright (C) 2012 PR Newswire. All rights reserved
Tallahassee Democrat Managing editor Rebeccah Cantley has been named one of Editor Publisher magazines top 25 under 35.
Cantley, 33, is featured in the April edition of the magazine, which highlights up-and-coming publishing industry leaders.
This years honorees … were selected as much for their resumes as for their extracurriculars, the magazine editors said. Their contributions to their companies and communities have won awards, sparked policy change, increased revenue and page views and reinforced the role of the newspaper as watchdog and community ambassador.
A native of West Virginia, Cantley joined the Democrat staff in 2005 and was named managing editor in 2011. She began working for daily newspapers as a 17-year-old as a sports clerk and freelance writer for her hometown paper in Beckley, W. Va. In her 12 years with Democrat parent company Gannett Co. Inc., Cantley has performed nearly every newsroom task.
I am really humbled and grateful to receive this recognition, not only for myself, but on behalf of the Tallahassee Democrat, Cantley said. Ive decided to make Tallahassee home, and working for our communitys newspaper is an honor every day.
As a reporter, Cantley worked on two international reporting projects in Indonesia and Sudan. As a newsroom manager, she writes an award-winning column, often tackling tough issues such as domestic violence. She also is committed to reader interaction and community causes, volunteering as a board member for Alzheimers Project Inc. and as a member of the Junior League of Tallahassee.
This is a wonderful recognition of a talented news person who has worked hard to earn the respect of her colleagues, said Democrat Executive Editor Bob Gabordi. She has made a real difference in Tallahassee and it is nice that people in our industry across the nation see that.
Cantley said while much about the newspaper industry has changed, the fundamentals remain the same.
What hasnt changed is that journalism is still important, and our primary role is still to provide quality news and information that makes a difference in our communities, she said. Our industry needs young leaders who are committed to innovation and finding ways to stay relevant in our audiences lives, and thats what I hope to do.
MUSKOKA – About 30 years ago, in the Muskoka and Parry Sound area, a handful of newspapermen began to battle for control of the local newspaper industry.
Bill Allen was an integral part of almost all of those battles, which he waged for more than three decades battles that shaped the local newspaper industry, and local communities.
On Friday, March 30, the regional general manager of the Huntsville Forester, Bracebridge Examiner, Gravenhurst Banner, Parry Sound North Star, Almaguin News and North Bay Nipissing News died in hospital about three weeks after collapsing in his Huntsville office.
He was 61 years old.
Bill was born and raised in Parry Sound, the son of Irene and the late Howard Allen. After a variety of jobs, including teaching karate, and selling confectionaries and auto parts, Parry Sound is where he began his media career, the manager at CFBQ radio.
He moved to newspapers joining publisher Don Smith at the Georgian Bay Beacon in 1980, the year he and Gwen married, where he would compete with the 100-year-old Parry Sound North Star.
For four years, they waged a war with the North Star before Laurentian Publishing, the company that owned the North Star, purchased the Beacon.
Bill was always looking for something aggressive, something new, said former North Star general manager Fred Heidman. Bill cut his teeth in Parry Sound, but he was basically always looking for a challenge hellip; and learned the hard way because he took on an established paper here, one in Almaguin, and in Huntsville.
After a few months working for Laurentian, around 1985 Allen joined Smith again at the Muskoka Publications Groups Muskoka Advance in Bracebridge, competing against the Bracebridge Examiner.
Bill had a unique talent of building relationships with his clients and members of his community, said Smith. I have great respect for him.
Around 1986, Allen moved to downtown Huntsville to manage the Muskoka Publications Groups Huntsville Herald-News direct competition for the Rice familys well-established Huntsville Forester. He was also publisher of the Highland Herald in Almaguin for about a year.
My goodness, what a formidable competitor he was, said former Forester owner/publisher Liz Rice. Even in that strained relationship I admired, respected and liked Bill, as did most of the business people in Huntsville. It sure was nice when he agreed to work on the same side of the street as me.
Allen made lifelong connections during his time at the Herald.
Lyle Payne, who knew Allen for more than 25 years, was one of those in business with him at the Huntsville Herald-News. He said Allen wasnt just one of the good guys, he was a great guy.
