Why are all the newspapers collapsing?

David Love has some ideas what's wrong. Here are some of my favorites:

I would suggest some additional reasons that some newspapers have failed. Too often, they simply have not served their readers, and the product, like a GM car, has lost its appeal. Many news companies— not just papers, but TV as well—are owned by corporate conglomerates and entertainment companies. This reality is reflected in the softball, celebrity gossip orientation of many so-called news outlets. Governed by the bottom line and cost-cutting measures, these papers have eliminated their City Hall beat reporters, and other reporters who are in tune with the pulse of a given city. In the absence of seasoned journalists who can actually report on anything, because those people were already laid off, these newspapers become a collection of news wires and press releases, in a pamphlet. And who is paying for that when you can read it online?

The damage has been done in terms of the giant pass that the news media have taken on the important issues of the day. During the Iraq War, the mainstream media took the opportunity to act as nationalistic cheerleaders, the propaganda arm of the Bush White House— beating the drums of war and almost celebrating the thousands upon thousands of deaths that would inevitably occur.

As cheerleaders for corporate America, the mainstream press fell asleep on the Wall Street crisis. Over-caffeinated blowhard snake-oil salesmen posing as business journalists were in abundance during the heyday of the financial sector. But where were the probing exposés on the problems of deregulation, and the thoughtful analyses on the consequences of gluttony on Wall Street?

Even as we speak, what about coverage on the thwarted assassination plots against President Obama? Or a meaningful discussion on the malicious and deleterious effects of U.S. drug policy? How about a substantive debate in the mainstream news about the madness that represents America’s gun policy, and the lethal combination of gun proliferation, economic recession and untreated mental illness—of individuals and of the society— that plays itself out in communities throughout the country?

Well, many newspapers and other corporate news venues will not offer and have not offered such valuable content. Their game is trifling and sloppy. So if they die, it wouldn’t be too soon, as they provided us little benefit in the first place. That is why people increasingly turn to independent news sources

One that David mentions that I suspect may be a really critical component is the fact that the papers I know of did quit doing City Hall and around the town coverage and replaced it with stuff like E! TV coverage of entertainment. As David says "Governed by the bottom line and cost-cutting measures, these papers have eliminated their City Hall beat reporters, and other reporters who are in tune with the pulse of a given city."

I think this became a lot worse when the Reagan administration stopped enforcing anti-trust and explicitly permitted local city newspapers to buy out and shut down their competitors. The result was no competition. Newspapers no longer had to spend money providing news their readers really wanted about their towns and cities. Instead they became boosters for whichever developers had taken over city hall during the last election and the newspapers pushed the latest great economic development plan - usually tourism or bringing conventions to town.

The result is that we are rapidly losing the journalistic expertise those newspapers built up over the years, what few elements of it their corporate masters had left to them after the last rounds of cost-cutting.

It's a dammed shame. It really looks like Capitalists and their accountants cannot manage a successful newspaper.

Tribune bankruptcy is more Wall Street banking incompetence

The Chicago Tribune company filed for bankruptcy, and it becomes quite clear that Sam Zell's takeover last year should never have occurred. It was worse than the housing industry's subprime loans made based on inflated values using no down payment loans made to someone who could not pay the money back. Even worse, Zell's bankers used the Tribune company's Employee Stock Ownership program to take control of the common stock of the Tribune.

Then Sam Zell incompetently ran the several fine newspapers he had taken over into the ground. The story is worse than the incompetence shown by the Wall Street investment banks and the Detroit automotive companies combined, compounded by Sam Zell's disdain for journalism and his general incompetence. The man should never have been sold the Tribune.

Harold Meyerson of the Washington Post has the story.

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.

"Weekly World News" to stop publication

The last issue of the black-and-white supermarket tabloid "The Weekly World News" will be published Aug 27. The news tabloid started because the publishers were switching to color and still wanted to use their black-and-white presses is ending.

Where will we find out the news that "12 U.S. Senators are space aliens?" (None named - I suggested they included Jesse Helms and Phil Gramm, myself. I still think that Jon Cornyn was an alien replacement for Gramm.) I do suspect that there are fewer than 12 aliens in the Senate now, though. Too many of the current Senators are much to wacky for space aliens to associate with.

