Friday, October 10, 2008

The slo-mo train wreck continues

I got in trouble with some of my friends in the newspaper business a few months ago when I posted this item (and put it in my newsletter). Cathy Mills, at the San Jose Mercury News, sent me a gently chiding message, pointing out, among other things, that the newspaper biz still has profit margins that many other industries would envy (20% or so in recent years) and that total readership is up, even if circulation is down.

She's right, of course. And I certainly don't think the newspaper industry is going to disappear. Radio was supposed to be dead sixty years ago when TV started to establish itself. Instead, the broadcasters adapted, re-formatted, re-targeted, and have (mostly) prospered. The same will happen, I suspect, with newspapers.

But during the period of adaptation, I fear there will be many casualties. This week:
  • The East Valley Tribune, the #2 paper in metro Phoenix, lays off almost half their staff, pulls out of Scottsdale and Tempe, cuts to four days a week, and converts to free circulation.
  • The LA Times announces another big round of layoffs.
  • Freedom Communications, the owner of East Valley Trib and the Orange County Register, is in violation of its loan agreements.
  • And a Forbes report adds that the New York Sun closed, the Minneapolis Star-Tribune skipped a debt payment, and S&P put Gannett on credit watch.
Again, while the industry will survive, many individual papers won't, and those that do will be smaller in every way -- fewer pages, fewer reporters, less coverage; and on the ad side, there will be fewer readers and therefore less reach for advertisers.

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