Tuesday, December 02, 2008

Blog outlines where newspaper cuts will come

In the second part of an an examination of the financial woes of the newspaper industry, former San Francisco Chronicle and Chicago Sun-Times editor Alan D. Mutter, outlines what is likely to happen at papers across the country:

Companies like GateHouse Media, Lee Enterprises, McClatchy, MediaNews, Morris, New York Times Co., Philadelphia Media, Star Tribune and Tribune are obligated to improve their profitability in the coming years to repay the principal and interest on money they have borrowed to make acquisitions.

In the event the publishers are unable to meet those obligations, their creditors will move in to slash expenses; attempt to sell off assets to generate cash, and take every other step necessary to sustain the properties as going concerns.

This will last as long as the newspapers continue to generate operating profits. But it is highly unlikely in this environment that any creditor would provide additional cash to prop up a money-losing newspaper.

In other words, a newspaper that cannot sell enough advertising or cut enough expenses to sustain profitable operations is not likley to make it to the other side of 2009.

3 comments:

Lee Ann Sontheimer Murphy said...

I stopped subscribing to the Joplin Globe in October but I noticed yesterday that the prices for a single daily copy have risen to 75 cents for weekdays, $1.75 for Sundays. The copy I looked through while at a Joplin restaurant had very little content. If they couldn't sell papers at 50 cents, they will probably sell less for 75 cents.

I remember when the Globe was still a quarter and it was a better newspaper back then!

Anonymous said...

When are you going to post regarding the changes at the Carthage Press? It would appear Rick's life dream has been realized.

Anonymous said...

Ms Murphy, Welcome to economics 100.The Globe only has to sell 2 papers now to achieve the same revenue as they did before selling 3. Assume they sell 20,000 papers at .50, that's $10,000. Now they only have to sell 13,333 to achieve the same revenue. So, they lose 5,000 sales - or 25% circulation, they still achieve more revenue and at a lower cost of production. (less paper, electrcity, soy ink)