Newspapers are in turmoil and cutting costs to save their lives. A headline in MediaPost says (and then explains) it all: Into the Red, Newspapers Face Collapse. Here’s a depressing and representative tidbit from the piece, discussing the highly debt-laden state of newspaper companies and how these companies are carving themselves up to service that debt:
This year, the company has raised $121 million with the sale of a Hollywood studio and $650 million with the sale of Newsday to Cablevision; the Chicago Cubs baseball team and historic Tribune Tower in downtown Chicago are also on the block. On the cost-cutting side, management announced a new 50-50 policy, whereby its newspapers will contain no more than 50% editorial content, allowing significant staff reductions.
And here’s an eloquent lament on the state of newspapers from the NY Times. (I agree, newspapers aren’t just another business sector.)
Yellow pages companies are challenged by similar pressures and market forces. Lowered guidance amid a recession, high levels of debt and declining share value has already claimed top YP execs and Yell’s CEO looks to be the next in line, speculates Forbes.
Putting aside servicing debt payments, which is a major issue in some cases, historical margins are a problem for both YP and newspaper publishers. Forty to 50%+ margins are probably no longer sustainable amid a fragmenting marketplace and increasing competition from lower priced ad products online. But public companies are in a bind in trying to manage through this because investors simply don’t want to hear such sober talk. They’ll likely punish the shares of these companies further.
I’m not picking on YP or newspapers, similar pressures exist for TV, magazines and almost the whole of “traditional media.” It’s not limited to any individual sector.
If you were running a public YP publisher or print newspaper company, what would you do?