The Tribune Co and its Los Angeles Times newspaper are in the news again today. This time it’s about the paper’s publisher, Jeffrey M. Johnson, who has become something of a newsroom hero in standing up to the parent company by refusing to initiate ordered budget cuts. This new profile comes after a flurry of articles (and here and here) in recent weeks about pressures on the Tribune Co to sell the Times. Moreover, the situation at the Times is a subset of turmoil at the Tribune Co., similar to that which resulted in the dismemberment of Knight-Ridder.
The unrest at the Times, however, is being repeated at large and medium size dailies all across the country. The underlying facts are undisputable. The remedies are less obvious.
The facts, which have been repeated frequently here and elsewhere, are that:
1) Daily newspaper circulation has been on a long term and steady decline. From a high point in the 1980s of about 63 million daily copies, the most recent count reports a total of 45.4 million copies, a decline of about 28%, even as population and households increased over that period. Some papers and some areas have fared better than others, but the trend overall is down.
In the case at hand of the L.A. Times, circulation, which was more than 1 million daily 10 years ago, was down “only” 17%, to 852,000 this year. Again, this despite a 12% growth in population since 1990 in Los Angees County alone.
2) Advertising is flat. Adjusted for inflation, newspaper advertising revenues increased only 7.3% between 1994 and 2004. That’s a compound annual growth rate of 0.7%. Total advertising in all media, on the other hand, grew by 49% in that period. Newspapers accounted for 27% of total advertising in 1985, 23% in 1995 and about 17% today.
With lower circulation and an expanding list of alternative vehicles for reaching their audiences, advertisers have been switching their budgets elsewhere, from direct mail to local cable to the Internet.
So, what’s a publisher to do? Jack Klunder, senior vice president for circulation at The Los Angeles Times, commented that Johnson was not against retrenchment: “Jeff has never said that we don’t need to make intelligent cost cuts. The challenge is, How do you grow your business when you have years of a stagnant or even declining revenue picture? You can’t grow your business just by cutting costs.”
Indeed. But Klunder’s statement leaves out a big detail: What is their business? Does he refer to the business of printing and distributing a newspaper? Or does he mean the business of gathering news and other information and making it available on a variety of platforms to multiple audiences?
True, businesses cannot grow by cutting—but they can survive. And right now newspaper publishers need a strategy to grow their business while transitioning from a reliance on high profit paper-based models. They will never again be able to have long term growth in the newspaper. But they can thrive if the cuts in expenditures on printing presses and circulation departments are accompanied by maintaining the capability for providing content about the local area in which they are well known. And offering this by whatever mechanisms some customers want to use: Web sites, Podcasts, Vodcasts, mobile devices, or telepathy for that matter. That will keep some—hopefully enough-- advertisers as customers as well.
I don’t know if the Tribune Co. has been intelligent about the cuts they want to make in LA or elsewhere. What we do know is that cuts are inevitable given the shrinking traditional newspaper. The hard part is how to make that part of a plan for regeneration.
(See a related article at Who Owns the Media?)
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