It’s Time To Shoot The Messenger: 'What Is The Purpose, What Do You Hope To Gain' From Your Newspaper Doom And Gloom Articles?

Philip M. Stone January 15, 2008

It’s not easy these days writing positive articles about the newspaper industry, and a regular reader has taken this writer to task for newspaper bashing. “Publishers completely understand the challenges before them, but that doom and gloom really goes in one ear and out the other.” the reader chastised.

He referred specifically to last Friday’s article of how the subprime crisis has really hit newspaper advertising and how the shares of several publicly traded newspaper groups hit 52-week lows last week. The reader fired away, “What is the purpose of this article? What do you hope to gain? Unless you are preaching to the choir to steer clear of newspapers (and radio for that matter) there really is no point in ramming more bad news down the throat of newspaper publishers. You are talking about economic conditions that are well beyond their control. Even the best laid marketing plans can’t persuade advertisers to run, when they, themselves, have no customers.”

Well, that certainly got us thinking. Should we play ostrich and put our head in the sand and hope the problems just go away?  Or should we continue to point out things newspapers should be doing to improve themselves to make the best of what is admittedly a bad situation?

This writer explained to the reader, for instance, how much we have been preaching that newspapers need to heavily invest in the video business on their web sites. Anything to get the web revenue up as quickly as possible and all the online statistics show the popularity of video on news sites.

But the reader responded, “I will be the first to agree that they should incorporate video, however, they are not in the TV news business. Heck, I am from a generation that grew up getting my news from TV and radio – I probably only read a newspaper 30 minutes a day and 20 minutes of that is the sports section (don’t tell my clients that [ed note: that’s why we are not identifying him!]). And I think most newspaper web sites stink. I don’t think there is any reason to put so many stories and options on line.”

That may well be the prevailing view of many publishers, and if so, it’s as good an indication of the problem out there as any that we keep writing about.

It’s still this writer’s view that video is a major key to improving newspaper web fortunes, one only has to see, as we often write, how the web sites of local TV stations are increasing in popularity while the growth of newspaper web sites is slowing. With that in mind comes news from the World Editors Forum that they have produced a three-part primer for newspapers on how to use video to best advantage. The series, at http://www.editorsweblog.org is titled, appropriately in light of the debate with the complaining reader, “How Much Video” and its editor, Jean Yves Chainon notes, “Everybody is still figuring out the dos and don’ts of video.”

Newspapers are getting into the video business in varying ways. High up in editorial budgets this year should be video cameras given out to reporters for use as they cover their beats. Some newspapers are getting so sophisticated as to build their own in-house video studio, and others are producing full-fledged video programs. There is no right answer for how deep to go, but one point is clear – one must go video.

But does that reader have a legitimate point that reporting on the plight of newspapers is not really relevant any more since newspapers seem basically powerless to stop the plight of their shares to levels not seen in many years.

For an answer we started looking around over the weekend to see what other media are doing with this story and if the truth is judged by the number of words written on the subject then this really is a big global story. We noted that 24 hours after our story appeared that the Financial Times ran a story in the same vein pointing out the very low share prices of UK media shares with the headline, “Media Stocks Hit As Investors Fear Downturn.” Our pompous attitude to that was that great minds think alike!

And then there was Business Week. It noted, “While 2007 was notably ugly for newspapers, 2008 is looking worse. Paper prices are rocketing, and ad revenues continue to slide. On The Simpsons a character just taunted a Washington Post  reporter, ‘Ha-ha, Your medium is dying!’”

In the UK, Murdoch’s Sun tabloid that has been selling at cut-price for the last couple of months in the London and suburbs area in order to stop circulation falling through the magic 3 million level lost the fight in December, falling some 15,000 copies  below that psychological barrier, and The Sunday Mirror dropped below its psychological 1.5 million barrier causing loads of comment in the UK press that surely one of those two newspapers will soon turn to becoming free.

Widely quoted, including by the FT,  was Douglas McCabe of  Enders Analysis who concluded, “These are psychological barriers, but I think they accelerate the arrival of the day when one of these two papers – probably The Sun – will decide to go free.” It’s an interesting thought since Murdoch more than a year ago successfully launched thelondonpaper, a free PM paper distributed in London and if the Sun were to go free then that would start another great newspaper war going against Associated Newspaper’s free Metro in the morning and against London Lite and The Evening Standard in the afternoon. But don’t get too excited, doubtful that will happen; the Sun after all even with its falling circulation is still the UKs largest circulation daily newspaper.

Over at The Guardian, its headline “Don’t Mention The Share Price” gives a pretty good lead-in to its story about ITV, the country’s largest commercial TV broadcaster. There’s a great line in that story, which just has to be stolen to describe most media shares these days --  “like catching a falling knife.”

And whereas last week Bloomberg commented on how unrealistic balance sheets of many US publicly traded newspaper companies were, Reuters chose a different tact at the weekend to which the Guardian headlined the story, “Cheap US Newspaper Stocks May Reward The Patient”. The story’s theme was basically that with shares being at such multi-year low prices then perhaps this was the time to invest in the industry, and it pointed out several  private equity groups that were doing just that.

Perhaps the most interesting was Private Management Group (PMG) that raised its stake in Journal Register Company from 6% a to 9%. Yes, that’s the same PMG that forced the Knight-Ridder sale and has been busy in the last year unloading a great deal of its newspaper holdings. So the real question we want answered there is whether PMG is planning another Knight-Ridder or it just believes the shares are under-valued and will grow as the market recovers?

The problem with the “now may be the time to buy” stories is that who would have believed that newspaper shares would fall as low as they have, and is there further to go? When the New York Times Company broke through the $20 a share barrier was that the time to buy? When Morgan Stanley Investment Management sold its 7.3% holdings at $18.30 because it couldn’t resolve its dispute with the Sulzbergers on the two-tier share system – was that the time to scoop up shares as buyers obviously did? Yet the shares today are in the $16s. More to fall?

Who would have believed Gannett falling below $40 a share? But there they are in  the $30s. Further to fall? McClatchy that was at $56 when it announced its Knight-Ridder deal is now in the $11s – and they won’t be helped by Moodys Friday downgrade of its corporate rating to a more severe speculative grade with the warning that the company’s revenue will continue to fall this year, primarily because of the real estate market downturn hitting classified advertising and the uncertainty how long that will last. It listed the outlook for the company as “negative.”

And a worrying note came out of the UK over the weekend about the state of advertising spend. The UK’s advertising economy is considered to be somewhat  more robust than the US, but the Bellwether Report for Q4, 2007, showed that advertising budgets were revised down more than at any other time in the past two years. Even Internet advertising, which has been the strongest growth sector, will see the smallest increase in budget spend for four years.

We could go on but the point is pretty clear. The plight of the newspaper industry remains a worrying development and the media obviously considers it a worthy continuing news story. Although trade groups will tell us that globally everything is ok – the numbers are up – when we take our patch of the US and Western Europe then that is not the case. Others will say we should now consider total readership rather than just print circulation, but that just goes to hide print’s decline.

But let us be among the first to say that not all is doom and gloom. There are good things to look forward to, most notably the News International titles in the UK converting to full color this year. That will show whether a £600 million ($1.2 billion, €450 million) investment in making newspapers more pleasing to the eye will pay off to readers and advertisers alike, and that’s as good an example as any of newspapers investing heavily in their print future.

But if it is true that one of those newspapers, The Sun, might consider the “free” route then we will have to start really looking into getting answers for that real doom and gloom question publishers fear the worst – Is it too late to boost paid circulations?