He worked tirelessly with me to work for charity. The man was honest, a straight guy who you could rely on. As long as I knew Bill, he never told a lie. I used to always get a kick out of Billy. He was always proud of the fact he was from Parry Sound. He often said that he was a Parry Sound boy, born and bred. He loved Huntsville, but Parry Sound was him.
Brent Cooper, a reporter at the Huntsville Forester today, first met Allen back in the late 1980s at the Herald-News. He said that Allen could make a stressful day into a lighthearted one just with a few words.
He didnt act like the boss around us. He looked upon us as a team, working together for the same goal. I remember when he started as publisher the Herald wasnt a large paper by any stretch of the imagination. He promised me that when we hit 20 pages we were going to have a party, and he kept his word. In fact, we kept producing papers at that size or larger from then on, simply because we all wanted to show him how much we appreciated his support.
Things like that made you want to work that much harder for him. We are all a little richer for knowing him and a little poorer now that he is gone.
Allen worked at the Herald for 18 years before joining the Forester on October 13, 1998, first as a salesperson, then as sales manager.
Bill was brilliant with his unassuming manner that made people feel comfortable from the instant they met him, Rice recalls. Bill never got riled. He never got ruffled, and after a really long hard week he was the first to thank everyone for their efforts. He never looked for a thank you, or for credit, for himself. He thought of others first and foremost. I owe my happiness to Bill. He always worked harder than me and helped expand the Huntsville Forester, the Weekender and the Muskoka Advance through some very difficult years. He was my friend, my mentor and my conscience.
As the newspaper industry evolved, Metroland Media Group Ltd. purchased the Huntsville Forester from Rice in 2005. Allen took on the general manager role for the Forester and the Almaguin Forester.
He then took on more responsibility as head of the South Muskoka newspapers, including the Bracebridge Examiner and the Gravenhurst Banner.
In 2009, Bills role was expanded once again to include the Parry Sound North Star and the Parry Sound Beacon Star.
Throughout his path to success, the only thing more important than his work and his community was his family.
Allen, the son of Irene and the late Howard Allen, leaves behind his wife Gwen, daughter Terrie and her husband Clint Nielsen of Parry Sound, daughter Billie-Jo and her husband Riley Bulmer of Huntsville, and his son Andrew and his wife Jackie and their two-year-old daughter Emma, of Huntsville.
He was the same at home as he was at work meticulous everything had to be perfect, said Andrew. Like at work, at home he was a teacher. He was a lot softer than people knew. It broke his heart whenever he had to be stern, or let people go. He lost sleep when he had to do those things. He didnt want to lose anybody.
Allen was also an old-fashioned romantic, surprising his wife all the time, giving her poinsettias every year for Christmas.
His soft side really appeared around his granddaughter Emma.
He became a kid again with her, Andrew said. Hed get down on the floor and have tea parties, play with Play-Doh. His knees would get stiff and it would take him half an hour to get back up. I think he loved her because she loved him.
He leaves behind family, friends and a long-lasting impact on area newspapers and the communities they served.
Bill also had extended families at the Huntsville Forester and in the community of Huntsville in which he was proud to live and raise a family and serve in return, said former Huntsville councillor and Forester columnist Mike Greaves. Community people such as me have always found Bill open, receptive and supportive of the many activities we were involved in. For me it was usually as easy as a phone call. lsquo;Bill, we are thinking of doing this, can the Forester help? The answer was always yes, and always there was a commitment greater than originally anticipated.
In 2009, Heidman nominated Allen for the prestigious Ontario Community Newspaper Association Silver Quill Award for 25 years in the newspaper industry.
Heidman admits Allen was a competitive pain for the Parry Sound North Star the 1980s. But he worked alongside Allen briefly in 1984, and again in 2006-2009 for Metroland Media Group Ltd.
What he did was key, Heidman said. He made newspapers that were established newspapers better because they had competition and sharpened what they were doing as he fought against them. He wasnt concerned about taking on a paper that had been around for 100 years.
Among co-workers, Allen would also break the tension with his off-colour jokes and trademark lines. Among them, a grinning youll miss me when Im gone.
