Newspapers Injure Themselves at a Crucial Moment

Another week, more bad news for the newspaper industry. Today, quarterly numbers for the New York Times:

With its profit and revenue both lower in the second quarter, New York Times Co. warned Wednesday that a troubling trend toward weak advertising sales shows no signs of abating.

The publisher of the flagship New York Times and other newspapers (NYT) reported it earned $21.1 million, or 15 cents a share, in the latest three months, down 82% from a net profit of $118.4 million, or 82 cents, generated in the second quarter of 2007.

The year-earlier earnings included an after-tax gain of $94.3 million tied to the sale of the company’s broadcast-media group, among other items.

Revenue in the latest quarter fell 6%, to $741.9 million, from the prior year.

On average, analysts surveyed by FactSet Research had been looking for New York Times Co. to report a profit of 22 cents a share on revenue of $755 million.

Total ad revenue plunged nearly 11%.

This, of course, is why major newspapers companies throughout the country are laying off workers left and right. And while print ad revenue dips and online ad dollars rise, online ads aren’t valued as highly as their print counterparts. The margins are stellar for online advertising, but the money doesn’t (yet) make up for the decline in print revenue.

So newspapers are caught having to make a tricky transition. They’ve got to invest more and more editorial resources in online, but they’ve got less and less money with which to do so.

A friend of mine works on the editorial side of a major metro daily, part of a national chain of newspapers. He’s survived one round of buyouts and fears another before the end of the year. He describes a dwindling newsroom that’s gripped by uncertainty. Stories are getting smaller and sections are getting cut. It’s a weird time, he says. And of course no one knows what’s going to happen.

Here’s what I hope will happen: Newspapers will realize that cutting editorial and content at this crucial moment of transition is the worst thing they can do. John Morton, a newspapers analyst speaking today on NPR’s “Day to Day,” says newspapers are shooting themselves in the foot by doing so, when establishing a strong editorial presence on the Internet is important to attracting readers and distinguishing themselves.

How newspapers solve this problem is the $64,000 question. But they can’t continue down this road. It might slow the bleeding in the short run, but how do you sell advertising around a news product that’s diminished or, just as likely, doesn’t even exist?

Of course some journalists, writing to the Columbia Journalism Review, question whether solid editorial even mattered to newspaper owners in the first place. But that’s a whole other issue.

More

A Chicago Tribune investigative reporter talks about why he’s quitting journalism [Day to Day]

Parting Thoughts: CJR posts letters from frustrated, venting journalists

The Rage of Squeezed-out Print Journos [Gawker]

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One Response

  1. […] angle, newspapers are losing in the transition from the print to online model. They’re cutting away at the very thing that makes them great (their resourceful, talented newsrooms), while, according to this study, inadvertently discouraging […]

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