Declines in Trust, Revenues Force Sales and Spinoffs of Newspapers

By:  Bob Adelmann
08/08/2013
       
Declines in Trust, Revenues Force Sales and Spinoffs of Newspapers

Multiple sales of prominent newspapers this week continues as their readers increasingly get their news from more trusted sources on the Internet.

The back-to-back announcements of the sale of the Boston Globe to Boston billionaire John Henry and the sale of the Washington Post to Amazon founder Jeff Bezos earlier this week continue to track the shrinkage of the newspaper business that has been going on for more than a decade. Henry bought the Globe from the New York Times for just $70 million, a fraction of the $1.7 billion (inflation-adjusted) the Times paid for it 20 years ago, while Bezos paid $250 million for a franchise that just a few years ago was worth billions.

The value of a newspaper is its ability to generate revenues through advertising and subscriptions. Both have been in horrendous decline, especially since 2000 when newspaper revenues hit an all-time high but have since collapsed to levels not seen since 1950. Said journalism professor Lou Ureneck from Boston University: “Classified advertising is a distant memory, ancient history. Maintaining newspapers … is going to be a long and difficult slog.”

The Post’s CEO Donald Graham put the best face possible on the sale in an interview on Monday

The Post could have survived under the company’s ownership and been profitable for the foreseeable future. But we wanted to do more than survive. I’m not saying this [sale to Bezos] guarantees success, but it gives us a much greater chance of success.

For his part, Bezos, who is buying the Post with his own money, has zero experience in running a newspaper despite his success in founding Amazon. In expressing his hope for the future, Bezos said:

I understand the critical role the Post plays in Washington, DC and our nation, and the Post’s values will not change.

There will of course be changes at the Post over the coming years. That’s essential and would have happened with or without new ownership. We will need to invent, which means we will need to experiment.

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