It’s “the latest—and biggest—sign of duress for the newspaper industry yet,” said Michael de la Merced in The New York Times. This week the Tribune Co., publisher of the venerable Los Angeles Times, Chicago Tribune, and Baltimore Sun, filed for Chapter 11 bankruptcy protection. The company, which owns a dozen newspapers and 23 TV stations, is $13 billion in debt, most of it taken on during its purchase by billionaire investor Sam Zell. Zell bought the company for $8.2 billion last December in what he described then as “the transaction from hell.” His words turned out to be prophetic. Since the takeover, Tribune Co. has been flattened by what Zell now calls “a perfect storm” of plunging advertising and declining circulation, coupled with a worldwide credit shortage.
Unfortunately, that storm is spreading, said David Olinger in The Denver Post. “From Los Angeles to New York, leading newspapers have slashed newsrooms with buyout offers, and when those failed to reach budget-cutting goals, with layoffs.” More than 10,000 employees have lost their jobs in the past year. More than 30 daily papers are up for sale, including such stalwarts as The Miami Herald and the Denver Rocky Mountain News. Even The New York Times says it is borrowing up to $225 million to ease a cash crunch.
Nobody should be surprised, said Brian Deagon in Investor’s Business Daily. As their advertisers and readers were seduced by the speed and edginess of the Web, publishers developed no strategic response. To anyone who cares about newspapers, the statistics are chilling: Back in the 1970s, 80 percent of adults read a daily newspaper. “Readership is now below 48 percent.” Without a sustainable revenue model, the companies that provide some of the world’s greatest journalism won’t be able to hang on much longer.
Let’s face it—“newspapers are done for,” said Andrew Sullivan in the London Times. “Print and paper and delivery by truck are immensely cumbersome and expensive compared with a modem.” Some papers, including The New York Times and The Washington Post, have responded to this new reality with great websites that offer loads of information and entertainment. But online advertising, while growing, simply is not as lucrative as print ads, nor is it growing fast enough. “The distance between the print sinking ship and the online life raft was always perilously long. And now the recession has whipped the waters between into hurricane turbulence.”
Without question, the recession has taken a bleak situation and made it bleaker, said Martin Peers in The Wall Street Journal. But that doesn’t mean publishers are without options. The most obvious is consolidation, which “would allow companies to save on corporate overhead and information-technology costs.” The Tribune Co., for example, “could be broken up and its properties combined on a more geographically logical basis.” Sharing resources is another solution, with newspapers with excess printing capacity to produce other newspapers.
But that doesn’t solve the fundamental problem, said Andrew Leonard in Salon.com. Only major innovation—of the sort that has proved elusive—will head off the extinction of traditional media. But one thing that has become clear in the Internet age is that “you have to differentiate yourself by being better, quicker, or quirkier, or all three.” That may be bad news for giant media conglomerates that aren’t exactly known for their quick adjustments or risk-taking. “My bet on the media future: Fewer media empire dinosaurs, like the Tribune Co., and a lot more lithe, scampering little mammals.”
