It is taken as common wisdom that this is the worst point in America history to ever own a daily newspaper.
Its just so obvious that metro dailies are clear dead ends. Monetizing the Internet is the only hope, otherwise we return to the dark ages, the seas will boil and run red with the blood of lady justice.
Perhaps is it is my wide-eyed optimism, but I keep looking at numbers and I am reminded of a piece of advice that Warren Buffett gave in a recent interview with CNN money.
“I always say you should get greedy when others are fearful and fearful when others are greedy.”
It seems plain that the business of journalism has never been more fearful and that leaves a goldmine of opportunities.
Newspapers and media companies are cash cows. In the bright old days of the early 21st century, the Tribune Company regularly drug down profits of 25-30 percent. Those days are long gone though. Last year Tribune posted a comparatively paltry 19 percent margin.
Yes. The end of newspapers and journalism is nigh. In the worst recession in a hundred years and the worst possible time ever for newspapers, Tribune (one of the most mismanaged media conglomerates in America. They owned the CUBS for god’s sake) posted a 19 percent profit. Would you like to see that in context?
The following is a list of companies and their 2008 profit margins.
Dell computer 4.01
General Electric 6.51
I admit that a fair amount of last year’s newspaper profit is due to budget cuts and the cheapening of the overall product, so that drop in profit does represent a worrisome trend.
Nevertheless, I maintain that poor capital management has created the real pain in newspapers bottom line more than the influx of the Internet. Media conglomerates have leveraged themselves so deeply in debt (sound familiar Amex user?) that all that profit goes into servicing its creditors, thus killing their ability to weather the economic storm properly.
A new newspaper, rebuilt from the ground up free of lingering debts (beside start up costs, which clearly would be huge), leaner, meaner and more hungry than fat lazy dailies which feel the need to hire someone to run their Facebook page can succeed. The money is there, we are all just afraid to pick it up.