Category Archives: Decline

Clay Shirky on the Collapse of Complex Business Models – Media & Newspapers

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…Diller, Brill, and Murdoch seem be stating a simple fact—we will have to pay them—but this fact is not in fact a fact. Instead, it is a choice, one its proponents often decline to spell out in full, because, spelled out in full, it would read something like this:

“Web users will have to pay for what they watch and use, or else we will have to stop making content in the costly and complex way we have grown accustomed to making it. And we don’t know how to do that.”

-CShirky read the entire post on Shirky’s blog.

Newspaper Association of America Reports Ad Revenue Fell 27.2% in 2009

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Newspaper print ad revenue fell 28.6% from last year (which fell 17.7% the year before).  Even more alarming is the fact that newspaper Online advertising revenue fell 11.8% (which fell 1.8% the year before).

Total ad spending in the U.S. fell 12.3% to $125.3 billion in 2009, according to a report from Kantar Media (formerly TNS Media Intelligence).

Internet display advertising was up 7.3%, and free-standing inserts, up 3.0%.

While the economy had an impact in the numbers, clearly, the business model is not working.

Everyone is Going Nuts about NYTimes.com Charging for Content in 2011

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I heard through Twitter that NYtimes.com was going to start charging for access to their content if you read too many articles on their site… what?

Forbes is calling it “Meter Madness At The Times” and goes on to report-

Greg Mitchell, E&P’s former editor, termed the plan “vague.” Content Bridges’ Ken Doctor called it “a big bet.” Social media critic Mathew Ingram, blogger at GigaOm, wrote, “Why is the NYT waiting until 2011? This isn’t exactly rocket science to implement.” Reuters’ media blogger Felix Salmon minced no words, calling it “a sad day for online journalism.”

I confirmed it by doing a Google News search and then reading an article about it from the Free site Paidcontent.org where they also published the entire NYT memo to the staff.

I wish NYTimes.com all best I’m curious to see how this grand experiment (Round 2) works out. Remember Times Select was a failure, I’ve said it before and I’ll say it again, you can’t charge for general interest news in the internet paradigm.

BREAKING! Buggy Whip Manufacturers Have Not Hit Bottom!

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“Despite some tentative optimism from Washington, Wall Street and Madison Avenue, people who monitor the newspaper business for a living say it has not yet hit bottom.” 9/20/2009 -NYTimes.com (yeah that’s right, the FREE site)

“Sen. Ben Cardin (D-Md.) has introduced S. 673, the so-called “Newspaper Revitalization Act,” that would give outlets tax deals if they were to restructure as 501(c)(3) corporations.” 9/20/2009 -TheHill.com

So if going out of business and/or seeking a bailout from the Federal Government is not the bottom then hey, the Buggy Whip industry hasn’t hit bottom either.  The Buggy Whip makers have seen a stabilization and even increase in sales in the last few years… yep, things are fine.

How Scott Adams Saved Newspapers – I’ll Pretend I Didn’t Read This

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Dilbert creator Scott Adams writes a blog post, How I Saved Newspapers.

Normally I like Dilbert comics.  They are witty and fun and relevant and I imagine the creator of those comics sometimes has a window into my world.  When I read Scott Adams blog post about saving newspaper though I couldn’t help but think that Bottleneck Bill or some other minor character wrote the piece.  Adams solution for a failing newspaper industry is called “super-local news” and relies on volunteers submitting content to newspapers… “the super-local news has to have lots of content about classrooms, Cub Scout meetings, local movies listings rated less then R, and that sort of thing.” Sounds like the internet only useless.

Adams states that this new newspaper will of course feature Dilbert comics.  *sigh* I’ll just pretend I didn’t read this Scott.

