Even the News’s own headline writers follow the herd in missing the story about A.H. Belo’s quarterly results. The headline is correct but wrong — that is, it’s wrong if a headline is supposed to convey the real news in a story.
The real news is this: Belo’s newspapers — after years of misreading the media revolution, after a year of a freefall in advertising revenue, and after a desperate bid to stay in business by slashing costs — have stabilized. They have come up with a publishing model that works.
Here’s Daniel Gross over on Slate.com on how the model works. The key, as I have been saying for three years, is this:
But newspapers aren’t continuing to spend money as if it’s 2003 and hoping that Craigslist will disappear. No, they’re planning for survival by slashing costs sharply, trying to boost online advertising, and, here’s the clincher, making people pay more for the product. Print media is now in the process (belated, in my opinion) of finding a second large, potentially more stable, revenue base in addition to ads: subscriptions. The New York Times and many other papers have increased the price of the paper at the newsstand and for home delivery. When you raise the price of a product, you’re likely to lose a portion of your customer base. And while no newspaper likes to shed readers, some of the shrinkage in circulation is by design. If raising subscription costs by 11 percent causes 10 percent of customers to flee, a newspaper will find that its circulation revenues are stable while it saves a lot of money by manufacturing a smaller number of newspapers.
3 comments
Wick, I think the plan is generally a good one. I still think they need to quit giving away content online.
On a side note.. did you see the documentary on PBS the other day called “Stop the presse”? I was pretty good, but seemed to be oblivious to the real financial situation at newspapers. Many of the comments from various reporters and editors suggested that the papers are profitable, but not profitable enough. Their argument was that papers used to make a 30% profit margins and are now in the 10-15% range. Is that really true? I thought most of the papers in trouble have been losing money.
If you saw it, I’d love to know what you thought.
I think newspapers would LOVE to make 15 percent profit margins these days. I think they’d love to make any sort of profit. Period. The days of 20-to-30 percent profit margins are sooooooo last century.
Curtis it is true! The majority of newspapers are profitable. The issue is exactly what was stated in the documentry. Historically newspaers have earned 30% margins. Today they are producing half that due to ad revenue declines due to fragmentation in the marketplace. Companies that are publicly held have to satisfy board of directors and bankers who are expecting higher margins. This has choked some newspapers and forced finacial stress or worse. Most newspapers who shuttered their doors have been in two newspaper towns. DMN’s pricing strategy is risky. The question remains while improving margins of increased circ revenue coupled with production savings you risk the continued loss of ad revenue due to decreased audience. What’s the sweet spot? There’s the risk. Maroney continues to gamble—-DMN’s style. Stick around they change strategic course about every 18 months.