Last December, Tribune Company, whose holdings include the Chicago Tribune and the Los Angeles Times, filed for bankruptcy. Wall Street bad boy-turned-online provocateur Henry Blodget was predicting the New York Times’s parent company would run out of cash. Right on cue, the Times Company threatened to close its second largest newspaper, the Boston Globe, which at one time was projected to lose $85m this year. And Hearst similarly announced it might shutter the San Francisco Chronicle in the face of mounting losses.
As 2009 draws to a close, all of those papers are still alive…
He claims three things: that corporate debt made the news industry look worse, that newsrooms can get leaner, and that new financial models are finally taking off. Newspapers still post gross profits of 10-20%, Kennedy argues, but are crippled by billions of dollars of parent company debt. Second, there’s still room to cut—he argues that we should go back to 1970′s-era staffing levels. (Yikes!) And third, new revenue streams are just starting to pick up and a combination of iPhone apps, e-editions, and other enhanced products could indeed save the newspaper.
Of course, don’t get too excited: “In the long run, we are likely to see newspapers continue to shrink, break apart and close, as small, specialised websites move in on their turf. But as John Maynard Keynes observed, in the long run, we’re all dead.”