Transforming the News

Facing serious challenges from new competitors who are grabbing readers and advertising dollars, newspapers must find ways to reinvent themseleves to survive

November 19, 2006|By Michael Hill | Michael Hill,Sun staff

The great department stores once stood in every city like eternal sentinels of American commerce.

In Baltimore, they anchored the corners of Howard and Lexington streets -- Stewart's, the Hecht Co., Hochschild-Kohn, Hutzler's.

And now they are gone.

Some wonder if the same fate awaits the American newspaper.

What was once unthinkable is now thought about as newspaper companies struggle with declining circulation and profits.

Few newspapers have disappeared, but the respected Knight Ridder chain is no more, a victim of pressure from shareholders as circulation and profit margins declined. The Chicago-based Tribune Co., which owns The Sun, has put itself on the block for similar reasons.

No one knows exactly what will come out on the other end of this period of rapid adjustment. But if newspaper owners play their business cards right, most media experts think they will still have institutions that are both profitable and important, in print and online.

But there will certainly be serious challenges. Just as those department stores watched high-end boutiques take one type of customer and low-end discount stores another, newspapers are watching their readers -- and advertisers --- heading in all sorts of directions.

And, just like those old department stores, newspapers are accustomed to providing something for everyone -- not just the news and editorials and columnists, but also sports, stock listings, comics, the crossword, the entertainment reviews and listings, the bridge column, the weather report, obituaries.

Newspapers continue to do this as a matter of course. It is what they are expected to do, just as those department stores had clothes and furniture and toys and housewares and lingerie as well as restaurants and tea rooms.

That's because big-city newspapers have been considered a part of the essential fabric of American urban landscapes, like roads and buildings and schools and parks. They were an assumed ritual of daily life. That is simply no longer the case.

Managers of the Boston Globe, a regional icon in American journalism, recently announced that they expected their newspaper to lose money this year, because of plummeting circulation, classified and advertising revenues. Media analysts blame that chilling news, in part, on the fact that Boston has more high-speed Internet connections than most cities in America. Editors in other cities see the Globe's problems as a shadow looming in their own futures.

Still, while all acknowledge that the ground is shifting, not all the news is doom and gloom. For now, most newspapers remain highly profitable enterprises.

"Whenever I address an industry group, I always start out by saying, `You think you've got problems, how would you like to be Ford Motor Company?' " says Peter M. Zollman, a former journalist, now a newspaper industry consultant.

"Or NBC, which has to sit there and watch Tivo take away its entire business model?"

Indeed, newspapers aren't in that much trouble yet. It is the trend lines that many find alarming. The challenge they face at this point is to find ways to compete effectively in a marketplace where there is an array of new competitors offering cheap advertising and free news before revenues begin to plummet.

Newspapers that meet that challenge will survive. Some others will probably die. But that's nothing new in America.

An old story

Howard Weaver, the head of news for the McClatchy chain -- which bought Knight Ridder and then sold off about half of its papers -- notes that for most of the history of the United States, newspapers went in and out of business all the time. Major cities might have had a half-dozen papers. Baltimore had The American, The News, The Sun and The Evening Sun.

Weaver points out that newspapers have been hit hard before. It is no accident that their number peaked in the early part of the 20th century, before network radio went on the air. Television's zoom across the landscape after World War II continued the pattern of killing off scores of papers as they lost their monopoly as daily information providers.

Most of those cities that had many papers ended up with only one, maybe two. But those papers were financially strong. Little was required beyond turning on the printing presses to insure a steady profit.

This was the newspaper world of the past four decades, the one that those now in the business grew up in. There was plenty of money for expensive journalistic forays, if the owners were so inclined. Labor strife was common because, as in the other dominant U.S. industries of the day -- such as steel and autos -- there was plenty of money to fight over.

The crucial difference, Weaver says, between newspapers' previous battle and the current onslaught is that newspapers retained one important monopoly -- TV and radio could not do classified advertising.

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