Those are the words of newspaper executive and Berkshire Hathaway Vice Chairman Charles Munger. His comments were made the same week McClatchy, the second largest newspaper company in the United States, filed for bankruptcy.
Between 2006 and 2018, McClatchy’s advertising revenue fell by 80 percent and daily print circulation fell by 58.6 percent. The company has been family owned for 163 years. It has 30 newsrooms in 14 states.
We live in a world where consumers get their news instantly on their smartphones. The high cost of printing newspapers and the expectation from hose consumers that news should be free has rocked an industry that was so dominant for so long. In published reports this week Munger said “Technological change is destroying the daily newspapers in America. The revenue goes away and the expenses remain and they’re all dying.” Although he did say The Wall Street Journal and New York Times would most likely survive.
With TV fragmenting, the likes of Netflix, Amazon Prime and other subscription services surging, and the slow death of the newspaper industry, it certainly serves as an important lesson for the radio industry, as it turns 100 years old this year, that anything can happen.
What is your company doing to stand out with consumers and bring customers through the doors of advertisers on a consistent basis?
If corporation stockholders didn’t feel they had to suck newspaper companies dry, newspapers would be just fine. But all they want is the money; they don’t care about the service a newspaper provides.
Newspaper doesn’t have to die, but it does need to change the way it thinks. The article claims that papers still have all the costs they did in their heyday. I don’t see how this can be true when they have cut staff & are printing a fraction of the number of copies. Newspaper needs to think more like radio and radio’s business model. I am a digital subscriber to a McClatchy paper. I’d be happy to read it daily, just like I used to do with the printed copy. The website (and the advertisers) would get my eyeballs for many minutes each day. But, the online experience of my paper is horrendous, filled with intrusive ads, pop ups and rouge video starts, so I don’t spend a lot of time there. Newspaper websites need to be compelling, entertaining and a great source for local content. If they have an audience, advertisers will buy it. They need to change the business away from subscription revenue and toward ad revenue to stay alive.
Subscription revenue is and was a small part of the newspaper business. The big full page ads taken out by major department stores in big cities were the lifeline of newspapers but the classified ads were a really significant part of holding newspapers together and being successful. When the classifieds went away, newspapers were in deep trouble.
Printing fewer copies? That’s a little bit like saying radio stations should have fewer listeners. An extra 10,000 copies doesn’t cost much except for the paper and the ink. The more you print, the less each copy costs. Delivery is another matter, of course.
Newspaper companies have made their websites more aggressive in order to work better for advertisers. They are trying to replace the revenues they once got from print. I certainly agree with you that many of these practices are obnoxious but the bosses would say: what else can we do?
Here’s the deal: the way people used a newspaper versus a digital site is completely different. People picked up the paper and leafed through it, usually a page at a time. In the process, people noticed the ads and some responded to them. With a website, all of that changed. Advertisers paid far less for the ads. As the saying goes, it was trading dollars for pennies.
Local television newsrooms worked with a fraction of the number of reporters and editors of newspapers. How? In part, the stole stories from the local paper or, at minimum, used the paper as a guideline for news coverage. Plus, most television reporters were expected to generate at least one story a day, sometimes more. The idea of spending weeks developing a story was rare for television but not uncommon in newspapers. A few days on a major story was often the rule rather than the exception. The result is the newspapers added more and more staff year after year as profits rose. Reporters would graduate to senior status after a decade or so at a major paper and not be expected to grind out stories constantly.
Keep this in mind, too, however: the cost of the editorial staff a big city newspapers was a fraction of the cost of printing and distribution. In other words, you could reduce the editorial staff to one person and, as long as you had the ads and the subscribers, still be losing money.
My name above was mistyped. It is Doug Terry.
Except for live sports, the only thing saving broadcast TV. Few want to watch a game when you already know who won.
In years past, I was a voracious reader of newspapers and magazines. Now, I honestly couldn’t tell you the last time I picked up one of those print publications and actually sat down and read through it. This little thing called ‘the Internet’ changed all that.
Remember, in the medium and large markets, when it seemed like the Sunday paper weighed a couple pounds, filled with several multi-page sections, Parade magazine, the local TV listings book, and more retail coupons and weekly circulars than you could count? Now, these Sunday papers barely have any breadth or substance to them.
And, the fast-threshold pay walls that newspaper publishers throw up for their online editions, even though the website is still crammed with intrusive, paid ads, is a huge turnoff for those of us who try to occasionally continue to read them.
Yes, newspapers are absolutely dying, and especially with the younger the demographic you’re talking about. The newspaper publishers just don’t get it. They do not know how to effectively counter ‘disruption’…and it is killing them.
Ed:
I believe that Berkshire Hathaway’s BM Media, run by Warren Buffett and Charlie Munger, just sold off all of the Berkshire newspaper holdings including the hometown Omaha World-Herald. I may be wrong, but I believe they retained their interest in WPLG-TV Miami.
Neil Nelkin
NRG Omaha
Broadcast TV is dying, too, Neil. The linear nature of watching live broadcast television no longer appeals to a growing number of busy, distracted video consumers. We will still watch broadcast TV-originated programming at our own time and convenience, on a streaming platform or service…but, we won’t plunk down our behinds at the scheduled times that TV broadcasters always required of us.
Robert, what is left unsaid is minorities in the inner city quit reading them, due to the acceptance of ebonics as a language in schools, and they were a just as big subscribers as suburban readers.