NAA Looks Foolish on National TV

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Tuesday March 31, 2009 Steven Colbert had on John Sturm, president of the Newspaper Association of America.  Typical of all his guests, he made them look out of touch and stupid.  As Advertising Age wrote in their blog, “it was hilarous and depressing”.  Why on earth would the NAA send anyone to speak with Colbert for his program?  You know the saying, “all publicity is good publicity” well, it’s not.

Steven Colbert is an influencer watched by millions and he just pronounced the floundering newspaper industry dead.  It’s impossible for Strum to come up with a single retort to “why buy the cow when you can get the milk for free?” and “if you’re serious about competing on the internet, why don’t newspapers have a huge porn section?”

The Colbert Report Mon – Thurs 11:30pm / 10:30c
Stephen’s Namesakes
comedycentral.com
Colbert Report Full Episodes Political Humor NASA Name Contest

A Change in Media Economics 1991 letter to the Shareholders of Berkshire Hathaway

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Excerpt from 1991 letter to the Shareholders of Berkshire Hathaway
http://www.berkshirehathaway.com/letters/1991.html

A Change in Media Economics and Some Valuation Math

In last year’s report, I stated my opinion that the decline in
the profitability of media companies reflected secular as well as
cyclical factors. The events of 1991 have fortified that case: The
economic strength of once-mighty media enterprises continues to
erode as retailing patterns change and advertising and
entertainment choices proliferate. In the business world,
unfortunately, the rear-view mirror is always clearer than the
windshield: A few years back no one linked to the media business -
neither lenders, owners nor financial analysts – saw the economic
deterioration that was in store for the industry. (But give me a
few years and I’ll probably convince myself that I did.)

The fact is that newspaper, television, and magazine
properties have begun to resemble businesses more than franchises
in their economic behavior. Let’s take a quick look at the
characteristics separating these two classes of enterprise, keeping
in mind, however, that many operations fall in some middle ground
and can best be described as weak franchises or strong businesses. Continue reading →

Newsday Ending Free Online Content and other newspaper news

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Newsday plans to charge for online news -from Reuters

* Cablevision plans to charge for Newsday website

* Writes down Newsday value by $402 mln

Analyst Ken Doctor on his blog wonders what someone would be willing to pay for 4.5 minutes a month (the average site usage for unique visitors) for access.

Rocky Mountain News to close, publish final edition Friday -from RMN

The Rocky Mountain News publishes its last paper tomorrow.  “Denver can’t support two newspapers any longer,” Scripps CEO Boehne told staffers, some of whom cried at the news. “It’s certainly not good news for you, and it’s certainly not good news for Denver.”

What a crazy day in newspaper land.  No one expected the Newsday news.  I half jokingly tweeted that the NY Post and NY Daily News sites are expecting a bounce in visitors.  I’m curious to see what happens at Newsday, I suppose the alternative of them going bankrupt was unacceptable.

Chicago Journalism Town Hall Newspaper Industry Panel Discussion

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Chicago Journalism Town Hall Newspaper Industry Panel Discussion February 22, 2009

Chicago Public Radio recorded the THREE HOUR event.  listen via these links:

Here’s Part One…

And here’s Part Two

Steve Rhodes of the Beachwood Reporter has an ebullient follow up:

So when I looked at the folks scheduled to appear on the town hall panel, I shuddered. Now, bear in mind, I know almost all of them and like almost all of them. Some I admire greatly, in fact. But someone please tell me, how is Rob Feder going to help us save Chicago journalism? Mancow.com?

Ridiculous Debt to Cash Flow Ratio Dooms Journal Register Company

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Journal Register, Publisher, Files for Bankruptcy -Bloomberg

The publisher of the New Haven Register would cancel its stock and become a closely held company, owned by its lenders under a proposed reorganization plan filed in U.S. Bankruptcy Court in New York. It listed debt of as much as $1 billion and assets of between $100 million and $500 million in Chapter 11 documents.

