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"In 2009 ad 2010, all the two-newspaper markets will become one-newspaper markets, and you will start to see one-newspaper markets become no-newspaper markets," says an analyst for Fitch Ratings in this morning's (March 12) edition of the NY Times. The article makes no specific predictions about which city will be without a paper, but has interesting revelations. It says the Seattle Post-Intelligencer will fold next week, and the surviving paper, the Seattle Times Company, is a candidate for bankruptcy. (Many big papers are now operating in bankruptcy.) Ad revenue for the industry is down about 25 percent in the last two years. (In January, the Union-Tribune said its ad revenue has dropped 40 percent since 2006.) The Times says Denver's MediaNews Group, once considered a candidate to buy the U-T, is at risk of bankruptcy. The article says the Washington Post and Boston Globe (owned by the NY Times) are now operating at a loss. Buzz Woolley, backer of VoiceofSanDiego, is quoted saying that if papers fold massively, "A huge amount of information would just never get out."

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Comments

SurfPuppy619 March 15, 2009 @ 11:13 p.m.

Sportsbook sounds like an insider......UT?

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mythusmage March 12, 2009 @ 9:02 a.m.

If Mr. Wooley is correct, nothing would change.

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Don Bauder March 12, 2009 @ 10:32 a.m.

Response to post #1: Touche! It's true that less and less information comes from the U-T. Best, Don Bauder

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pascal March 12, 2009 @ 10:33 a.m.

Hmmmm... so I guess by a "NO-newspaper market," that would necessarily mean for San Diego: No Union-Tribune, no North County Times, no La Jolla Light, no READER, etc., etc., etc...! Sounds a bit too pessimistic, even for this blog!

"(Many big papers are now operating in bankruptcy)"? Not sure HOW MANY constitutes "many," but I think I can count on one hand the number of the 100 largest papers in the U.S. that are actually "in bankruptcy" right now. In the future, perhaps more, but right now I think "a couple" and not "many" is much more accurate.

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Don Bauder March 12, 2009 @ 1:45 p.m.

Response to post #3: The Fitch report was about the major dailies. To my knowledge, it didn't address free distribution alternative papers or neighborhood weeklies. As to bankruptcy, there are more than a handful of papers operating in bankruptcy. Here are some: the LA Times, Chicago Tribune, Baltimore Sun, Orlando Sentinel, South Florida Sentinel and Hartford Courant of the Tribune Co.; The Minneapolis Star-Tribune; the Philadelphia Inquirer and News; the New Haven Register, Trentonian, Oakland Press and Macomb Daily (Michigan) and Lake County News Herald (Ohio) of the Journal-Register. I would guess at least 9 of those are in the top 100. Best, Don Bauder

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pascal March 12, 2009 @ 3:27 p.m.

Response to post #4: Wow Don, you're good! From your list here, exactly 9 of these are in the Top 100 (source: burrellesluce.com). So my original statement stands corrected! But, given that 6 of these 9 are all parties to a single bankruptcy (Tribune Co.), I'd like to request at least partial credit for still being able to count on one hand the number of bankruptcies that involve top 100 dailies (4).

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nomaddmh March 12, 2009 @ 4:16 p.m.

An interesting article at time.com: "The 10 Major Newspapers That Will Either Fold or Go Digital Next"

http://www.time.com/time/business/article/0,8599,1883785,00.html

No UT on the list though. I think the UT will continue to stick around in some form for the foreseeable future - hopefully someone will buy them soon and sack all the barnacled management that's anchoring down what could be a great local paper again someday (sans Copley).

And I definitely don't see them going "digital" anytime soon - signon is still a pile of junk. They need to either completely restructure their signon team with some decent web designers or outsource the design to a company with some talent. I'm a big fan of the layout of sites like latimes.com and nytimes.com.

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SurfPuppy619 March 12, 2009 @ 4:39 p.m.

Ad revenue is down substantially.

The LA Times, as pointed out is in BK as part of Tribune Co., used to have a classified section of 15 pages or more, now it has 1.5 pages total, and there is not even a classified section anymore for most of the week, they just throw it in at the back of one of the other sections.

The Sports section used to have tons of various ads, yet today there were just 3 classified ads TOTAL in the sports section.

So ad revewnue is in the toilet, no doubt abut it.

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Visduh March 12, 2009 @ 7:57 p.m.

Just wondering if there is, somewhere in the US, a daily newspaper that is prospering. A paper with enlightened management and an attitude that encompassed the idea that a newspaper could prosper if it did some things that nobody had ever tried. Is there any such a paper in the nation today?

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Don Bauder March 12, 2009 @ 10:29 p.m.

