Print In Peril: More Shutdowns And Earnings Declines
Newspaper industry headlines just keep getting worse and worse. This weekend two more newspaper companies — Philadelphia Newspapers and New Haven's Journal Register Company — filed for bankruptcy. This week the downward spiral continues:
Tuesday evening Hearst threatened to close the San Francisco Chronicle newspaper if it can't cut costs. The newspaper will do major layoffs to try to hit a savings target; within a number of weeks if it can't reach that target it'll look to sell the paper, and if it can't sell, it'll shut it down. Who would want to buy a paper right now? Needless to say, it's not looking good for the 12th largest daily newspaper in the country, so what would happen if San Francisco became the first major city without a daily newspaper? Would a website move in to fill that role?
Wednesday morning the Washington Post Co reported a 77 percent drop in quarterly earnings, dragged down by a $65.8 million writedown on the value of its community newspapers and the Everett Harald, as well as a $69.7 million writedown of CourseAdvisor. Excluding those charges Q4 earnings per share were up a hair to $10.55 from $10.11 in the year-ago period. But the company's print division continues to decline on weaker circulation and advertising numbers -- excluding charges the newspaper division reported a $24.9 million operating loss for 2008 while its Newsweek-driven magazine division reported a $10.9 million operating loss for 2008.
Against the backdrop of these declining newspaper results, Thomson Reuters 51 percent jump in net income is particularly impressive. In the fourth quarter the company earned 79 cents per share, up 52 percent from the year-ago period, driven by the acquisition of Reuters news service (excluding the acquisition, revenues would have been flat. Considering the fact that major banks like Lehman Brothers and Merrill Lynch have disappeared in the past year, you'd think demand for its business services would be suffering along with Wall Street. But instead, the company says the financial crisis has increased demand for its information for the financial, legal, and accounting sectors. It seems Thomson Reuters is anything but discretionary in this environment
So the question is, what can the rest of the news industry learn from Thomson Reuters? Could, say, The New York Times or Washington Post find an audience which is willing to pay for its unique content? Could these papers build on their areas of expertise to create a niche subscription system that we've been talking about for so long? What can newspapers do to make their services non-discretionary?
E-mail MediaMoney@cnbc.com with your thoughts.