Journal Register Company Files for Chapter 11 to Implement Pre-Negotiated Debt Restructuring; Expects Normal Operations to Continue Uninterupted -Journal Register Company Website

Saturday, 21 February 2009

Yardley, PA, February 21, 2009 – Journal Register Company (the “Company”) (PINKSHEETS: JRCO) today announced that the Company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to implement a pre-negotiated plan of reorganization (the “Plan”) with certain of its secured lenders designed to substantially reduce the Company’s debt.  The Company intends to continue to operate as usual, and does not anticipate any business interruption during the restructuring. -continue reading at the above link

There are many debt ratios which one can apply to measure a company’s ability to service debt, I’ll Just do the Cash Flow to Debt Ratio here.  This is more Alan Mutter‘s turf so ask him for those numbers (or verify mine).

JRCO’s operating cash flow for the year ended December 2007 was $54million

JRCO’s Total Debt for the year ended December 2007 was  $624.8million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 0.086 or 8.6%

As investopedia states: Under more typical circumstances, a high double-digit percentage ratio would be a sign of financial strength, while a low percentage ratio could be a negative sign that indicates too much debt or weak cash flow generation.

As a comparison: Lee Enterprises (LEE)

LEE’s operating cash flow for the year ended September 2008 was $128million

LEE’s Total Debt for the year ended September 2008 was  $1337million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 0.095 or 9.5%

As a comparison: The Washington Post (WPO)

WPO’s operating cash flow for the year ended December 2007 was $581million

WPO’s Total Debt for the year ended December 2007 was  $490million (Short/Current Long Term Debt + Long Term Debt)

Giving the company a Cash Flow to Debt Ratio of 1.185 or 119% – ample cash flow to service debt.   Oh Journal Register, where did you go wrong?  How does a company with one tenth the cash flow of The Washington Post have over one and a quarter times its debt? Lee, you are next.

Alan Mutter Jumps The Shark – Getting Over Newspapers

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This post is in response to Why newspapers can’t stop the presses from Newsosaur by Alan Mutter.  It is a series and at the time of this writing he was on installment 3.  Please help me explain why he thinks newspapers should focus on newspapers because I can’t make any sense of this.

Because newspapers on average derive approximately 90% of their sales from print advertising, the only ink-on-paper newspapers that can afford to attempt digital-only publishing are the ones that are irreversibly losing money. -Alan Mutter

So we have newspaper companies that are irreversibly losing money.  These companies have discovered that in the internet paradigm, their value proposition is valueless or near valueless. Continue reading →

UK Newspaper For Sale, The Independent

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Not long ago I wrote fondly of the Independent.co.uk’s move to incorporate Reddit into their website to allow multiple entry points to their content.  The headline in the image I used could not have been more accurate.

In three months The Independent’s Debt caught up with it.  It now needs $260 million by May of this year to pay off loans or go into default.  Too excited indeed.

How’s the site doing?  Not too bad actually.  If the debt can be eliminated and costs from the print side controlled, maybe they’ll make it!  But don’t get too excited. Continue reading →

Why Are Newspapers Paying A Dividend?

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The news-wire services were all abuzz today with the news that McClatchy (MNI) would suspend its dividend indefinitely following 2009 Q1.

The purpose of paying a dividend it to reward shareholders by telling them something like, “our company is so mature and profitable that in lieu of retaining our earnings for growth, reinvestment, or acquisitions we are going to give it to you”.  Some companies have never paid a dividend.  They feel that they can better grow the money for stockholders better than the stockholders themselves.  Berkshire Hathaway, for example, has never payed a dividend and will most likely never pay a dividend.

Why did it take MNI until 2009 to realize the money in their coffers would most likely be better used to pay down crippling debt?  Why is NYT still paying a dividend?  Is it only because the Sulzberger family needs income?  What about GCI?  Why do they think their company is better off shedding cash than using the money to pay down debt and restructure?

I don’t get it.  Paying a dividend is not fooling anyone into thinking your newspaper is strong.  Do everyone a favor, retain those earnings and pay down debt until you figure out how to become economically sustainable.

