Nieman Foundation at Harvard
For print newspapers, one Florida retirement community is a better market than Atlanta, St. Louis, or Portland
ABOUT                    SUBSCRIBE
Jan. 22, 2009, 9:14 a.m.

Many newspapers are healthy — some owners, not so much

Amid all the doom and gloom about newspapers laying off staff and closing bureaus and even — as in the case of Tribune Co., parent company of the Chicago Tribune, Los Angeles Times and Baltimore Sun — filing for bankruptcy, there has been very little attention paid to one of the main reasons for those cutbacks and business failures. And I’m not talking about a decline in journalistic principles or the sudden departure of advertisers for other online properties, or anything as apocalyptic as that. One of the main reasons has very little to do with journalism or even the Internet, and everything to do with the world of mergers and acquisitions.

That reason, as one or two astute observers have pointed out (including former newspaper exec Alan Mutter at his blog Reflections of a Newsosaur, and most recently a commenter at the popular political blog Talking Points Memo) is debt. In the case of Tribune Co. — acquired by corporate raider Sam “Grave Dancer” Zell — and several other major newspapers as well, acquisitions and corporate financing have created the conditions that led to much of the pain they have inflicted on the papers they own. Tribune Co. has built up a staggering debt load of $13-billion, and and chains like McClatchy have accumulated their own unwieldy debts over the past few years, by acquiring newspapers from family firms and smaller chains.

When the U.S. economy was strong, these acquisitions no doubt seemed like a slam-dunk. Despite declines in readership and some movement by advertisers to embrace the Web, many newspapers continued to spin off healthy amounts of cash as recently as a year or two ago, and many corporate chieftains including Zell saw them as a no-brainer kind of acquisition. As the economy has weakened and advertising in particular has declined, however, newspaper owners have found it harder to meet their debt obligations. That doesn’t mean their papers aren’t healthy, just that they aren’t profitable enough to make the payments on all that debt.

Do many newspapers have problems? Sure they do. They’ve dragged their feet when it comes to the online world, and many of them have focused on the wrong things in order to try and drive growth, as my NJL blogging colleague Martin Langeveld notes in his latest post here. And yes, print advertising has declined and online advertising isn’t making up the difference. Those are very real challenges. But they aren’t the only explanation — or even (I would argue) the primary explanation — for the pain that many newspaper chains are suffering right now.

POSTED     Jan. 22, 2009, 9:14 a.m.
Show tags
Join the 60,000 who get the freshest future-of-journalism news in our daily email.
For print newspapers, one Florida retirement community is a better market than Atlanta, St. Louis, or Portland
For local newspapers, print circulation has collapsed for every audience except retirees. That’s why the daily paper in The Villages, Florida (metro population 129,752) prints as many copies as the one in Atlanta (metro population 6,930,423).
The Tributary, covering Florida’s largest city, will be a worker-directed nonprofit
Staffers will take part in making collective decisions about the organization, from hiring and compensation to developing the budget, along with their journalistic work.
The Los Angeles Times gets a fully staffed “burner account”
The first-of-its-kind team is offering “views, vibes, and commentary.”