There Are Still 'Good News' Stories About the Newspaper Industry, It’s Just That There’s Not So Many As There Once Were And You’ve Got To Look A Little Harder To Find Them

Philip M. Stone April 2, 2008

When a major publishing house such as Hearst announces that it’s investing some $60 million on new printing facilities for one of its metropolitan newspapers It’s the kind of news that sends a big positive message to Wall Street, Main Street, and, yes, even the folks who work on newspapers who by now must be getting pretty demoralized over all the bad news continually out there.

Hearst has announced it is investing $60 million to expand The Albany, New York Times Union with a state-of-the-art press and packaging facility that will allow the newspaper to offer color on every page. The facility should go on line in about late 2011.

Now it doesn’t hurt that Hearst, owner of 15 daily newspapers, 31 weekly newspapers, as well as being one of the world’s largest publishers of monthly magazines, can afford to take a long-term view of its investment. Times-Union publisher  and CEO Mark Aldam hopes for the investment to pay for itself within a decade, the business plan calling for a lot of third party printing including New York City newspapers that want a faster presence in the upstate area. It also probably didn’t hurt that the associate publisher and vice president Is one George R. Hearst III.

The Hearst announcement of investing in all-color comes hot on the heels of the announcement by Mort Zuckerman last month that he is investing more than $100 million so that his New York Daily News can go all-color by the end of next year.

And then comes word that while the sales prices for newspapers may have halved in the past five years, community newspapers are still doing very well. Dave Slavin, a senior associate at media broker W.B. Grimes and Company says, “The first quarter of 2008 has seen solid newspaper merger and acquisition activity in the Southeast and Mid-Atlantic. Even though the news about public newspaper companies has been distressing, I’ve found the exact opposite to be true about community newspapers.

“If you’re a seller the multiples are still great and there are numerous buyers in the market. If you’re a buyer, this is a great time to put your plans into high gear. The cash flow of community weeklies and small dailies is holding up just fine. Many of these prime properties are now flying below the radar screen of the major groups. And you’d be surprised who might consider a sale. They say, ‘Wall Street typically climbs a wall of worry.’ Opportunity is knocking in the newspaper industry.”

The success of smaller newspapers was echoed Tuesday by Marshall N. Morton, Media General president and CEO. The company owns 22 daily community newspapers, more than 150 weekly newspapers along with the three metropolitan newspapers and 23 TV stations. Morton told an investor’s meeting Tuesday, “Our smaller markets tend to be kinder to newspapers, so it’s still not unusual to see a profit margin of 20% or more at our smaller market newspapers. This performance says that the demand for local information continues to be strong and it is saying that we need to be flexible in our approach, local market by local market. And we are.”

Those numbers compare favorably with the results of the annual media survey of the Project for Excellence in Journalism (PEJ) that reported the average pre-tax profit margin for newspapers in 2007 was 18.5% --really nothing to be ashamed of except that seven years ago the average profit margin was around 30%.

Morton also gave a fascinating insight into how media companies need to transform themselves. “We’ve been saying for years now that we’re not just a newspaper company, not just a broadcast company and not just an Internet company. We’re also not a podcast company or a cell phone company. These are distribution platforms; they’re different pathways to consumers.

“What we are is a content company – and, more specifically – a local content company. But it is really more than that; we are audience aggregators. The way we make money is by connecting advertisers to local audiences. We have research-based relationships with consumers in each of our individual markets. Consumers value our information, including those advertising messages by the way.

“When people want information about their communities –whether that’s news, weather, general information, entertainment information, or, particularly this year, political information – we want them to think and turn to the Media General brands in their markets. If we’re doing our jobs right, we are ‘local’ in each of our communities.”

Media pundits of late have been rather morbid about the newspaper industry. A recent Dow Jones story warned, “Hundreds of newsroom layoffs coast- to-coast are raising fears that the push for profits and a dismal economy are teaming up to accomplish the unthinkable -- putting the print industry in its grave.” The PEJ report said, “Newspapers are still far from dead, but the language of obituaries is creeping in.”

But when you have the likes of Rupert Murdoch and Mort Zuckerman fighting over who can get their hands on Newsday it goes to show there’s life in the old newspaper beast yet. A wise piece of Murdoch advice: “What sells newspapers is news.” With that in mind, it’s time publishers start looking at their newsrooms as profit centers instead of cost centers. Without a decent local news product they might as well shut down print.