Newspapers Confront a Barrage of Problems: Societal Trends Make Business Decisions More Difficult. (Newspaper Cutbacks)

By Lacy, Stephen | Nieman Reports, Fall 2001 | Go to article overview

Newspapers Confront a Barrage of Problems: Societal Trends Make Business Decisions More Difficult. (Newspaper Cutbacks)


Lacy, Stephen, Nieman Reports


In the media maelstrom that followed Jay Harris's resignation as publisher of the San Jose Mercury News, writers and critics most often have framed the issue behind his leaving as a battle between profit and journalism. They have expressed a concern that resources flowing to stockholders come from the newsrooms and reduce the quality of journalism. Though this is a legitimate way to define the debate, it concentrates attention on corporate managers' decisions and downplays the impact of four important trends that are currently reshaping the newspaper industry.

These four trends--two within the newspaper industry and two outside of it--involve increased public ownership of newspapers, a decline in competition among newspapers, greater diversification in society, and the growth of electronic media. Let's briefly examine each.

* Public ownership: Led by Gannett during the 1960's, most large newspaper corporations now trade their stock publicly. This has moved control over a corporation's goals from a relatively few family members to managers of large institutional investment funds and to stock analysts who advise investors. As a result, publicly held newspaper corporations must produce consistent, high profit margins. If expectations are not met, stock value declines.

* Decline of newspaper competition: Because of economic factors, competition between dailies in the same town or city has practically disappeared, and competition across city and county lines is declining because of clustering. While this provides more profit for companies, it reduces the perceived need to invest in the newsroom and diminishes competition among individual journalists who thrive on it.

* Diversification of society: During the last half of the 20th century dramatic changes occurred in U.S. women's lives. Career options and lifestyles choices are much greater for them today. In addition to increased gender diversity in the workplace, a higher birth rate for minority groups and immigration have created more racial diversification. By midway through the 21st century, no racial group will be a clear majority of the U.S. population. This diversification leads readers to demand that newspapers offer a greater variety of news and information, something more difficult and expensive to do than when those needs emanated from a relatively homogeneous community. Increased coverage of a particular group of readers requires either more space to be added to the newspaper or space to be taken from the interests of other groups. The former is expensive; the latter tends to lead to lower circulation.

* Growth of electronic media: People have more ways of getting information now than at any time in history. The boom in cable and the Internet gives individuals the ability to focus on narrow topics of interest and avoid spending time sifting through more generalized news presentations, thus fragmenting the audience. Shrinking audiences and circulations cause businesses to buy advertising from a larger number of media outlets to reach the numbers of people they want as customers. Newspapers increasingly must compete with other media for the advertising dollar. And this intermedia competition comes at a time when newspaper managers felt they were gaining more market power because of declining newspaper competition. Understanding the nature of and responding to intermedia advertising competition remains difficult for newspaper managers.

Industries constantly face change, but the current newspaper situation is unusual because the two industry trends are pushing newspapers toward higher profit margins, but the two society trends are working in the opposite direction. At this point, it seems likely that the two social trends will overpower the industry trends.

In such a time of fundamental market and societal change, the critical issue concerns whether the desire for short-term profits will force some current companies out of the newspaper business. …

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