Newspapers as we know them are doomed

[Walter Dnes]

Originally Posted by roger1818

I am glad that they aren't buying any of the print media though. That would give Shaw way too much power.

Starting a new thread, because this is off-topic in the Shaw-purchases-Canwest thread. Nobody in their right mind would buy the newspaper chain. Newspapers as we know them are doomed. The internet and the recession are killing them. In "the good old days", the newspaper was "the only game in town" for advertisers. That included not only the big national chains, but also the local company paying for help-wanted ads, as well as Joe Blow trying to sell his sofa because he's moving. Because they were in a near-monopoly position, newspapers could charge extortionate rates for advertising. This supported 30%+ annual ROI. Then bad things happened...

Even before the internet, circulation and ad revenue had peaked. Used car ads were nibbled at by "auto trader" type weeklies. Real estate ads were nibbled at by "MLS Weekly" type papers. Help wanted ads were nibbled at by "Employment Weekly" type papers. Then came the internet

• Craigslist and Kijiji (sp?) destroyed personal want-ad sales
• Monster.com etal destroyed help-wanted listings
• sites like MLS.ca destroyed real-estate listings

And then came the recession. It was the final nail in the coffin.
The main revenue sources for newspapers are...

• ads from car dealers and manufacturers... oops
• ads from companies recruiting new employees... oops
• ads from real-estate agents/companies selling homes... oops

I've downloaded American ad-revenue numbers, and posted them on a file-hosting site as a spreadsheet. The URL is...

http://www.mediafire.com/?sharekey=e...648785df63f216

Graph1 is unadjusted numbers; Graph2 is adjusted for inflation, using constant 1950 dollars. The initial spreadsheet, without the graphs or adjustment for US inflation, can be downloaded from the Newspaper Association of America website at... http://www.naa.org/TrendsandNumbers/...enditures.aspx

Notice the ad-revenue peak in 2005? That was the year Conrad Black sold to the Aspers for $3.2 billion. Notice the powerdive immediately thereafter? Now you know why Canwest went under. Granted, these are American figures, but Canadian figures will be similar, just on a smaller scale.

Newspapers relied on being monopoly gatekeepers for advertisers. The internet sites I mentioned are eating newspapers' lunch. Because they don't have to support an Ottawa bureau, a Washington bureau, or a Baghdad bureau, the websites can undercut newspapers and still make a profit.

Even with an economic recovery, newspaper ad-revenue will not return
anywhere near its former heights...

• the people and companies who have turned to the net for advertising won't come back.
• there are fewer retailers to advertise, many having merged or gone under during the depths of the recession.
• there are a lot fewer car dealers to advertise, especially Chrysler and GMC dealers, after the Chrysler and GMC shut down a whole bunch as part of their bankruptcy/restructuring.

Contrary to my sentiments, Torstar is bidding for Canwest's newspapers. If they "win", I believe that 5 to 10 years from now, we'll be seeing Torstar in trouble, possibly CCRA (Canada's version of Chapter 11). Yes, I'm serious. Shelling out a billion dollars (some combination of cash and debt) will greatly speed up their demise.

• The New York Times shelled out $1.3 billion for the Boston Globe in the 90's and, more recently, $600 million for a brand spanking new corporate headquarters. Then they had to borrow money at 14% (YES!) from Carlos Slim, a Mexican businessman whose ethics they had previously disparaged. They're temporarily liquid, but they have to hope and pray the economy turns around.
• Canwest bought out Conrad Black for $3.2 billion in 2005, and we know what that led to.
• McClatchy purchased the Knight-Ridder chain for $4.1 billion in 2006, and now McClatchy is in trouble.
• Sam Zell purchased "The Tribune" chain for $8.2 billion in 2007 (using mostly OPM, i.e. Other People's Money). The Tribune filed for Chapter 11 bankruptcy a year later, but Zell remains a billionaire.

[hugh]

We've had these conversations before and I think most of us would agree that the newspaper business is on the decline. The loss of classified ads really hurt since it used to make up about 30% of revenues for the industry.

Although the industry is in decline, I'm not sure I would pronounce it doomed. Readership in Canada has held up pretty well in the last 10 years and many Canadians still want the "local rag."

In addition, the NYT and other major papers are finally realizing that putting all their content on the Web for free only drives traffic but not revenue.

My guess is The Toronto Star will still be around in 10 years. We will likely have more "digital editions" and less "dead tree editions" but I think they will adopt a "news everywhere" strategy where readers pay for access regardless of the platform they view it on.

[james99]

Let's see how well they do when the recession ends and ad spending increases.

I have a daily subscription to the SF Chronicle via the Kindle. Just an example of how newspapers can sell their editions in other formats.

[Coasterdon]

I can't be the only person who enjoys reading the local paper over breakfast. When I get an IPad I can see myself subscribing to other papers not available here to read at other times but I prefer reading a my local newspaper over breakfast.

[eljay]

I can't be the only person who enjoys reading the local paper over breakfast.

You're not.

[apn]

Thread seems 5yrs too late. I've never had a newspaper subscription and probably never will. Used to enjoy sitting down with the Sunday Times, but have long since abandoned the habit.

With the boomers expiring, I think commercial television and maybe radio will be next as the younger generations continue to embrace the internet and "I want it now" on-demand mentality sets in.