When revenue is still seriously down, but profits are up, is that good news? The U.S newspaper companies that have reported fourth quarter 2009 results so far would have you believe it is. But based on their reports, it’s clear the industry as a whole is still in deep trouble, with no strong indication that better days are ahead.
Five of the ten publicly-owned U.S. newspaper companies have reported their fourth-quarter 2009 results; five more to go. (Those reporting so far are Gannett, New York Times Co., Media General, Lee Enterprises and McClatchy. We also have results from News Corp., but News publishes newspapers on four continents, and much of its revenue comes from films, television, cable, and book publishing. Its U.S. newspapers represent perhaps 10 percent of News Corp.’s total revenue and are not broken out for comparison.)
When I was in San Francisco for ONA, a kind reader offered a blunt critique of my reporting: “You know, every time The New York Times sneezes, it isn’t news.” He’s right, and yet, here’s another post in which the Gray Lady clears her nose: Bill Keller, the Times’ executive editor who’s becoming a regular around here, delivered a newsroom address on Thursday that touched on layoffs, efficiency, and charging for NYTimes.com. Keep reading »
Yesterday’s meeting of top newspaper executives in Chicago, where they considered ways to charge for content online, has reignited the often-passionate discussion of whether news sites could generate subscription revenue from readers. Plenty has been written about the futility of erecting pay walls — much of which I agree with — but a few points are often overlooked. So here we go:
1. Newspaper companies that attempt a pay wall imperil their value. Sorry to put on my French cuffs here, but this is an important point: With so many local newspapers on the brink, it’s fair to assume they have only one more chance to find a revenue stream in online subscriptions. And until they make that last attempt, investors can all be hopeful about the prospects of charging for news online.
That hope is currently priced into the stock of Gannett Co., The New York Times Co., News Corp., McClatchy, and every other publicly traded company with hobbled newspapers on their hands. If they try and fail to erect a pay wall, their already-flimsy valuations could evaporate as investors decide there’s no hope for newspapers to find a new business model.
And keep in mind that many of these companies would still like to unload some properties on private investors who are more bullish about the newspaper business (the Sam Zells of 2009). That’s a lot harder to pull off if it’s plainly evident the papers won’t be able to wring any subscription revenue from their onine readers.
2. Pay walls aren’t necessarily intended to generate revenue. It’s counterintuitive, but charging for the website may be an effective way to protect the print edition, which still provides 80-90 percent of income at most newspaper companies. In fact, MediaNews Group’s president, Jody Lodovic, recently told Editor & Publisher that while the company plans to erect pay walls, it doesn’t expect a windfall from them. “The whole idea is to stop the erosion from print to online and encourage people to become print subscribers,” she said.
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