Want to learn more about dividends?  Here is an intro from Investopedia:

One of the simplest ways for companies to communicate financial well-being and shareholder value is to say “the dividend check is in the mail.” Dividends, those cash distributions that many companies pay out regularly to shareholders from earnings, send a clear, powerful message about future prospects and performance. A company’s willingness and ability to pay steady dividends over time–and its power to increase them–provide good clues about its fundamentals.

Continue reading at Investopedia.com

The Day The Newspaper Died – From The New Yorker

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The day the newspaper died -from The New Yorker

James Franklin’s New-England Courant, launched in 1721 and its editorial policy:

“I hereby invite all Men, who have Leisure, Inclination and Ability, to speak their Minds with Freedom, Sense and Moderation, and their Pieces shall be welcome to a Place in my Paper.”

This sounds like the policy of any blog, no?

The New York Times – The Future Looks Slim

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New York Times Co. in Talks With Carlos Slim on Preferred Stock Investment -from WSJ.com
“The talks are ongoing and may yet fall apart but one of the options being discussed is a preferred-stock issue.”

A set up like this would make the Mexican Billionaire one of the largest shareholders of NYT stock.  He already own 6.4% of the common stock.  The preferred stock would make Slim more than just a common shareholder, but a stakeholder with leverage.   MXTimes.com here we come?

Which begs the question: Why are Americans investors not interested in The Grey Lady?   Why is Slim the only one seeing opportunity here?

UPDATES:

Will Carlos Slim Save The New York Times? -from BusinessWeek.com
How independent will these publications remain?  KGB? WTF?

” London’s 171-year-old Evening Standard is nearing a deal to sell a controlling stake to Alexander Lebedev, one of Russia’s richest men (and a former KGB agent). Lebedev has also discussed the possibility of buying British national newspaper The Independent as well.”

UPDATE: January 20, 2009
Slim Lends New York Times $250 Million as Sales Fall -from Bloomberg

“While it provides some breathing room, this investment doesn’t solve the longer-term issues facing the newspaper industry,” said Fitch Ratings analyst Mike Simonton in Chicago. “It will be even more challenging for the company to generate positive free cash flow in 2009 with this new, heavy interest burden.”

Why Is Google’s CEO, Eric Schmidt, Worried About the Newspaper Industry?

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Follow Up to Google CEO Eric Schmidt’s Interview With Fortune’s Adam Lashinsky This has all the background information on what is coming to be known as Google’ refusal to bail out the newspaper industry.

After a Twitter exchange with Jay Rosen he brought it to my attention that perhaps instead of me asking “why should Google help newspapers?”, I should I ask, “why is Schmidt worried”?  Rosen is the man.  He always gives me good jumping off points for further investigation.

So, why is Eric Schmidt worried about the failing newspaper industry? Here is the final question and response from the Fortune interview. Continue reading →

Hyperlocal Disaster – East Iowa Herald Closes After One Year

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You can’t get more “hyperlocal” than a newspaper serving a population of 1000. This is the purest attempt at Hyperlocal that I’ve ever read about, a very small operation covering a very small population. It has been said before that hyperlocal fails because the advertising cannot support it. So what happened in this situation? Something new and unexpected? Nope, from publisher Mitch Traphagen, “It literally came to an end, the ad revenues,”.

The East Iowa Herald Closes After One Year -from AP/ Chicago Tribune.

It should be pretty obvious by now that advertising revenues cannot support general interest news operations by now. The Krugman Paradox and Publisher’s Dilemma spell this out pretty clearly.

