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Newspapers' future rough, but survivable

Thursday, January 8, 2009 | 10:00 a.m. CST

Your new year was made a little brighter, I hope, by last week's announcement that the future of our Columbia Missourian has been assured for at least another three years. Mine sure was.

That other newspaper in town looks even healthier. Its associate publisher, Vicki Russell, is the new president of the Missouri Press Association. In the most recent issue of the MPA's house organ, she says, "The Trib is doing fine."

You certainly couldn't say that about the newspaper industry — or the broader news industry — as a whole. The news about the news is almost all bad. Every day, it seems, there's another report of layoffs or reduced content or looming bankruptcies. Just a few days ago, Lee Enterprises, the company that owns the St. Louis Post-Dispatch, was notified that its stock price has fallen so low that it is in danger of being delisted by the New York Stock Exchange. How low? Try 40 cents a share. In 2005, when Lee bought the Post, it was trading at $42 a share.

Across the state, Mark Zieman, publisher of the Kansas City Star, felt obliged last month to write a column asserting that the Star is doing just fine, thank you. Readers of his paper might ask why, if that's so — content is being cut and the staff reduced.

The answer to that question explains a lot of the ills besetting an industry that I'd argue is at least as important to the democracy as the auto industry is to the economy.

The Star, like the Post but unlike the Missourian and the Tribune, is owned by an out-of-state company. In the case of the Star, that's McClatchy, which was once a highly profitable, family-owned organization. After McClatchy went public, its stock traded for as much as $70 a share. Now you could buy a share for less than $2, not that you'd want to.

Other newspaper companies, such as the Tribune Co. in Chicago and the Journal Register Co. back east, are in even worse shape.

What happened? A combination of bad management and bad luck. The bad management part was driven by greed, a reality not unique to newspapers. McClatchy and Lee both decided that bigger was better. Both borrowed heavily and bought. Lee bought the Post, which was twice as big as any of Lee's other 50 papers. McClatchy leaped even further, purchasing most of the former Knight-Ridder chain, including papers in Kansas City, Fort Worth, Miami and Charlotte.

Meanwhile, a real estate mogul in Chicago named Sam Zell took the biggest plunge of all, buying the Tribune Company, owner of the Chicago Tribune, Los Angeles Times, Baltimore Sun and other big papers, as well as the Chicago Cubs. He did that, of course, with other people's money. That's what high rollers do.

Then came the reckoning. Though none of these geniuses saw it, the business model that had made newspapers rich for generations was already under threat from the Internet, which lures away readers and advertisers. So the days of profit margins above 20 percent, which managements and the stock market had come to count on, were gone, probably forever.

And you've probably noticed that we're entering our second year of recession. Hardly anybody saw that coming, either.

The newspapers we read about as being in trouble are mainly those that are not only suffering from the recession but are buried under a mountain of debt. The Star, which publisher Zieman said is making a nice profit, is being milked to make McClatchy's debt payments. The same thing is happening in St. Louis, Los Angeles and Chicago.

Russell told the Missouri Press News, "What we don't know is how the newspapers that are having trouble will look when the economy turns around. I would not be surprised to see some of the big newspaper companies go bankrupt."

Neither would I. That might not be an altogether bad thing, as Vicki notes, for journalism and for the democracy, if they were succeeded by locally owned, maybe even journalist-controlled, publications in print or online. (If you want to see pioneering models of what that might look like, go online to Minnpost.com or Stlbeacon.org.)

Call me Pollyanna, but I don't think the newspaper is doomed.

The New York Times, I'm guessing, will survive. It's profitable, family-run and not burdened by too much debt. Same with the Washington Post and the Wall Street Journal. The Gannett empire is probably solid enough.

The Columbia Daily Tribune will be fine, too, I expect. The Internet is more a blessing than a curse for truly local news and advertising.

And our Missourian lives to print another day.

George Kennedy is a former managing editor at the Missourian and professor emeritus at the Missouri School of Journalism.


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Comments

Andrew Hansen January 8, 2009 | 11:36 a.m.

Pollyanna.

(Report Comment)
Ayn Rand January 8, 2009 | 12:02 p.m.

I agree that the NYT will survive, but what if it stops printing or prints only the Sunday edition, which is the most profitable? (I'm not the only one speculating about that possibility. E&P has, too.) That directly affects the Tribune because it has the contract to print the NYT for this region. That would be a huge cash-flow hit for the Tribune. Can it pick up enough additional commercial work to offset that loss? If not, won't that affect the quality of the Tribune if it means Hank has to cut staff?

(Report Comment)
Anton Berkovich January 8, 2009 | 12:04 p.m.

On the recession, you wrote "Hardly anybody saw that coming, either."

That's not true at all.

(Report Comment)

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