PressEthic

Could it be? Is it possible? After years of hearing how the newspaper industry is on a steady trajectory all the way down, with readerships declining, circulations in the toilet, and staffs being slashed, there is hope. According to a Nov. 3rd article in Newsweek, newspapers are still profitable. In fact, there are investors are waiting to buy them up. Maybe I’ll even get a job at one after all.

The article refers the numbers released by the Audit Bureau of Circulations, which surveyed 770 major American newspapers. They found declining newspaper circulations almost all across the board. According to the piece:

“While this week’s numbers, compiled by the Audit Bureau of Circulations, may have spooked some, the reality is that newspaper profitability remains high. Cash-flow margins—a good measure of the self-financing capabilities and profitability of a business—are still high.”

“The New York Times Co., which posted a 3.5 percent slump in circulation, had a 15 percent margin last year, according to JPMorgan Chase; The Tribune Co., which owns the L.A. Times, had 20 percent across its various papers, and Knight Ridder, which was sold to McClatchy Co. earlier this year, had a 2005 margin of 19.9 percent. Those margins are higher than those of many big Fortune 500 firms, including IBM.”

This is great news! Even though many of the big newspapers are laying off staff and their shares are in the toilet, maybe, just maybe, some newspaper will hire me. And maybe they’ll have pockets deep enough to send me abroad.

Then I continued to read:

“As for the money, [JP Morgan analyst Fred] Searby says that many newspapers are indeed cash cows, but they’re deteriorating cash cows. “I hate to say it, but the industry is in slow-train-wreck mode,” he says.”

How slow exactly is that train-wreck mode exactly? According to the article:

“The disconnect between Wall Street’s perception and the industry’s profitability has created opportunity for investors looking to take newspapers private. The smart money in private equity looks for companies where the product sentiment is negative but cash flow is strong: these investors take the companies out of the public markets until sentiment is strong enough to launch an IPO. Pressure from shareholders to boost the stock price has made such sales all the more attractive to the big publicly traded newspaper companies.”

This sounds sort of promising. The last paragraph of the article was as follows:

“Gregory Favre, a fellow in journalism values at the Poynter Institute, says that no matter who owns what, it would behoove the newspaper industry to keep the communities they serve in mind as much as they do the bottom line. “There’s no question that we have enormous challenges ahead,” he says. “What bothers me is that newspapers have put a much larger premium on satisfying Wall Street than on the role they play in their communities.” That’s a role that shouldn’t bottom out because of bottom lines.”

I think this is the most important paragraph of the piece. The quality of the paper should always be more important than the bottom line. And in a perfect world, a high-quality product would drive sales up.

Unfortunately, we don’t live in a perfect world. If we did, the world wouldn’t need journalists. But the world does. So if the newspaper industry tanks, online sites aren’t hiring, and I can’t find a job in journalism, well, I’ll just have to create my own.