What about donations? What about Spot.us? Barring a generous grant or donation, this model will also fail. Spot.us might be a nice niche alternative for the San Francisco Bay area, but I don’t see the model working for small-town USA. There just isn’t enough disposable income floating around for the model to work. Continue reading →

Detriot Newspapers Going Paperless – you’ll probably read about this in the newspaper tomorrow

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Paul Anger, vice president of news and editor of the Detroit Free …
Detroit Free Press, United States – 27 minutes ago
The Detroit Free Press announced today a first-of-its-kind plan in the struggling US newspaper industry — emphasizing more online delivery of news and …

Detroit dailies curtail home delivery, boost e-editions
Bizjournals.com, NC – 39 minutes ago
The Detroit News — owned by Denver-based MediaNews Group Inc. — and another Detroit daily newspaper, the Free Press, faced with one executive called a fight …

Detroit Newspapers Confirm Plans To Limit Home Delivery
CNNMoney.com – 1 hour ago
The publishers of the Detroit Free Press and Detroit News confirmed Tuesday that they will limit home delivery to three days a week in order to shift …

“Save New York Times” Facebook Group Raises $0

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Some poor misguided soul has taken it upon himself to save the $ulzbergers from a paradigm shift. That the company is still paying a dividend is reason enough not to donate. But I could think of many more. Some other person is trying to “save” the industry one tshirt at a time.

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2004 Newspaper predictions way off, well maybe not that far

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Excerpt from State of the News Media 2005

By the Project for Excellence in Journalism

In December 2004, a mock documentary about the future of news began making the rounds of the nation’s journalists and Web professionals.

The video, produced by two aspiring newsmen fresh from college, envisioned a nightmare scenario – by the year 2014, technology would effectively destroy traditional journalism.

In 2008, Google, the search engine company, would merge with Amazon.com, the giant online retailer, and in 2010 the new “Googlezon” would create a system edited entirely by computers that would strip individual facts and sentences from all content sources to create stories tailored to the tastes of each person.

A year later, The New York Times would sue Googlezon for copyright infringement and lose before the Supreme Court.

Will the New York Times be around in 2011?  If they are not around, who will protect us from Googlezon?  And who were these two “visionaries”?  I demand answers.

Reaching Out to Finance and Law Experts Regarding a Switch to Non-Profit Status

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NEWS ALERT

from The Wall Street Journal

Dec. 7, 2008

Tribune is preparing for a possible bankruptcy-protection filing as soon as=
this week, according to people familiar with the matter, opening a new fro=
nt of trouble for the newspaper industry.=20

As Tribune continues discussions with its lenders to rework its debt load, =
the newspaper-and-television concern in recent days has hired Lazard as its=
financial adviser and a legal counsel for a possible trip through bankrupt=
cy court.

For more information: http://online.wsj.com

–The announcement above just gave the post below a greater sense of urgency–

I’m looking to get information about an idea that is floating around with more and more regularity from the newspaper industry “experts” and “commentators”.  The idea is turning a failing for-profit newspaper into a non-profit news source.  I’m not sure why a newspaper would want to do this. That’s why I’m reaching out to experts in finance and law.
Continue reading →

Newspaper Publishing Employment Data 2005 to 2008

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Dr. Joe Webb is a very smart guy.  He runs WhatTheyThink.com, a graphic communications resource for analysis and economic forecasting.  Mostly he focuses on commercial printing but his weekly audio chart for December 1, 2008 caught my eyes and ears.

The chart he has put together using employment data from the Bureau of Labor and Statistics shows that newspapers have lost roughly 15% of their employees since January 2005.  This highlights the fact that those companies were adjusting to a negative market well before any “financial crisis” hit America.

Simplified Chart by metaprinter.com

This chart is a simplified one that I whipped up.  The chart on Dr. Joe’s site is much more complex incorporating all print mediums as well as PR and Ad Agency employment.

Not one to mince words, Dr. Joe states that basically what we are seeing [on his chart] is, “newspapers dying on the vine…  in the long run this is probably an opportunity for commerical printers to move that printing over to the commercial side”.  To hear the dulcet tones of Dr. Joe’s voice visit his site and follow along as he explains the chart.

