Monday, December 08, 2008

The Decline and Fall of Modern Newspapers

The New York Times is fortunate. They have a shiny new office tower that they can borrow nearly $225 million against in order to keep the newspaper operations afloat. The problem is that the actual value of the company is pretty much contingent upon the price of that office building (the land for which was procured via eminent domain for those that want to revisit recent history).

The Miami Herald is up for sale. The Newark Star Ledger was up for sale and considering bankruptcy but instead settled on massive layoffs and combining some business operations with the Times of Trenton.

The same can't be said for the Tribune company, which runs dozens of papers across the country, including the Los Angeles Times and the Chicago Tribune. They're considering bankruptcy protection. Of course, it was the Wall Street Journal who broke that news. The Tribune Company has hired bankruptcy specialists to figure out the next step.

The New York Sun already folded, showing that the problems aren't confined to the liberal side of the paper industry.

So, what's brought about the impending failure of so many newspapers, including some of the most prestigious and well recognized US papers in the nation?

Well, there's no easy answer but there are several causes.

(1) The media outlets showcased their unending bias and the public got turned off, choosing not to buy the papers.

(2) Consumers finally got tired of buying stale news when they could obtain it online at a lower cost - namely free.

(3) Advertising revenues have fallen year over year as the papers have not figured out a way to profit from Internet sales. Craigslist has proven to be a newspaper killer because it does the classified ad better than the papers can. In a booming economy, advertising will pour into newspapers, but with the market turning sour, advertisers are looking for more bang to the buck, and will curtail their expenditures.

Via Patterico, Tribune has filed for bankruptcy in Delaware. It plans on restructuring the company's debts and financial picture.

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