Wednesday, June 25, 2008

Newspapers and their future

Here's that link I mentioned to a paper presented at a conference last week at the Joan Shorenstein Center on the Press, Politics and Public Policy at Harvard's Kennedy School of Government.

To add some facts to the comments: Newspaper circulation has been declining yearly for several decades. What's causing the financial trauma isn't circulation, though of course rising circulation is better than declining. Some of the circulation declines at many papers, such as the Observer, come from their choosing to eliminate delivery by truck and carrier to distant places, including Raleigh. But subscription revenue is a small percentage of newspaper revenue. That's why papers conclude it's more cost-effective not to deliver to far-away places.

The overwhelming bulk of revenue is from advertising. In the past, at most papers around the country up to 30 percent of that revenue, or more, has been from classified ads. That's why the migration of classified ad revenue to online has been such a blow.

Last year, U.S. newspapers averaged a 17 percent profit margin. The Observer remains quite profitable. Last year, nationally, only about 11 percent of newspapers' ad revenue came from online ads. Online readership is growing, and online ad revenue is growing.


Anonymous said...

It's like any other business. The unsuccessful will fold. That's the way it is.

Anonymous said...

The newspaper is only read by %38 percent in Charlotte and thats scary; This means People havent a clue or they watch or read something else. My guess they dont pay attention to anyone source.

Anonymous said...

We are going back in time to the caveman days where People dont read and dont have Satelite TV to catch recent news ; The only way the newspaper in Charlotte can survive is start a New York section, Ohio section and a California and 'so on and so forth' you all get the idea. They need to stop the Bridal section and like USA today offer a wide scale of universe; Then the newspaper will have to go technoTV like the Charlotte observer have a channel with interactive pointing to a certain story read by a reporter. Its now critical to get news out fast because the Newspaper is 12 hours out of date when you get it, hot off the press.

Anonymous said...

The newspaper would do better to have a printer set up in Peoples homes to deliver news all night long on a rolling sheet or Morning news show from the Charlotte Observer that repeats like many others recapping news and adding updates as the day progresses; The Newpaper is alive but the distribution is to slow , way to slow for todays fast technology. Years ago Newspapers were deliverd in the morning and night version to keep People informed and they moved away from spontanaity and continuity.

Anonymous said...

I wish the Charlotte observer would have a private printer off your phone line or computer that would deliver the paper in that format or for a fee over the computer watching a reporter read a story to me via internet

Anonymous said...
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Anonymous said...

Young kids in school should have the newspaper to read on a daily basis before and after studies this would improve their knowledge and reading skills. Why not have social studies read some of the Newspaper about todays issues. This would get them in a habit of Picking up the paper and reading about many events that are current. Instead People stand at the bus stop dancing like they are on stage looking like a damned fool or retard.

Anonymous said...

Mary, McClatchy is not profitable. On an accounting basis there have been billions in writedowns on the value of the newspapers. In the past year the losses have totalled about $2.6 billion.

On an operating basis, last quarter McClatchy lost money overall.

Advertising revenue dropping 15% with reduced profit from $9 million in Q1 2007 to a loss of about $1 million in Q1 2008.

With ad revenue dropping about 15% each month (April, May) compared to the previous year, it looks like Q2 is going to be bad also.

McClatchy has no cash in the bank and is living on a line of credit. The $2 billion in debt has been downgraded deep into junk bond territory.

Classified advertising revenue fell 25% compared to a year ago.

Revenue for 2008 will be about $1.9 billion. A huge drop from $2.3 billion in 2007.

With another 15% drop in 2009 we can expect approx $1.6 billion in revenue next year.

So 2008 will likely mark the year that McClatchy been bleeding red ink on a small scale. With another 15% drop, then the losses explode. McClatchy has cut a lot of the fat, but they now need to find $300 million in additional cuts in order to keep the losses managable.

If they don't keep cutting, the coming declines in revenue will force asset sales or a bankruptcy filing.

These are just the facts. It is all available on Yahoo Finance and from reading the links to analyst projects for McClatchy.

In my opinion, McClatchy and the Charlotte Observer are in for a few more rounds of layoffs, likely with the next round by the end of 2008.

Anonymous said...

I think the Observer, through, does a good job of reporting the news. I am a native Charlottean, but I haven't lived there in about 7 years (although I do visit regularly). I have managed to keep up with the transit debate, news about UNCC, crime, development and more online from Asheville, Baltimore, Mexico and, now, Chicago.

I loved Creative Loafing in college (even had an internship there), but let's face it: those weekly papers (in Charlotte and anywhere else) serve mostly as vehicles for snarky columnists, insular debates and music reviews, with lots of bar ads. And newspapers like Rhino are just partisan propoganda, not real news. So really, the Obs, for all its faults, is the best thing around for local news.

It just depends on the method now, online or paper. My suggestion would be to put all content online with a focus on breaking news. A paper version, possibly free, would do more features, in-depth coverage of the breaking news from the day before, long-form articles and things of that nature. Online is great for short, quick and fast. Paper is good for long, detailed and slow reads.

