More Signs Newspaper Business Is Faltering Quickly

Print Email

The newspaper industry has too many newspapers and too many chains to look at it as a whole to determine its health. However, there is no question its health has gotten much worse over the past 20 years as online news has crippled what has been, until recently, a print business. To see what is happening to the newspaper industry currently, observers have to consider it almost property by property.

The most visible trouble in the industry is the battle between Digital First Media and its employees. The company is either the third or fourth largest chain, depending on the yardstick. Alden Global Capital is its majority owner. The investment firm has continued to chop the number of employees. Oddly, the financial results from the papers are fairly good, because they are, in many cases, handsomely profitable, which might be a sign the newspaper industry is still a financially healthy one. Ironically, the health is due to substantial layoffs.

A more direct way to look at the industry is two recent developments. The Chicago Sun-Times, the second paper in the nation’s third-largest city, asked consumers to throw it a lifeline. It said its survival was at risk and asked people to pony up $7.49 a month for online subscriptions. The action cannot be viewed as other than an appeal to keep the paper from foundering soon.

At another of the largest chains, McClatchy Co. (NYSEAMERICAN: MNI), its flagship property, the Sacramento Bee, laid off 15 editorial workers. That may not seem like many, but in an already thinned out newsroom, it is a lot. The layoffs were also the third in just over a year. There were reports that McClatchy also laid off workers at its other West Coast properties.

What is notable about McClatchy is that it is one of the largest chains in America. Despite resources, restructurings and fairly robust digital resources, it continues its retreat.

In just a few weeks, the largest publicly traded newspaper companies will post their first-quarter results. Other than New York Times Co. (NYSE: NYT), which has had success selling digital subscriptions, last year’s typical results were revenue drops of 5% to 10%.

The early writing on the wall for the past month is that the financial problems at newspapers have not abated. It will be another very rough year.

I'm interested in the Newsletter