Kansas City Star Newspaper Plant – Invest a Lot to Learn a Little?

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November 10, 2008 “Publisher Mark Zieman said the paper was looking into the possibility of selling, then leasing back the huge $200 million printing plant it began using a little over two years ago. ” -from Editor&Publisher

“Looking to the future I wish the Kansas City Star my best and thank them for taking us on a tour. I hope that their expanded capabilities in the new plant enhance the publication and its reach into the community.”

That’s what I wrote on September 24, 2007 after attending the International Newspaper Group annual conference held in Kansas City.  We were given a tour of this facility.  Very Impressive.  Very New. Very Clean. Very Modern.  But tell me what is the point of building a $200million dollar buggy whip factory?  When they gave us that tour, we were told that the presses were capable of printing and binding other periodicals besides newspapers.  What we apparently weren’t told was that no contracts for printing such things were ever signed.

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Cashflow Problems at Daily Planet, Clark Kent to Take Buyout!

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“Superman’s weaknesses are well documented: Kryptonite. Magic. The evil genius of Lex Luthor and Brainiac. The imperilment of those closest to him. Bryan Singer. The risotto at Le Cirque (The calories! Soooo worth it, though). And all of these, except for the risotto, have been explored at great length—which, you might think, is why DC is sending him into space. But no, the truth is that the Big Blue Boy Scout is facing a more serious threat than any he’s seen in the 70 years since his debut. A threat that none of his yellow-star-derived powers can help him against. A threat that will seem painfully obvious once it has been pointed out.

I am speaking, of course, of the decline of print media.”  _from io9.com

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Are You Humiliating Your Newspaper Employees? Tis The Season!

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There has been a noticeable increase in stories about the shitty jobs newspaper employees are being given in order to continue receiving their pay. Editor and Publisher reported this morning that Newark (NJ) Star-Ledger employees, “Reporter Jason Jett and Assistant Deputy Photo Editor Mitchell Seidel have been filing, sorting, and delivering mail for more than a week, according to sources”. Later this afternoon Westword Blogs reported that, “Staffers at the (Colorado newspaper) Longmont Times-Call recently received an internal e-mail inviting them to work as valets at a private Christmas party for the Lehman family, who own the paper”.

I’m sure the owners of the companies think they are doing a great thing for their employees. I can’t think of a better way for employees to generate revenue than manning mailrooms and parking cars. WTF!? How about parking your own car and paying your employees to do something they are trained to do?

WSJ.com and FT.com Subscription Revenue Jumps 15% in 10months!

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January 2, 2008 from paidcontent.org: “a new report from Bear Stearns analyst Spencer Wang. WSJ.com revenue is currently pegged at $78 million annually, based on an estimated 989,000 subscribers paying $79/year”

November 5, 2008 from paidcontent.org: “WSJ.com is making more than $200 million from advertising and subscriptions, News Corp Chairman and CEO Rupert Murdoch told analysts during the company’s earnings call. He said the site is making “probably $100 million in subscriptions and certainly over $100 million in advertising.”

So either this information is inaccurate, or the site is really growing its paid readership. It is definitely probable that the current economic climate is raising interest in the publication. After all, the Financial Times Publishing unit announced that sales were up 14%, with ad revenue up 1% for the first 9 months this year. Awesome considering the world economy is down about 40% this year!

This reinforces the notion that people are always willing to pay for good information. Henry David Thoreau wrote that “A truly good book teaches me better than to read it. I must soon lay it down, and commence living on its hint. What I began by reading, I must finish by acting.”

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Newspapers do not need to get into the memorabilia business.

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I figured it would only take a matter of time for some “authoritative” voice to validate the NEED for traditional printed newspapers by citing the DEMAND from November 5th.  In this recent article from Alan Mutter’s newspaper industry blog the argument is made that November 5th proved “that newspapers still matter”.