Parker Carlson at the Washington Post has a good story on a unique, entertaining and ubiquitous (not to mention very, very strange) American institution. I really love this line from the story:

Eddie Clontz was the mad genius behind WWN. A 10th-grade dropout from North Carolina and former copy editor at small newspapers, he imbued the WWN newsroom with his unique philosophy of journalism: Don't fact-check your way out of a good story.

It's a great philosophy as long as the readers know what you are doing.

Want to know how to get more investigative journalism? Try this suggestion.

Today I read Sara's post at The next Hurrah after watching the most recent "Frontline" last night, and put it together with my own knowledge of newspapers and a recent post I placed at Booman Tribune. This has been growing for a while. But I think I know how to solve the problem of the disappearance of foreign bureaus and investigative journalism.

I left this as a comment at The Next Hurrah earlier this evening.

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The Frontline last night made the point that city newspapers do most of the original reporting.

In the past they have been able to do this because they made what an economist would call "Monopoly" profits. That is, their costs of production and distribution of the newpaper (70% of costs) has been a barrier to entry for competitors.

But the monopoly profits depended on wide distribution, because the number of copies distributed determined the price of advertisements. This is why newspapers have worked so hard over the last century to reduce the number of papers in each city to one and no more. One of the last stages in this process has often been a "joint production agreement" in which there are two editorial departments, one sales department and a single production and distribution system. This usually ended when (over the last three decades or so) the evening paper bought out the morning paper.

I have watched the Houston Post be bought out by the Houston Chronicle (which, interestingly was totally owned by a foundation while the Post had been sold by the family and gone public) and the Dallas Morning News (DMN) bought out the Dallas Times Herald. This latter occurred because a new owner borrowed a bunch of money at 13 to 15% interest to buy the Herald, and in the competitive market of Dallas, could never make more than about 10% profit. In 1991 or 1992 the DMN bought out the Times Herald and shut it down, then raised their own advertising rates.

It is interesting that the DMN had purchased the local ABC TV outlet ICH 8) before the Congress passed a law stating that no one company could own both a major newspaper and TV outlet in the same market. It was by use of this synergy that they overcame the Dallas Times Herald and shut them down.

Before 1960 a major city newspaper was a money machine. They had a monopoly on want ads, local for-sale classified ads, and department store advertisements. TV came in and took the car ads and a lot of the consumer product ads. The single city newspaper was a result of TV competition. But so was the closure of all the Newspaper foreign bureaus. I am not aware of a single Texas newspaper that hadn't shut down its foreign bureaus by 1970, with the possible exception of a Mexican bureau. (Those are all gone now, also, as far as I know.) The papers depended on the AP and UPI wire services for foreign coverage, and for something really big they sent in a special reporting team.

But the TV news was setting the news reporting agenda after 1970, and once Viet Nam was over, who needed foreign news? With the news agenda set for local news, AP and UPI were in real trouble. UPI collapsed and was bought by the Unification Church (Yeah, the Moonies.) UPI, like the Washington Times, is a loss-leader for the Moonies.

These events carry us up generally to the early 90's. Then the Internet appeared and began to steal revenue from the papers and TV. Craig's List has been a Newspaper-killer. So has Career-Builder.

Economically, Investigative reporting has been a result of monopoly profits. The News media that had a monopoly on advertisement revenues has offered investigative reporting because it was a barrier to entry to competitors that could not be easily afforded by a new entry to the industry. By offering investigative reporting, a news outlet could differentiate itself from the potential and actual competitors. This was one of the "unnecessary" costs that were eliminated when competition was replaced by a monopoly. But if some organization with a different technology could start offering local news and collect advertisement revenues (TV?) they were sufficiently differentiated from the newspapers so that the investigative reporting was unimportant.

Essentially, a paper is a bunch of paid advertisements that pay for the distribution of the paper. See the "Greensheet" or whatever your local sales advertisement throwaway is. News attracts readers, and investigative journalism differentiates between news providers. The revenue is still the advertisements. But advertising rates are higher if the paper has higher circulation. The news is thrown in to increase circulation, so they can charge more in advertisement rates.

