American Newspapers: Disruption, Decline, …Collapse?
U.S. newspapers are dying a slow, but accelerating death. Even Warren Buffet has thrown in the towel.
June 20, 2020
For newspapers, the Internet revolution brought savage disruption from which — for most — there has been no recovery.
The downward trend is especially pronounced in the United States. As was the case in other countries, the industry initially downplayed the digital challenge. It now pays the price as only the New York Times, Washington Post and Wall Street Journal have viable online strategies.
Cash cows no more
For more than 100 years, U.S. newspapers were cash cows with revenues from classified ads, subscriptions and advertisements making fortunes for their owners.
With hindsight, we can see that the industry’s golden age was the 1980s. Two years into that decade, Gannett CEO Al Neuharth created USA Today, whose blue logo flashed across the sky holding altitude for three decades.
USA Today delivered TV-style news to its readers. Stories were short, punchy and colorful, its vending machines resembled TV sets. It beat the competition on sports and weather.
A pesky listserv called Craig’s List
The 1990s Internet challenge arrived innocuously enough, sending up no red flags. Who was threatened by a pesky listserv called Craig’s List?
But for consumers, it was a bargain. They learned that, unlike with newspapers, they didn’t have to pay to post their own classified ads there. They could go to Craigslist.com, buy and sell for free and get an immediacy of response (and a helpful online option to dialogue if need be) which newspapers simply couldn’t provide.
Next: The march of the aggregators
The next onslaught was provided by the news aggregators like Yahoo. They packaged news from everywhere — and gave it away.
The newspaper industry’s snail-like response, even profound arrogance, at the time is explained by the continued growth it saw in ad revenues, which didn’t peak until 2005, by which time it was very late. The industry’s time-tested business model was failing.
Print circulation in the United States peaked in 1984 and then fell steadily. With subscriptions declining, ad spending began a slow shift to digital.
But arrogance still ran high. The best evidence of that came in 1993 when the New York Times paid $11 billion for the Boston Globe. It was sold 20 years later for $70 million, at a 93% loss.
Back in the 1920s, there were 2,500 daily newspapers in the United States. Today, there are 1,250. In the past 15 years, 20% went out of business. Circulation and ad revenues are both down over 55%.
Newsroom employment has shrunk by 50%. Pew Research says 27,000 journalism jobs vanished since 2008. Last year alone, 8,600 journalists lost their jobs. McClatchy, a chain of 29 papers, went into bankruptcy in February of this year.
The last true believer
Warren Buffett was among the last true believers. His first business was delivering newspapers and he long argued that local news would save metropolitan dailies. In January of this year, he threw in the towel, peddling Berkshire’s stable of 30 papers for $120 million. Newspapers, he conceded, were toast and will disappear.
Gannett and USA Today is another dreary story. Al Neuharth, who also founded the now closed Newseum in Washington, is long gone.
Gannett, still the largest newspaper chain with over 250 publications, is a shadow of its former past. Last year, it was sold to Gatehouse for $1.2 billion. Gatehouse, a small market media group, went bankrupt in 2013, was restructured and is now controlled by investment funds.
Gatehouse took the Gannett name and promised to keep its papers alive, but markets are skeptical. Gannett shares trade for about $1.00, down from $25 five years ago.
The rare exceptions
The New York Times, Washington Post and Wall Street Journal are swimming against the tide and winning. All three are again profitable and even expanding.
An estimated 20% of all remaining newspaper journalists in the United States work for entities affiliated with those publications.
Bad investments, like NYC cabs
Several Gannett papers, including those in Tampa, Detroit, Pittsburgh and Indianapolis, no longer print every day. A much thinner USA Today prioritizes its online presence. With the
coronavirus reducing ad revenues, some 24,000 Gannett employees are taking pay cuts or unpaid furloughs.
Of course, newspapers and journalism aren’t alone in being decimated by internet-based disrupters. Regrettably, they’re barely alive, like a New York cabbie who paid top dollar for a medallion before Uber and Lyft arrived.
Takeaways
Are US newspapers moving from disruption and decline now on to collapse?
U.S. newspapers are dying a slow, but accelerating death. Even Warren Buffet, long among the last true believers — and investors — in newspapers, has thrown in the towel.
For newspapers, the Internet revolution has brought savage disruption from which there has been no recovery for most.
US newspapers were cash cows for over 100 years -- with revenues from subscriptions and ads making fortunes for their owners.
Only the New York Times, Washington Post and Wall Street Journal are swimming against the tide. All three are again profitable and even expanding.
An estimated 20% of all remaining US newspaper journalists work for entities affiliated with the New York Times, Washington Post and the Wall Street Journal.
