Hussman Talks to Little Rock Rotary Club About Future of Newspapers

Walter Hussman was back on the speaking circuit yesterday, talking to the Little Rock Rotary Club about the future of the newspaper business. No surprises here. Hussman sounded the same notes at this speech as he has in previous comments to other groups. The main message: giving away news for free online is bad business.

Some excerpts below from reporter David Smith’s Arkansas Democrat-Gazette story on the speech, in today’s business section. This story, of course, is locked down to nonsubscribers on the Democrat-Gazette’s Web site, and it’s not available on the DG’s free Web site in northwest Arkansas, where it’s fighting a newspaper war.

“The Internet has disrupted the newspaper business,” Hussman told the Rotary Club of Little Rock. “But we in the newspaper business have facilitated a lot of our own problems. One of those problems is giving away all of our content for free” on the Internet.
That has contributed to publicly owned newspaper chains faring poorly, Hussman said.
Over roughly the past 18 months, the stock price of Gannett Co. has dropped about 75 percent. McClatchy Co. is down 85 percent and Lee Enterprises Inc. has dropped more than 90 percent, according to Hussman.
The privately owned Democrat-Gazette remains profitable, Hussman said.

Many newspaper owners are watching Hussman, said Thomas Warhover, associate professor of newspaper journalism at the University of Missouri.
“They’re waiting to see how it shakes out,” Warhover said. “Some newspapers started [by charging for news online] and switched to the free model. My speculation is that they are reluctant to whiplash back unless they are sure they can get the numbers they need.”

But giving away content has not been successful, Warhover said.
“You only have to look at the bottom lines of newspaper companies to see that,” Warhover said. “Whatever we’re doing isn’t working.”
Even though the Democrat-Gazette is profitable while many papers nationally are losing money, there is little evidence that newspapers are beginning to charge to allow people to read stories online.
“That ship sailed 10 plus years ago,” said Mike Simonton, a media analyst with Fitch Ratings in Chicago.

“Newspapers have got to get more innovative,” Hussman said in an interview after the speech. “When they have more competition and more challenges, they have to do that.”

We should point out, again, that Hussman’s northwest Arkansas operation, fighting a newspaper war with Warren Stephens, is giving away news for free on its Web site. Also: there’s been a hiring and salary freeze at the newspaper, as advertising revenue declines and delivery and printing costs rise.

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