Platform Agnostic

The article goes on with an emotional plea for newspapers to focus on news stories that “touch the hearts and minds” of their readers, just like what happened on November 5th and September 11th.

———————————————————————— Continue reading →

100 Year Old Newspaper Abandons Print

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NEW YORK, Oct 28 (Reuters) – The Christian Science Monitor, started in 1908, will abandon its weekday print edition next year, choosing instead to put daily news on its free website and print a paper just once a week.  As of March 31, 2008, the Monday through Friday print circulation was 56,083 daily.

The Monitor gets a $10 million to $12 million annual subsidy from The Church of Christ Scientist that keeps it afloat.  The news source wants to end the subsidy by supporting itself with advertising on its website. It also is exploring becoming a national and international news provider to local U.S news outlets.

ABC News Cancels Its Newspaper Subscription – FOREVER!

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The New York Observer reported on October 24, 2008 that ABC News was canceling their magazine and newspaper subscriptions!  ABC News president David Westin announced cuts in administrative expenditures to better align their budget with the tough economic climate.  By saying the move was better for the environment, he pretty much put a nail in the coffin for never bringing the subscriptions back. Yikes!  Here is an excerpt from his statement:

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Wall Street Journal Reports Newark (NJ) Star-Ledger Losing 40% of Newsroom

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40% or 151 of about 330 people took buyouts in the recent selling / panic fiasco at the newspaper.  This begs the question of.  “what will the content look like now that so many people are leaving”.  But more importantly, what were those people doing before they were let go?  I’d like to see a list of Names and Titles of people leaving.

From The Wall Street Journal:  The task now, Mr. Willse said, is to “figure out a way to make a good newspaper with a 40% smaller staff.”

Free Advertising Ideas For Newspaper Publishers

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In a recent interview Gigaom.com creator Om Malik alluded to a few ideas, which newspapers can use to innovate their online presence.  He jokingly stated that for $25million he’d be happy to dispense his knowledge to the newspaper industry, but not for less.  I work for much less.

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Newspaper Revenue Model Severely Jeopardized – Current Economy Reveals Massive Flaws

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Last week Sequoia Capital, the venture capital firm that funded Apple, Oracle, Cisco and Google, among others held a meeting and made a presentation to its portfolio companies about how to try to survive an economic downturn.  The attached presentation is quite in-depth and technical however it does a good job of highlighting the implications on future spending habits.

The implications from the presentation for newspaper publishers are troublesome.  We already know the print advertising model has been rapidly failing since the second quarter of 2006.  Now, the increased exposure and reliance of newspapers on internet advertising and internet advertising growth can become a deadly problem.

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As Predicted, The Star-Ledger and Truckers’ Union Come to an Agreement

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As I reported on September 17th, the threat of sale was just that. This thing was getting signed no matter what. But what kills me, and the real news story here, are the statements issued by Donald Newhouse. In order to fix a problem, you must first admit that there is a problem, and I don’t get even a hint of that from him.

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Will The Newark Star-Ledger Close Newspaper in January? Doubtful

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The Wall Street Journal reports that the Newark Star Ledger will shutter its operations on January 5th 2009. An agreement with the truck drivers’ union, Teamsters, is unlikely.

Publisher George Arwady states, “we still are far from an agreement with the Drivers’ union… the lack of progress makes it doubtful the two sides will reach an agreement by the Oct. 8 deadline”. The following mail notices will be sent out in accordance with Federal and New Jersey state law.

To: All Star-Ledger Employees
From: George Arwady
Date: September 16, 2008
Re: Update
As I have previously told you, there are three conditions that must be met in order for The Star-Ledger to remain in business under its current ownership. Although we are making progress toward meeting two of our three conditions (the Mailers have a ratification vote scheduled for September 22), we still are far from an agreement with the Drivers’ union.
Accordingly, since it is doubtful that the Drivers will ratify an agreement by October 8, 2008, we will be sending formal notices to all employees this week, as required by both federal and New Jersey law, advising you that the Company will be sold, or, failing that, that it will close operations on January 5, 2009.
It is most unfortunate that we have to send out this notice, but the Drivers have left us with no choice.
George Arwady, Publisher

Personally I feel that the Newspaper will not fold. The Newhouse organization just redesigned all of its newspaper websites (they share a common platform). NJ.com hosts all the Newhouse newspapers for New Jersey.

