“Newspapers are at what is known in business school terminology as a strategic inflection point,” said Drew Davis, president-executive director, American Press Institute. “Customer preferences are changing, technology is changing, and in every case of change like this even the most successful industries and businesses have ceased to exist. The prospects without transformation in the newspaper business are grim.”
A little late
Ongoing declines in paid circulation and seemingly endless new forms of competition have cooled many investors and advertisers to newspapers as a medium, so much so that the goal of the task force to assess threats seems more than a little late to waking up to the industry’s challenges. It’s obvious a transformation needs to happen sooner rather than later.
The most recent report from the Audit Bureau of Circulations did nothing to help, showing a 2.6% top-line decline in paying weekday readers among 786 papers, according to an analysis by the Newspaper Association of America.
And Knight Ridder’s biggest shareholders have hung another cloud over the industry by insisting that the company solicit bids because of “limited growth across the newspaper industry,” “continuing consolidation among the traditional sources of print advertising revenue” and “the redirection of advertising dollars to other media.”
A Morgan Stanley report released yesterday kept things grim, implying that Knight Ridder might be an attractive acquisition -- if it slashed its costs by $150 million or more. The most extreme scenario examined by Morgan Stanley would cut costs by $350 million by eliminating 6% of the workforce, closing the Daily News in Philadelphia and making major reductions in corporate spending and digital operations.
The institute, an educational center for the news business, has tapped consulting firm Innosight to help with Newspaper Next, which is expected to issue a report in late 2006. The project has also assembled a task force largely comprised of newspaper executives who are competitors in other settings. They include Jennifer Carroll, director of news development, Gannett; Christian Hendricks, VP-interactive media, The McClatchy Cos.; Jonathan Landman, deputy managing editor, The New York Times; Lincoln Millstein, senior VP-director of digital media, Hearst Newspapers; and Hillary Schneider, senior VP, Knight Ridder. Stephen T. Gray, former managing editor, The Christian Science Monitor, and former CEO, The Monroe (Mich.) Evening News, was named managing director of the effort.