“Where is the money?”

Newspapers have money. Sometimes, a lot of money. They just don’t think it’s enough.

I write that because a commenter on this post asked: “For the newspaper that takes this bold step, where is the money?”

I suppose that the years of layoffs, furloughs and salary freezes have given people the idea that newspapers are broke. In fact, those actions have helped newspaper companies’ bottom lines. I’m sure that some newspapers are barely breaking even. A few may even be losing money. But they are the exception, not the rule. Most newspapers have profit margins that, while not what they were in the 90s, would still make other local businesses quite happy. Here’s the illustration: Warren Buffett isn’t buying newspapers if he doesn’t think they make money.

So, the real question isn’t “where is the money?” The real question is, what is the newspaper spending its profits on? And the follow ups: Is it investing in the future? Is it investing in its staff? Is it reducing the profit-taking so that more can be funneled back into the operation? Is it reducing its investment in the newsprint product so that it can increase an investment into digital news creation and distribution? Or is it mimicking Slim Pickens in “Dr. Strangelove,” riding the moneymaker to the end.

3 thoughts on ““Where is the money?”

  1. Pingback: I got there first « Newsroom With A View

  2. JR – I agree that the question is not whether newspapers have money but what are they doing with what they have. Unfortunately, the possible uses you cite (e.g., investing in the staff) are anathema to most media companies today. That suggests, I am afraid, that even after almost two decades of being challenged by emerging technologies, the newspaper industry, in general, still doesn’t get it. As evidence, I cite a number of the responses to your recent post about pay walls. I see the same head-in-the-sand response today that compelled me to leave after 20 years in news papering. Alas, one of the unspoken threats to the future of newspapers is the continued erosion of relationship with and influence over advertisers. Newspapers, by virtue of staff and budget cuts on the business side have attempted to commoditize the one thing in any business that cannot be commoditized…relationships with decision makers. Without ad dollars no media company can survive. And no matter how good the journalism today’s media buyers and planners have grown up largely without newspapers in their lives and with no relationship to work from, budgets will continue to shift away to emerging media until the legacy businesses whither away. I once believed that newspapers would get wise and see that they had a compelling value proposition for readers and advertisers alike, in spite of the glitz and glory of new media. Instead, it seems that newspapers will captain their ships right to the bottom. What a sad and unnecessary outcome.

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