At newspapers throughout Muskoka, Parry Sound, Almaguin and North Bay, hes certainly missed now.
Share memories and thoughts of Bill on our Facebook site.
Every so often a study comes along about the newspaper industry that gives everyone a little glimmer of hope. The Newspaper Audience Databank recently released a study that claimed the following:
Canadian newspapers continue to be read by nearly 8 out of 10 adults each week. They have maintained loyal readers in print and at their websites. Changes in technology continue to affect reading habits; readership is now a combination of printed editions and news from websites. Over half of Canadian adults 18+ living in markets where daily newspapers are available read either a printed edition or visited a newspaper website every day. Printed editions are still the primary choice for newspaper readers, 73% of adults read a printed edition every week, and 46% each weekday.
That sounds all right! Im sure a lot of us in the industry would love to believe this is true and that we can just continue doing what were doing. It takes the onus off management to make big decisions and it takes away some of the fear everyone else has about the future.
But, unfortunately for us, and unfortunately for the folks at j-source.ca who linked to the study enthusiastically, newspapers wont survive simply because people feel good about them. Every newspaper is a business, and businesses survive when they make more money than they spend.
Its not like this is hidden data, either. Most newspapers have publicly available balance sheets and the steep decline in advertising revenues is well known. The flaw in that NADbank survey seems to be that they simply asked people if they had any interaction with a print product over the course of the week. Someone picking up an issue of Metro on the bench at the bus stop doesnt do a lot for us here at the Journal, unfortunately (even if they felt really good about it).
Theres an article on Forbes today by a hedge fund manager (the kind of person who understands profit and loss) about the New York Times, and he predicts that the newspaper wont exist in its current form by 2015. The options: merge, sell, restructure through bankruptcy, refinance, or sell non-core assets and smaller papers.
The Times has already lost about a third of its employees in the last 5-6 years and none of the options available allow it to continue at the same level of quality.
The Paywall vs. non-Paywall debate seems to miss the larger point: this ad-revenue supported business model will no longer be viable after 2015
Its just one mans argument, and Im sure the folks at the New York Times would tell a different story. But any discussion about the future of newspapers that doesnt start with the decline in ad revenue isnt grounded in reality.
Total newspaper advertising revenue in the United States last year fell by 7.3% compared to 2010. And print advertising, according to figures compiled by the Newspaper Association of America (NAA), was off by 9.2%.
The industry posted total ad revenues of $23.9bn (£15.2bn), a decline of $1.9bn (£1.2bn) from the previous year.
Though the NAA does not have current numbers on circulation revenue – nor on other activities, such as contract printing, events and social media assistance to businesses – Poynters Rick Edmonds estimates that those add roughly $10bn (£6.7bn).
This would mean that US newspapers are a $34bn (£21.6bn) industry. By contrast, Google alone recorded revenues of $37.9bn (£24.1bn) for 2011.
One other point of interest from the NAA figures. Digital grew by only 3.1% in the fourth quarter, less than half the rate of growth in any of the earlier quarters.
Sources: NAA/Poynter/WordStream
The Pueblo Chieftain recently named three newspaper industry veterans to management positions.
Greg Wagner, a longtime controller for Cox Newspapers in Texas, was named chief financial officer.
Tim Coles, formerly of the Ogden Standard-Examiner newspaper in Ogden, Utah, was named circulation director.
Dave Dammann, previously director of facilities and safety at The Chieftain, was promoted to production director.
Wagners appointment brings him back to his native Colorado. He grew up in Hotchkiss — near Grand Junction — until his late teens, when his family moved to Texas. He is a University of Texas-Austin graduate.
Following a long career with Cox Newspapers in east Texas, he most recently worked for the Vindicator newspaper in Youngstown, Ohio.
This was an opportunity to get back to Colorado after a lot of years, to be closer with family. I am really excited by the opportunity, Wagner said.
Wagners relatives in Grand Junction include a sister. He is the parent of an adult son who continues to live in east Texas.
Wagner said hes enjoying getting to know the Pueblo area. He last visited the city as a child, he said.
I like it. Its a nice community and theyve done some good things about building up the infrastructure, including the Downtown, he said.
