Recession Is the End for U.S. Newspapers As We’ve Known Them

Posted on July 2, 2008

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The Recession of 08 and 09 will be a nail in the coffin for some U.S. industries.

For big newspapers, airlines, and automakers, the recession is the end of business as usual, the end of business as they have enjoyed it for the past half-century. The industries will survive in some form, I guess, but they will never be the same.

Take newspapers, please. Sam Zell has posted “For Sale” signs on Newsday in New York and on the headquarters towers of the Chicago Tribune and the Los Angeles Times. Who is going to be crazy enough to buy those skyscrapers? Foreign investors, of course.

If Mr. Zell thinks the Trib and LA Times buildings are “underutilized,” what must he think of the cavernous Baltimore Sun building on Calvert Street?

Loss of their real estate is the least of the problems for newspapers. The newspaper industry was fat with profits through the 1980s, but the industry never fully recovered from the recession of 1990. In 1994, the Sunpapers brass pulled the plug on the Evening Sun. Since then, the Sun and many other major U.S. dailies have been holding staff buyouts the way PTAs hold bake sales. And then came the World Wide Web.

The printers are gone, the newsrooms decimated, the readers are surfing the Web. Newspapers will never again require magnificent and spacious downtown towers.

Now comes the most galling development, the offshoreing of the American news. Google “outsource copy editor India.”

The Orange County Register is only the latest paper to experiment with outsourcing to India. The Miami Herald and Minneapolis Star Tribune were among the papers that blazed the outsourcing trail, according to Columbia Journalism Review.

Indian companies are actively soliciting copy editing, headline writing, page design, and advertising production work from U.S. papers desperate to cut costs. Local flavor has been suffering for years as  newspapers homogenized, following USA Today’s lead. You ain’t seen nothing! Once Indian editors get through rewriting America’s heartland newspapers, you can kiss local flavor goodbye. Newspapers will have as much local flavor as your local beer, Hon.

A major challenge for newspapers, as for airlines and automakers, is the rising cost of gasoline. Circulation has long been the Achilles’ heel of major metro dailies. Inability to deliver the paper is what killed the Evening Star in Washington. The paper’s phone banks could sell thousands upon thousands of subscriptions. But the circulation department couldn’t deliver the goods. Suburban sprawl and afternoon traffic jams have killed almost all big-city p.m. papers in America.

Now, the cost of gasoline will put the hurt on the guys and gals who drive their big old cars to deliver a.m. papers in the pre-dawn hours. Unless newspapers can revive delivery by foot and bicycle, the gig is up for home delivery. The circulation model of the future, already perfected by the City Paper of Washington and the City Paper of Baltimore, depends on customers to pick up the paper themselves, from free distribution boxes on the street.

But how much demand is left for dead-tree newspapers, at any price? If you doubt that the recession will severely shrink the big-city newspaper business, take this simple quiz:

1. You need to trim the household budget. Would you cut out: a) Cable TV; b) Internet access; or c) The daily paper?

2. You are under 35 and you have a four-hour Amtrak ride (because you can’t afford airline tickets anymore). You will amuse yourself on the train by: a) Listening to music on your iPod; b) Text-messaging your friends; or c) Reading a newspaper?

3. If you had to choose, you would rather give up: a) Cigarettes; b) Beer; or c) Newspapers?

4. You have 75 cents for the vending machines. You buy: a) A candy bar; or b) A Sunpaper?

5. It’s more convenient to: a) Catch the news on TV while you eat breakfast; b) Browse the headlines on your cell phone on the subway or the bus; c) Check the Web at work; or d) Walk to the end of the driveway in your pajamas to retrieve a wet newspaper?

Yup, big metro newspapers will never again be a dominant source of news or advertising. The New York Times, Washington Post and Wall Street Journal probably will be the exceptions. Smaller daily and weekly papers can survive if they exploit local news and contribute to a sense of community. Smaller papers have a cost advantage because they have compact circulation areas. — Bernie Hayden

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