* The Star-Ledger
* Times of Trenton
* Jersey Journal
* Hunterdon Democrat
* Somerset Reporter
* Suburban News
* Independent Press
* Warren Reporter
* Horse News
* Gloucester County Times
* Today’s Sunbeam, Salem
* Bridgeton News

I think the truckers union will come to an agreement before the October 8th deadline. The incentive to retain their jobs is greater than the opportunity of striking and having to find other union work in the current economic climate.

If there is no agreement, expect Newhouse to run The Star-Ledger through their NJ.com website and “sell” the print product to a non union buyer. The printed product will continue under a non-union enterprise.

Who exactly is the Star Ledger planning on selling the newspaper to?

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I did a little digging to see how much one would have to pony up for buying The Star-Ledger should they decide to go ahead with their plan on October 1st. I have come to the conclusion that the paper is unsellable in its current business format, check out the links below.

So why would anyone buy this failing newspaper? I suspect a company would only be looking to absorb the intellectual property into their own organization. Everything else, the capital equipment, the people, the business contracts,.. all down the tubes.

I’ve said it once, and i’ll say it again, “if all the Star Ledger does is lay off 200 workers, the paper will fail”. The company needs a major replacement of leadership. How in gods name does the biggest and most powerful newspaper in the state of New Jersey go bankrupt?  I’ll tell you how, failure of planning, severe lack of innovation, and a total disregard for their customer’s needs.  

Having said that, potential suitors include but are not limited to: 

  • Gannett owns a few papers in the state and prints in NJ and upstate NY. I suppose they would be the top contender. I don’t think shareholders would be pleased with a newspaper company purchase right now though.
  • Followed by the New York Daily News with operations in Jersey City.
  • Followed by Sam Zell, because he is pretty unpredictable (which is probably a good thing right now). Hey Sam if you are reading this, email me. I have a really great newspaper business model idea and I think you are just the guy to try it out.
  • Then there is the outside chance Mr. Newhouse sells it to himself, gets rid of all his union problems and does something truly innovative. Be the first Major newspaper to go completely online.
    • If Samuel Irving Newhouse Jr. figures the company is a complete wash anyway, why not turn it into a grand experiment?
    • It could be a litmus test for the 27 other newspapers he owns through Advance Publications

NEW YORK TIMES :WANT to buy a newspaper company? No? You’re in good companyREAD MORE

WSJ Saving Money By Not Giving Me A Paper?

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The weekend edition of The Wall Street Journal has been removed from my student subscription.  For Shame.  Now what will I read my son?  Just because we can put a newspaper on a computer and cell phone does not mean we want to consume it that way all the time.

metaprinter reading the wall street journal to his son

From: The Wall Street Journal
Date: 2008/7/29
Subject: Important Information about your Subscription
To: [address deleted]

As a student subscriber, you have been receiving The Wall Street Journal Weekend Edition as part of your subscription. Students across the country have told us that the Monday – Friday editions of The Journal work best with their academic schedules and needs. Based on this feedback, we have adjusted your subscription to deliver only Monday through Friday, effective Saturday, August 2.

You can continue to access all of the articles and features found in the Weekend Edition through the Online Journal at WSJ.com – included in your student subscription to The Journal.

If you would like to continue to receive print copies of the Weekend Edition, please click on this link and complete the online form.

Thank you for being a valued subscriber of The Journal.

 

UPDATE 9-1-2008

One phone call is all it took to request Saturday delivery.  I’m back in the game.