Im happy to be here. Its a neat community and seems very progressive. Wagner said.
Coles has more than 30 years of experience as a newspaper circulation manager specializing in operational improvements.
Hes also worked with the Gannett, Thompson and Pulitzer newspaper companies.
In coming to The Chieftain, It seemed like a great place to work and the Rawlings family are great folks, he said. Our goal is to give the best customer service possible 365 days a year.
Coles in 2000 was named runner-up in the Newspaper Association of Americas annual circulation manager of the year competition. His career also includes a second-place finish in the International Newspaper Marketing Associations subscription contest.
Coles and his wife, Marcy, have seven children and nine grandchildren. Their youngest child is completing her senior year of high school in Ogden.
Coles said he is focused on improving circulation operations and also assisting the newspaper with its transition to online and mobile publishing.
Hes bullish on the future of the US newspaper industry. Were not going to be the newspaper of old, but as far as going away, I dont think that will happen, Coles said.
Dammanns appointment as production director represents a new chapter in his Chieftain career.
In the position, Dammann oversees the newspapers award-winning printing operations, including the pressroom, composing room, mail room and its Sixth Street commercial printing business.
Dammann started working for The Chieftain about 12 years ago, serving for much of that time as director of safety, compliance and facilities.
Married with one son, he is a Pueblo native. He graduated with a bachelors of business administration degree from Colorado State University-Pueblo in 1993.
Dammann said he looked forward to working with the departments under his supervision, including the Sixth Street print shop that operates inside The Chieftain building. The shop “can do business cards, newsletters or any of your small offset printing needs, he noted.
The Chieftains main press handles large commercial printing jobs in addition to printing The Chieftain and the The Pueblo West View. The newspaper is a frequent winner of the industrys Specifications for Newsprint Advertising Production award.
WASHINGTON, March 29, 2012 /PRNewswire via COMTEX/ –
President Barack Obama, Gov. Mitt Romney and International Monetary Fund Managing Director Christine Lagarde have joined the impressive schedule of speakers at the nation’s largest annual gathering of newspaper media leadership during the Newspaper Association of America’s mediaXchange 2012 conference in Washington, D.C., April 2-5.
This event offers an unparalleled opportunity to huddle with industry leaders as they share insights and successes with new business models and new platforms. It has already attracted dozens of major national advertisers for one-on-one sessions with newspaper executives.
Held in conjunction with meetings of the American Society of Newspaper Editors and The Associated Press, NAA mediaXchange 2012 features keynotes and panels that address the pressing issues of newspaper journalism, advertising, digital transformation and more.
President Obama and Lagarde are scheduled to appear at The Associated Press Annual Meeting on April 3, while Romney is speaking at the NAA/ASNE Luncheon on April 4. In addition to these distinguished guests, NAA also has lined up several dynamic sessions and keynotes throughout the three-day event. One featured panel promises to deliver an engaging discussion on the disruptive changes in news consumption, delivery and business models. Participants include:
Emily Bell, former director of digital content for Guardian News & Media and current director of the Tow Center for Digital Journalism at Columbia University’s Graduate School of Journalism;
Betsy Morgan, former CEO of Huffington Post and current president of Glenn Beck’s The Blaze;
Josh Quittner, former editor-at-large of Time Inc. and now editorial director of Flipboard;
David Westin, former head of ABC News and current CEO of NewsRight;
Michael Wolff, author, columnist and founder of news curator Newser.
NAA mediaXchange 2012 is designed to provide valuable ideas and insights to help newspaper professionals continue to grow audiences and revenue for their print and digital products. With 100 confirmed speakers, sessions highlight cutting-edge media strategies, successes in product and revenue development, new ideas and innovations in newspapers, and the latest tactics and techniques being deployed in print and digital. Topics range from paid content, social media tools and mobile product development to political advertising, the “digital first” strategy and the latest research on multiplatform audiences. In addition, more than 70 industry suppliers are expected to showcase their products and resources for newspaper media.
A complete list of keynoters and other sessions is available at
http://mediaxchange.naa.org/ .
WHEN: April 2-5
WHERE: Marriott Wardman Park | Washington, D.C.
