From TPM Reader PK …
I would be surprised if any of your readers who chastised you for second-guessing the business decisions of some of the newspaper companies that are now hanging on for dear life are in the newspaper business — at least on the editorial side of it.
I got into the newspaper business as a reporter in 1985, which now is known as the year when newspaper circulation in the United States peaked. It quickly became evident to me that the profit margins that companies like Gannett and Thomson, which has since exited the newspaper business, were unsustainable at any papers other than small ones. Unfortunately, it didn’t become evident to many other people. Gannett moved into owning larger newspapers and gutted them to achieve the 20-percent-plus margins it was getting from its smaller papers, and other newspaper owners followed suit. When circulations stated declining, paper owners cut more costs to maintain their margins. That made their papers worse, driving away more readers, they responded by cutting more costs, and the race to the bottom was on.
Throughout all this, I kept thinking that some newspaper owners eventually would realize that the problem was the high margins they were demanding of their properties and would accept lower ones from them. If they did, they did so too late. In the last round of newspaper purchases, the buyers not only expected unreasonable margins of the papers they were buying, they took out loans based on their expectations. You’re seeing the result. The question now is what major U.S. city will become the first to not have a large daily newspaper. My bet’s on Miami.
