Monday, November 14, 2005

The End of News?

The End of News?

By Michael Massing

[Cut] The developments at the Tribune Company mirror those in
the newspaper industry as a whole. For most big-city
papers, circulation is declining, advertising is
shrinking, and reporters and editors are being let go.
The full extent of the crisis became apparent in May,
when the Audit Bureau of Circulations reported
circulation figures for 814 daily papers for the six
months ending last March. Compared to the same period
the year before, total daily circulation fell by 1.9
percent and Sunday circulation by 2.5 percent. Sunday
circulation fell by 2 percent at The Boston Globe, 3.3
percent at the Philadelphia Inquirer, 4.7 percent at
the Chicago Tribune, and 8.5 percent at the Baltimore
Sun. At the Los Angeles Times, circulation fell 6.4
percent daily and 7.9 percent on Sundays. Even The
Washington Post, the dominant paper in a region of
strong economic growth, has suffered a 5.2 percent
daily circulation decline over a two-year period.

There are a few exceptions. The New York Times and USA
Today, both national newspapers, have had modest
circulation gains. Even so, the New York Times Company
announced in October that it was going to eliminate
five hundred jobs, including forty-five in the Times
newsroom and thirty-five in the newsroom of The Boston
Globe. (The Globe recently announced that it was
dismantling its national desk.) The Wall Street Journal
has been holding its own in circulation, but its ad
revenues have sharply declined.

It is a striking paradox, however, that newspapers, for
all their problems, remain huge moneymakers. In 2004,
the industry's average profit margin was 20.5 percent.
Some papers routinely earn in excess of 30 percent. By
comparison, the average profit margin for the Fortune
500 in 2004 was about 6 percent. If the Los Angeles
Times were allowed to operate at a 10 to 15 percent
margin, John Carroll told me earlier this year, "it
would be a juggernaut."

Back in the 1970s and 1980s, when most papers went
public, they had little trouble maintaining such
levels. Many enjoyed a monopoly in their markets, and
realtors, car dealers, and local stores had no choice
except to advertise in them. The introduction of new
printing technology helped to reduce labor costs and to
shift power away from unions and toward management. But
papers have since faced successive waves of new
competition-- first from TV, then from cable, and now
from the Internet. Yet Wall Street continues to demand
the same high profits. "Of all the concerns facing
newspapers," Carroll told me,
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