Circulation is dropping, print advertising revenue is falling and readers are going online to get news for free, leaving the US newspaper industry awash in red ink and threatening some of the biggest names in journalism.
“The business model that used to work at newspapers does not work any more,” the Washington Post Co chairman Donald Graham said last week, echoing what many observers of the US media landscape have been saying for some time.
With The Tribune Co, owner of the Los Angeles Times and other newspapers, seeking bankruptcy protection and vultures circling around other publications, comedian Jon Stewart got into the act with a new punchline to an old joke.
“What’s black and white and completely over?” Stewart asked viewers of his popular mock news television show on Comedy Central.
“Newspapers!” he said.
The crisis gripping the industry is of course no laughing matter to the 15,422 newspaper employees who have been laid off this year or taken buyouts, according to figures compiled by Erica Smith, a St. Louis Post-Dispatch journalist who tracks the cuts on her blog.
Media job losses are also being updated several times a day on a feed on micro-blogging service Twitter started last month by a group of public relations agents called The Media Is Dying.
Not a day goes by without more bad news for the newspaper industry as the financial slowdown accelerates the decline in print advertising revenue and more classified advertisers turn to free Web sites such as Craigslist.com.
The Audit Bureau of Circulations said that circulation for 507 daily US newspapers fell 4.64 percent in the six months to September to 38.16 million copies from 40.02 million in the same period last year.
Only Gannett Co’s USA Today and Rupert Murdoch’s Wall Street Journal bucked the trend, posting marginal gains of 0.01 percent in readership.
Print and online newspaper advertising revenue fell by 18.1 percent in the third quarter of the year, said the Newspaper Association of America, the sixth quarter in a row of decline.
Overall online ad spending, while increasing, is forecast to grow by only 8.9 percent next year, eMarketer said, and no major newspaper has reached a point yet where online revenue accounts for even 15 percent of total revenue.
The biggest bombshell yet exploded on the front pages last week with the announcement that the Tribune Co, which owns the Chicago Tribune, Baltimore Sun and Harford Courant in addition to the Los Angeles Times, had filed for bankruptcy protection, suffocating under nearly US$13 billion in debt.
Some newspaper owners argued that the Tribune’s woes were not indicative of the industry as a whole because the company had been purchased by a Chicago real estate magnate in a highly leveraged buyout that left it deep it debt.
But dozens of other newspaper face an uncertain future and Graham, speaking at a conference sponsored by UBS Bank in New York, hit the nail on the head with his assessment that the business model for US newspapers is broken.
“Both the Post and Newsweek will lose money in 2008,” Graham said of his flagship paper and news magazine, and “an extremely difficult climate for advertising will challenge us to demonstrate any improvement at all in 2009.”
Graham has invested heavily in a digital future for the newspaper, pouring resources into the Post Web site and hiring a new digital media officer.