Unfortunately, better news <>= [is not equal to] better circulation.

Instead, Better News is directly related to a better reputation for useful news, which is loosely related to increased habitual reading of the newspaper [while competitive sources of news will be (probably more strongly) inversely related to habitual reading of the newspaper] and habitual reading of the paper is directly related to circulation.

Reputation for providing useful news will be strongly directly related to investigative journalism. But only over a long period of time. The stock market looks at almost nothing more than 90 days. If the stock isn't going up, then the solution is cut the costs that are most loosely related to the 90-day change in stock price. That means cut foreign bureaus first followed by investigative journalism. For anyone who has followed the history of newspapers, this is a given. [It is also totally clear to anyone who watched the "Frontline" number 3 last night and remembers the NY Stock Exchange woman who proposed that newspaper should focus entirely on in-depth local and super-local news.]

So the problem is the financial markets. They want newspapers to continue to throw off monopolistic profits like they did before 1960. Because of competition, they can't. Not and provide investigative journalism. Not as long as they are controlled by the stock market.

But notice that I pointed out in Houston that the Houston Chronicle was able to buy out and close down the (better) Houston Post. The Houston Post was on the stock market. The Houston Chronicle was owned by a foundation. Guess who could plan (and spend) long term? It was the Chronicle.

The Frontline also pointed to the largest newspaper in Florida, the St. Petersburg Times. It is also owned by a foundation, and not subject to the short-term thinking of the stock market.

A newspaper that has the purpose of making money as first priority puts a low priority on news. But a newspaper owned by a foundation can be free to place news at a higher priority than can stock owned papers.

The problem with a foundation is that it can't go to the stock market for more cash to expand.

My proposal is that we (bloggers) create a set of local foundations to provide local news and operate on local advertisements. If we do it as blogs, we do not have the costs (70% of all newspaper costs) of production and distribution. We can compete with Craig's list by emphasizing local advertisements for local clientele, and we can do most of it with volunteer labor. [Key is that fact-checking and editing must be controlled in-house by expert journalists, probably paid.]

The volunteer labor would include journalism students (organized by their teachers who control their actions and output) and other volunteers. The news would supplement the national news on NPR and Public TV, so those would be sources to coordinate with. Similar to Public TV and NPR, there could be pledge drives for contributions for capital and overhead expenses, and for support of investigative journalism. See what the blogosphere could do.

A network of such foundations could contribute to State investigative journalism foundations. The various states could contribute to a similar national foundation base in Washington, D.C. That's similar to the funding of national shows on public TV and NPR. The local news foundations would own the investigative journalism foundations and provide the individuals on the Board of Directors for the investigative journalism foundations. [This would not be similar to the Public TV and NPR organizations that can be taken over by a government - as we have recently seen.]

You may have noticed from last night's Frontline that the LA Times is making a 20% per year return on invested funds. The problem is that the competition is increasing, circulation is decreasing, as a result the revenue is decreasing, and the business side of the newspapers are trying to deal with the drop in stock prices by cutting costs.

The costs they cut are also the benefits we users of newspapers buy them for, so we are going to the competitors and their circulation is dropping even further. Newspapers aren't going to disappear, but they are getting more and more like the Greensheet. They can't afford investigative or international journalism any more.

But a 20% return to a news foundation is a high return. Those of us who want international bureaus and investigative journalism will contribute to a foundation to provide those services. [I REALLY want bureaus in South America, Central America and Mexico!]

The first step in this is to set up the local foundations. It requires legal work and the blogging software (like that of Huffington Post) followed by active organization of volunteers in each major metropolitan area. A few professional journalists (like Josh Marshall) who can edict and fact check need to be paid from day one. The investigative foundations should probably be set up very early on in each state capital and Washington, D.C.

The business side needs to also be built at the same time, so that donations are nothing more than start-up costs.

Anyway, that's my idea at the moment. Anyone who wants to get in touch with me and help set up a business plan, my email is jayray21@hotmail.com/.

Some of this is my ideas for local news and local advertisements on the internet, while a lot of it is from the way Josh Marshall has set up TPM and from the way National Public Radio and Public TV work.