Posts Tagged ‘Buffalo News’

Stars, cows, dogs and newspapers

April 16, 2010

When I reported on business for the Rochester (NY) Democrat and Chronicle in the 1980s and 199os, there was a business management philosophy which held that all lines of businesses could be classified in one of four ways:

(1) Stars, with high profitability and high growth

(2) Cows, with high profitability and low, zero or negative growth

(3) Dogs, with low, zero or negative profitability and low, zero or negative growth

(4) Question marks, with low, zero or negative profitability, but high growth

The job of a manager was to (1) feed the stars, (2) milk the cows, (3) shoot the dogs and (4) answer the questions.

Back then the owners of the nation’s great newspapers treated them as cash cows. Newspaper circulation did not keep up with population growth, but newspaper companies typically had profits exceeding 20 percent, greater than oil companies. Profits were not typically put back into the newspaper to improve the product. Instead, newspapers shrank their circulation areas, published fewer editions, allowed news staffs to shrink and sought to maintain profits by cutting costs and staff.

Now the newspaper industry is in crisis. The Tribune Co. is reorganizing under bankruptcy, but at this point it appears it will continue publishing the Chicago Tribune, Los Angeles Times, Baltimore Sun and other properties. Other famous newspapers have gone to less-than-daily publication, replaced print editions with Internet-only presence or gone out of business entirely.

I would like to believe that this need not have happened if the big newspaper chains had put professionalism above profits. Unfortunately the facts don’t seem to support this belief.

The McClatchy Co., the third-largest U.S. newspaper chain, which bought Knight-Ridder newspapers in 2005, has done just what I want.  They have set an example of journalistic excellence, but financially they are down with Gannett Co. Inc. and all the others. The newspaper chains that are doing best, or least bad, are the ones that have diversified away from print journalism.

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