For a decade, we have read about the squeeze on printed newspapers. One after another, they have merged or gone out of business.
Flash! The Financial Times of London has just learned about this.
Newspapers are finding their business increasingly challenged as print advertising sales – their traditional revenue powerhouse – decline and readers’ attention shifts to the screen.
Revenues from print ads have dropped 8 per cent a year for the past three years, according to Ken Doctor, analyst at Outsell. Digital advertising on papers’ websites is picking up but brings in lower revenue than print.
That has left many companies turning to consolidation to trim overhead costs and expand their reach to offer a bigger audience to potential advertisers. Total deal value rose to $259m in the quarter from $125m a year ago.
Tribune Publishing’s Baltimore Sun Media Group and Florida-based Halifax Media Group were among the companies that bought up smaller regional newspapers during the quarter as they looked to widen their footprints.
“At this point there’s likely not going to be a significant uptick in traditional print publishing advertising dollars,” said Bart Spiegel, partner at PwC’s entertainment, media and communications practice. “You need to look at the cost structure of the business. You need scale and to take advantage of synergies to make sure you’re really driving profitability.”
“You need to look at the cost structure of the business. You need scale and to take advantage of synergies to make sure you’re really driving profitability”.
Whenever you hear the word “synergy,” think “two drunks holding each other up.”
The newspapers are all facing individual disasters, so they merge. The weakest are gobbled up by the less weak.
The following has not been in the spotlight. It has barely been in the flashlight.
Newspapers’ difficulties have been in the spotlight over the past year as formerly consolidated media companies including Tribune, News Corp, Time Warner and, most recently, Gannett, have unbundled their slow-growing publishing arms from higher-margin broadcast properties.
This is called “sell low, buy high.”
The following is called “more of the same.”
The spin-offs of newspaper chains may herald further rounds of consolidation. Gracia Martore, Gannett chief executive, said that its standalone publishing company, whose properties include USA Today, would “retain significant financial flexibility to pursue strategic acquisition opportunities that add shareholder value created by ongoing consolidation in the newspaper industry”.
We have heard these stories for about a decade. The process has been visible since 2001. This is very old news. Consider this chart. It goes only to to 2011. Things have, of course, gotten worse since 2011.
The Establishment Left bet a large chunk of its wealth — and its political influence — on its ownership of local newspapers. Today, nobody under 40 reads newspapers.