SOURCE Newspaper Association of America (NAA)
Copyright (C) 2012 PR Newswire. All rights reserved
In the not so distant past, the more valuable newspapers became, the more eager
sellers and buyers became to do deals. Today newspapers are far less valuable
by half or more yet sellers and buyers are once again finding each other in great
numbers.
When the future of newspapers seemed bright, with apparently never-ending
cash flow growth and steadily increasing values ahead of them, acquiring the print
products seemed like a no-brainer. Banks bought into this scenario, and acquisition
money was easy to borrow.
Then came the Internet. When broadband coverage of households began to surge in
2004, advertising began to drift away from newspapers. In just four years, starting
in 2006, the newspaper industrys advertising revenue dropped more than 50
percent, and is still eroding, although the rate of decline has slowed thanks to easy
comparisons.
The drying up of the revenue stream that historically contributed three-quarters of
newspapers revenue (its down to about 60 percent now) had a grievous impact on
operating profit margins, dropping them from over 20 percent in the early- to mid-
2000s to around 10 percent today. (Those figures are based on data from publicly
reporting companies as a proxy for the industry.) Not surprisingly, banks are no
longer so eager to finance newspaper purchases.
So where is the money coming from to fund the current wave of acquisitions? And
what do the buyers see that banks apparently do not? Well, it is worth pointing out
that, at the right acquisition price, a 10 percent operating profit margin, or even a
couple of points lower, is not unattractive. Some industries dont hope to achieve 8
to 10 percent margins in the best of times, and here are newspapers reaping them in
what for them has been the worst of times.
Back when newspaper margins were soaring, acquisition prices were also high as
measured by multiples of revenue or cash profit (so-called EBITDA, or earnings
before interest, tax, depreciation and amortization) or average daily circulation unit.
For example, a newspapers sales price back then might be equal to one-and-a-half
to two times its annual revenue (or 13 to 15 times its annual cash profit), or $1,000
to $1,500 per unit of average daily circulation a weeks total circulation divided
by publishing days. These were typical ranges of the multiples back then, although
some individual sales could be higher or lower.
Now that most newspaper profits are down by half or more, it is understandable
that their valuations are likewise down, as are the multiples of revenue, cash
profit and circulation when they are sold. The New York Times Co. recently sold
its Regional Media Group of 14 relatively small dailies and two weeklies for $143
million, which is just over half the groups annual revenue and $368 per average
daily circulation unit.
So whos buying and whos putting up the money? The Times papers were acquired
by Halifax Media Holdings, a company formed in 2010 by Stephens Media Partners
and two private equity companies to acquire the Daytona Beach News-Journal.
Stephens Capital Partners is part of Stephens Inc., a large financial firm based in
Little Rock that was one of the early non-newspaper investors in the newspaper
business, having taken over the old Donrey newspaper chain in 1993. Many of the
recent newspaper acquisitions the San Diego Union-Tribune, the Chicago Sun-
Times, Minneapolis Star Tribune, among others involved private
equity investors.
Late last year, Warren Buffetts Berkshire Hathaway bought the Omaha World-
Herald Co., which, in addition to its namesake paper, included six small dailies in
Nebraska and Iowa. The price was $150 million, plus the assumption of $50 million
in debt. This despite the legendary investors earlier assertion that newspapers
were not attractive investments in the digital era and that he wouldnt buy most of
them at any price. Indeed, the Omaha deal was a bit of an outlier among current
transactions, since the price amounted to slightly over $1,000 per daily circulation
unit and, in Buffetts words, certainly is not a bargain. But, he noted, the World-
Herald is solidly profitable. And, of course, it is Buffetts
hometown paper.
What worries me about some of the recent acquisitions (not Buffetts) is that if
newspapers fail to hold their own and their margins continue to decline, these
nontraditional owners could start slashing costs in a misguided attempt to make
their investments pay off. Thats a truly bad idea. The principal reason the new
owners bought the papers is the lingering value of their strong newsgathering
franchises, still the most dominant in every market despite rampant layoffs and
downsizing, and still the most crucial asset when it comes to seeking customers
online and on mobile devices.
Lose that and theres nothing left.