Sunday, February 03, 2008

What has gone wrong with newspapers

I have read newspapers since the 1950's and still do, but the ones that are published today simply aren't equal to those earlier ones. About a year ago I was looking for some information about my community during the 1940's after WW II and went to the library archives to read some newspapers. Frankly I was shocked.

The same newspapers I pick up today and rarely find a real news item in were interesting and chock full of news in those days. They had real reporters out all around the world writing clear, lengthy stories from the four corners of the world. My city had several newspapers with foreign bureaus and published news, not gossip. Today my city has a single newspaper and the best national and international news is written in Washington D.C. by the McClatchy news bureau. There are no foreign bureaus. Apparently the only newspapers who still have them are the New York Times, the Washington Post and the LA Times. None in Texas. What's gone wrong with newspapers?

Jon Talton, writing as "Rogue Columnist," explains why in a manner that makes a lot of sense to me. The answer is that newspapers grew to be big business. The family run papers sold stock on Wall Street and the families left the business. The corporate managers came in and promised impossibly high rates of return on investment to jack up stock prices. To achieve those returns they cut the editorial staff and closed international bureaus, making themselves less attractive to customers. But how does an accountant measure the value of a good reporter or a foreign bureau to readers? There simply is no metric that accountants can use.

And Wall Street will not put a high value on a business whose total revenue and net profit are not both growing. How do you achieve that? You buy out your competitors and raise advertising rates, and when your competitor tries to buy you out, you sell your own company to a large newspaper cartel that can protect you. But the cartel then sends in the bean counters and cut the "nonproductive" (for that read Editorial staff) positions to save money. So you end up with single newspaper towns in which the single newspaper has no competition to beat when getting the local stories.

Since the Reagan administration began permitting one newspaper to buy out and close down its competitor I have seen the Dallas Morning News buy out and shut down the Dallas Times Herald, and the Houston Chronicle bought out and shut down the Houston Post. In both cases, the surviving local monopoly newspaper immediately raised advertising rates and shortly thereafter began cutting editorial staff and publishing fewer features. Local news coverage ceased to include controversy and was reduced to metropolitan boosterism.

Since I don't follow high school sports, the only remaining reason for reading a newspaper is the comic page, and they keep shrinking that.

Here's Jon's take on the subject:
-The creation of monopoly markets and, through consolidation, cartels of newspaper ownership. Economic history shows us that monopolies and cartels always commit suicide. Divorced from the imperatives of real competition, monopolies easily slip into a self-centered world of bureaucratic conformity and a desire to protect the status quo. They became slow and rigid, in other words, road kill for competitors.

-Consolidation of newspapers into large, publicly held companies. This removed newspapers from their communities and killed a sense of holding a public trust. And it left them at the mercy of Wall Street. Newspaper executives promised returns that are nearly impossible for any (legal) entity to sustain year after year. Everything came to depend on delivering these short-term “growth” numbers to the Street. Among the biggest losers was the ability to invest in future technologies and the ability to shift to meet changing consumer habits. Those wouldn’t deliver instant double-digit margins. Thus, newspaper companies failed to start, or failing that, buy, a Yahoo or Craig’s List.

-A largely defensive strategy took hold, even though history shows that no company under siege ever merely cut its way to recovery. Significantly, investment in the unique intellectual capital of newspapers – journalism – was constantly reduced. Newsrooms lost much of their top talent. Marketing, more important than ever in business, was never a newspaper strength, and was cut to the bone. Research and development received little more than lip service, or was another tool to hand down demands for shorter, dumber, fluffier stories. There was little interest on the advertising side in the kind of “skunk works” that might have leapfrogged from print to online before the crisis became acute. No longer did the smartest business-school grads want to work on the business side of newspapers. A thousand cuts hurt readership. One example: eliminating stock tables antagonized the most loyal readers, older folks who weren’t online. Many went away. Multiply that around every newspaper each time a key reader destination was eliminated. The cutback of international coverage comes just as America's future is more and more determined by world events (yes, even the soccer mom's ability to fill up her SUV).

-Groupthink was a natural outgrowth of monopolies and the demands of Wall Street. This was hastened by the ascendancy of Gannett and its (for a while) superior returns. A startlingly conformist agenda emerged all over: design over content; short, uninteresting (but non-irritating to advertisers) stories, etc. The universe of different tactics, strategies and innovations that a competitive industry would have evolved never happened. The industry became strikingly inwardly focused, insulated from a changing world. When change was noted, it somehow always produced moves that degraded the news product. Years were spent developing “new editorial products” to attract non-readers. This was a questionable use of resources, as surveys and focus groups showed most of these people wouldn’t read anyway, and certainly not subscribe seven days a week to a print edition. But the resources to do them were diverted away from coverage that served existing readers. Industry leaders were singularly cavalier about their loyal customers, while chasing ones they had little chance to attracting.

-Leadership collapsed under the weight of these forces. A generation of managers that would go along with these dictates rose, while those with other ideas were pushed out or aside. These surviving managers – of course with honorable exceptions – were singularly incapable of dealing with the historic turning points facing newspapers. Every day they came in hoping to not make a mistake, to merely preserve the business they had, or to push through artificial, top-down, one-side-fits-all formulas, usually backed by questionable research. At some chains, the jobs of editors became little more than gathering stuff for graphic do-dads and implementing the content rules cooked up at headquarters. These were once the front-line leaders who made the biggest difference in the quality of a product based, inexorably, on the written word, well told. The simple creed of "get a great story and put it in the newspaper (or online)" went away. For example, experienced police reporters went away -- even though it's clear that well-done cop stories draw readers. In their place was a 21-year-old taking dictation from a police public-affairs announcement.

-The biggest problem, of course, had nothing to do with the newsrooms. It was the collapse of an unsustainable business model. Simply put, the model involved sending miniskirted saleswomen out to sell ads at confiscatory rates to lecherous old car dealers and appliance-store owners. Protecting these profits, whether from national, local or classified ads, became the central focus of newspaper bosses. These areas were the most vulnerable to new competitors. But the condition of the industry by the 1990s – risk averse, promising unrealistic margins, losing its best talent, ignoring ideas outside its preconceived notions – left it unable to meet these threats.
I won't discount the competition of TV in providing headlines and tabloid gossip passing as news while sucking up the local advertising dollars. But TV doesn't now, and generally never has provided timely news except in the case of mass disasters. It is too stuck in the studio and too hung up on the model-type image of the newsreader to bother finding the underlying social currents that make up real news.

I don't expect that newspapers will ever return. They have had a major problem with adapting their business model to the late twentieth century American economy and society. What is clear, however, is that the "solutions" of recapitalization, consolidation and cartelization that Wall Street pushed onto the newspaper industry have both increased the speed at which the newspaper industry has died and prevented the rise of innovative leaders who might have built something out of what has been a long and excellent tradition of news gathering and publication.

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