If newspapers were a baseball team, they would be the Mets -- without the hope for "next year."
Veteran media executive Alan Mutter, who is perhaps the business's most perspicacious observer, has been chronicling its demise one depressing statistic at a time. For instance, he informs us that during the past year:
- Newspaper revenue fell to its lowest level since 1984, although adjusted for inflation the income is actually worth half of what papers earned back then.
- Combined ad sales for all the newspapers in America in 2011 equaled barely two-thirds of the sales by Google alone.
- These declines only accelerated in the fourth quarter of 2011, indicating that not only is there no end in sight, but the worst is yet to come.
- Digital revenue, once the industry's hope for economic revival, grew only 6.8 percent during 2011, which is not remotely fast enough to make up for advertising losses.
To retain what's left of their rapidly disappearing profitability, the industrywide response has been to shed staff, to reduce the size of the paper itself (as well as its "news hole," or the amount of space left in the paper for news after advertising ) and, in some cases, to not publish on certain days. America's great newspapers have staffs that range from 50 percent to 70 percent of what they were just a few years ago. The Los Angeles Times, which has already been ravaged by staff cuts, announced yet another round of involuntary retirements just this week.
As a result of such moves, Mutter notes, newspapers are not investing in developing the products and services that would enable them to compete with the growing number of digital competitors lusting after local advertising dollars. The result is further deterioration in the value of these properties even beyond the absolutely alarming deterioration we have already seen. The drop last year in publicly traded newspaper shares was an amazing 27 percent.
(And even worse news -- if that's possible -- is Rupert Murdoch's News Corp actually increased in value in 2011 by a full 10.7 percent despite the criminal activity already uncovered in News of the World, among other properties. It was the only publicly traded newspaper-owning organization to do so, though it is deeply unlikely that it was the newspaper division that accounted for any of the rise. Alas the rest of the newspaper numbers would be even worse without News Corp -- a more than 30 percent drop -- all compared with a 5.5 percent increase in the Dow Jones average during this period.)
To add insult to injury, perhaps the most significant investments these same corporations made were to line the pockets of their failed executives. The Tribune Company -- which is in bankruptcy, having destroyed much of the value of not only its hometown Chicago papers but also the Los Angeles Times, among others -- treated its executives to nearly $100 million in performance bonuses (court-approval pending) for their awful performances. Gannett's CEO, Craig Dubow, resigned recently, having cut more than 20,000 workers since 2005 and a stock price dropping 86 percent, from $72 per share to just more than $10. That turns out to somehow justify a severance package for Dubow worth $32 million.
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