Newspapers: Can Less News = Higher Margins?
There's no question the newspaper business is in trouble. The question IS: Can Sam Zell, chairman of the Tribune Company, build a profitable business in an industry that's in decline?
Last week, Zell announced his plan to slash 500 pages of news from the company's dozen papers, including the flagship Chicago Tribune and Los Angeles Times. Zell's goal is to create papers that are half news content and half ads -- and that doesn't even include classified advertising and special ad sections.
Half ads? That's huge! Can you imagine if half the pages in the New York Times or Wall Street Journal were ads? It's almost unthinkable. Relying on a subscription model doesn't work, and the approach of super-local news or uber-fluffy features isn't saving newspaper readers or ad dollars.
My question: Will fewer news pages send even more readers running for the Internet where it's easier to find lots of content? Or can the transition be subtle enough that people won't notice?
The whole newspaper industry is suffering -- which is why Wall Street wondered about Zell's interest in investing in this business. The New York Times Co. has done its share of layoffs recently -- and its stock is down some 35 percent over the past twelve months. Meanwhile, the Washington Post Company is down over 20 percent for the same period.
Is there an end in sight for the newspaper business' woes? Can Sam Zell's more-ads-are-more strategy work? Or will the strategy News Corp. CEO Rupert Murdoch takes with the Wall Street Journal -- a strategy that's still emerging -- lead the way?
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