David McKnight said...

What if NASCAR stopped marketing its stock car races to fans of auto racing and instead spent most of its time promoting racing events at boat shows? NASCAR might then encounter some pretty rough sailing.

Newspapers are in a fever to pitch their on-line capabilities to people who already have chosen to get their news from sources other than newspapers. At least television news brodcast stations at the local and regional level here in the Carolinas do not promote their online information features over the content of their regular local newscasts (whether "at 5, 6, 10 or 11.")

Newspapers have miscalculated the economic value and editorial influence which accrue from having retail circulation over a larger area rather in a narrowly drawn geographic zone. James Madison, the bicentennial of whose presidency (1809-1817) will be observed next year, felt that the principles of republican democracy set forth in the U.S. Constitution would help the country protect the rights of individuals over larger physical expanses of land areas. Likewise The Charlotte Observer once enjoyed marketplace prestige and exercised a beneficial journalistic influence in two states as the self-described "Foremost Newspaper in the Carolinas."

Under three out-of-state newspaper management groups since the 1950s, with company headquarters moving successively westward at each ownership shift from Ohio originally to California now, The Observer has been goaded into becoming less of a Charlotte-based newspaper serving the people of the Tar Heel and the Palmetto states and more of a "consumer guidebook" of sorts, if you will, trying to please customers in a more resticted metropolitan service area.

The glory days of those orange home delivery boxes for subscribers to The Charlotte Observer from the mountains of Western North Carolina to the beaches of Eastern South Carolina have given way to an endless quest of following the daily shopping habits of bargain-conscious consumers in a relatively static customer service zone.

Likewise, McClatchy's Raleigh News & Observer once enjoyed a well-deserved repuation as the journalistic lifeline for the people dwelling throughout the far-flung counties of Eastern North Carolina, back when the distinctively green N&O mailboxes were the starting points for residents beginning their first laps around the racetracks of daily "Down East" living from Hamlet to Ahoskie.

There are many excellent local television news operations across the two Carolinas. People who value the role of newspapers in American society should pick out one or two of their favorite television news teams and count just how many compelling news, feature, sports and weather stories they are able to present to viewers within a single half-hour broadcast.

There was a time when the quantity and range of actual news and sports reports in a typical Carolinas newspaper was so much greater than that of the nearest local television news station that the TV folks seemed forever mired on pit row trying to figure out how to make it to the third turn. But now it's the other way around: newspapers have been so stripped down in reporting capacity that about the only way you can ever make it to the checkered flag in following coverage of a political campaign is to coast to the finish line on fumes from the last meet-the-candidates debate.

As a wise editor once observed: remember, every piece of reporting can't be an exclusive investigative feature because we need some good basic bread-and-butter stories too telling folks what's going on out there.

If newspaper editors and publishers had to adapt the hit songs of their their favorite rock, pop and country musicians, it would be interesting to see what the results of the poll would be:

Jackson Browne? "Running On Empty Until the Sunday Sports Package."

James Taylor? "Going to Carolina In My Mind Because I Sure Won't Read Much About Them in the Newspapers."

Roberta Flack? "Killing My Circulation Figures Softly With Our New Preoccupation With On-Line Re-Writes."

Alan Jackson? "Way Down Yonder On the French Broad River, There's Actually People Living Out There Who'd Like Some News Every Day."

John Denver? "Country Roads, Take These Newspapers Home to Our Long-Lost Readers."

Everly Brothers? "Wake Up, Little Suzie, the Papers Are Ready to Take to the Front Steps."

Loretta Lynn? "You Ain't TV Reporter Enough to Take My Newspaper Reader."

Bill Burkholder said...

You folks in the newspaper business need to learn from the iTunes model. Sites like and are ineffective, because they are passive. The reader has to seek them out.

Go read Chris Anderson's "The Long Tail."

The first newspaper that figures out how to push PDF files to my inbox for a subscription fee will get my business.

THINK ABOUT IT: NO distribution costs, other than server maintenance. Extremely LOW production costs. NO carriers. NO presses. NO killing trees unless I decide to print in my home.

Download the news to a computer or an iPod or iPhone or ebook reader of some sort...

About all you would have to do is re-format the old rag so it would display on portable devices and print on letter-size paper.

Woo Hoo!

David McKnight said...

Kudos to the reader who commented: "It's like any other business. The unsuccessful will fold. That's the way it is."

Nice comment. But consider this:

In the newspaper business, it is not the unsuccessful but the successful who will fold--fold more newspapers, that is, for delivery on the front steps of their readers' homes. Ha-ha-ha!

And who was it who said: "And that's the way it is..."

That great CBS news guy, Walter Cronkite, of course. He could fold newspapers almost as well as CBS's Bob Schieffer, who got his journalism start at the Ft. Worth Star-Telegram before moving over to television news.

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