It’s not the economy, stupid – Part 2

Mark Hamilton on why the “current crisis” in the news business might pay off on the other side of the chasm:

“Even if the American economy turns around in a big way, newspaper health won’t magically improve, because of the internet, demographic and societal changes, etc. But newspaper companies are likely to find that their new, slimmer and leaner-staffed newspapers are giving them something closer to the profitability that they enjoyed in the good old days. Increasing page counts, staff, etc. will interfere with that, particularly as newspapers compete against an ever-growing number of folks seeking to suck up ad dollars.

[snip]

It’s inevitable that by the time the American economy improves, some of the metros will have figured out how to remake the slimmer, smaller-staffed newspaper work for both readers and advertisers. Those that are successful will provide the template. Out of that comes the reinvented metro daily.”

Read the whole thing.

Four months earlier: It’s not the economy, stupid.

Sometimes reinvention happens out of necessity.

11 thoughts on “It’s not the economy, stupid – Part 2

  1. Actually, I think once the economy turns around, newspaper revenue will improve.

    Are newspapers in some sort of death throes. Absolutely. But will newspapers die in the next five years. No. Not even in the next 10.

    But a lot of what is happening right now. A lot of the job losses right now are because of cyclical economics, not secular changes.

    Newspapers will start hiring again in about a year to 18 months (of course, hiring never gets the headlines layoffs due, so hardly anybody will notice).

    Newspapers still generate a lot of cash (for all the hammering Gannett is taking, they still reported $233 million in cash flow). They still have huge market penetration compared to competitors. They generally still the best advertising buy in their markets.

    Will newspapers ever generate 35 percent profit margins again? No. Post recession, 15 percent? Maybe.

  2. Jeff, related to what I said in my previous e-mail … just because a newspaper goes out of business (if it happens) doesn’t mean that the cause was secular. The cyclical piled on top of everything else could be damaging.

    I doubt it will happen, but let’s be clear of the total cause.

    Also, would you could a newspaper shutting down print and going all online as a newspaper going out of business?

  3. Beyond the cyclical nature of the economy, a lot newspaper companies are being strangled by their debt (McClatchy, Tribune, MediaNews, etc.). That’s magnifying the impact of the current downturn. Taking on that debt managed to create nothing of value, and instead is sucking away resources that newspapers should be using to invest in new people and ideas.

    That debt will be a burden for years to come, unfortunately. So even when the economy does improve, any bounceback in revenues will probably just get eaten up by execs wanting to pay down as much debt at possible.

  4. I certainly hope papers survive, as much as my household awaits the next upward economic cycle. Watchdog reporting is paramount to democracy, and tries so hard to keep government and big business in check. But what about all of us whose reporter positions have already been eliminated in the meantime? How do we deal with this fallout? I totally want to find a way to keep reporting so that when revenue comes back and hiring fires back up, I’m on journalism’s front lines. But my rent is due every month between now and then anyway. Thoughts, anyone who thinks about this more/better than me?

  5. Newspapers going out of buisness is one of my worst fears. I would hate having to get all my news from podcasts and the internet. There really is something to be said about actually holding something in your hand and reading it.

    This being said, I do not think that we have anything to worry about. If nothing else we will end up with papers stripped down to the bear bones, a small amount of high quality information. And lets face it, the current paper is so chock full mediocere writting and reporting, that that might not be such a bad thing.

  6. I just spent a couple days sitting in on a Knight Digital Media Venter training for newspaper editors after speaking about innovation with Dan Gillmor, Vin Crosbie, Steve Yelvington and others.

    It would be interesting to compare my thoughts with their perspectives. What I saw was a group of newsroom leaders who know there are serious problems with maintaining the status quo and are motivated to make big changes. Many are planning new niche products and shifting more people into webs, and/or have all print reporters focus on all media forms equally. But to do it, they often have to eliminate staff since they can’t hire. Newsrooms in chains are more hampered than the independents, with a few exceptions.

    My takeaway is that while it may be too late for some, the economy and problems with the old model are creating a sense of urgency (and for some, outright panic). So the economy could be a blessing in disguise.

    I also see a large subset that are mostly thinking abou moving chairs around and not addressing fundamental problems with the model that need to change. And everyone lamented that no revenue people were in attendance.

    In my opinion, the newsrooms with too much organizational ennui are not going to make it. But I see some with positive, possibility-oriented leaders whose energy is infectious with their staff. Those places are doing well and will only get better.

    I’ll blog about this in more detail on Idea Lab next week.

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