Response to post #5: You are correct: a bunch of them are wound up in the Tribune bankruptcy. Ditto for the Journal Register BK. More bankruptcies are predicted. I give you the credit you deserve. Best, Don Bauder

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Don Bauder March 12, 2009 @ 10:33 p.m.

Response to post #6: I agree that SignOn still has a ways to go. Online editions of other papers, such as the NY Times you cited, seem much easier to navigate and more creative. Will U-T be sold? It's a horrible market. I can't even remember the last significant newspaper that was sold. Best, Don Baiuder

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Don Bauder March 12, 2009 @ 10:35 p.m.

Response to post #7: No one denies that revenue is in the toilet. I can't even think of a single significant daily newspaper for which that is not true. Best, Don Bauder

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Don Bauder March 12, 2009 @ 10:39 p.m.

Response to post #8: There is enlightened editorial management, yes. I nominate the NY Times. And for a less cerebral market, USA Today, although I confess I seldom see it. But as to financial management: that is another question. I can't think of a single management that foresaw Craigslist, Google, economic and demographic changes, and the other phenomena that led to the extremely rapid decline of daily newspapers. So in that sense, no paper was well managed. Best, Don Bauder

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WhatGoesAround March 13, 2009 @ 2 a.m.

Don - I think many newspaper managements did foresee these changes; they had plenty of warning from technology vendors about the future that was coming including the potential of the Internet, and warning from within their own ranks. Seattle Times / P-I JOA is a great example in the heart of Microsoft-land. They have one of the most sophisticated IT departments in the U.S. The real problem is that managements' froze in their tracks with fear and further failed to adapt their business / revenue models early enough to compensate for the revenue losses that were inevitable. My experience is that newspapers move at a glacial pace when it comes to making even the most mundane decisions. The question should be -- how many newspaper execs does it take to change a lightbulb? Their answer: We'll have to get back to you on that.

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Don Bauder March 13, 2009 @ 7:15 a.m.

Response to post #13: Yours is a most interesting post. If newspaper managements did, indeed, see Craigslist, Google, the economic and demographic changes coming, and did nothing -- that is quite an indictment, and I won't try to gainsay your conclusion. The demographic changes should have been obvious: as early as the 1970s and 1980s, it was clear that young people weren't reading. And managements weren't listening, I can personally attest. If you could put together some information showing that certain managements foresaw these developments, but sat on their hands, you could write a terrific story or series of stories. Best, Don Bauder

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SurfPuppy619 March 13, 2009 @ 8:39 a.m.

Don - I think many newspaper managements did foresee these changes; they had plenty of warning from technology vendors about the future that was coming including the potential of the Internet, and warning from within their own ranks.

By WhatGoesAround

Yours is a most interesting post. If newspaper managements did, indeed, see Craigslist, Google, the economic and demographic changes coming, and did nothing -- that is quite an indictment, and I won't try to gainsay your conclusion.

By dbauder

Although some newspapers, a small minority, may have seen the Internet writing on the wall, I doubt many newspapers saw it or had any clue of the change that was coming.

A change that was so huge in magnitude it would literally change the face of news and the way media is delivered.

I point to Microsoft as Exhibit A, because they were the leading software company in the world in the 80's and 90's and they had no idea how big the Internet was going to become. MS was so far behind the 8 Ball when the Internet hit that they never really caught up.

I think a good case can be made for newspapers that they simply had no idea of the magnitude of the Internet.

I doubt anyone did in the early/mid 90's. If you would have told me in 1995 that the Internet would dominate the way information is delivered and shared today I would not have believed it.

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Don Bauder March 13, 2009 @ 10:50 a.m.

Response to post #15: It would be interesting to see how writers during the early days of the Internet grasped the huge societal and economic changes it would bring. Remember, the big dot-com stock market bubble of the late 1990s was based on irrational exuberance about Internet-related IPOs. So some market touts probably sang about the coming changes in the mid-1990s before the bubble grew. Frankly, I don't remember. I do remember that when the U-T bought newspapers in 1995 and 2000, there were people within the company (myself included) who thought the money would have been better spent on technology. However, I don't know that we were prescient enough in 1995 to predict that the Internet would create a tectonic shift. Maybe some were in 2000 -- but I doubt 1995. Best, Don Bauder

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classico March 13, 2009 @ 12:34 p.m.

An editor told me about the time Copley bought my paper that the Internet was a fad, like CB radio.

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pascal March 13, 2009 @ 1:24 p.m.

I recall that back in 2000, many were asking how anyone could not have seen the severe decline in the promise of the internet, following the bursting of the dot-com bubble. Isn’t it interesting how we’re now looking back 5 years further, at 1995, and asking how newspapers were unable to see the bright future of the internet? It's always something!

No doubt newspapers have traditionally been slow movers on many fronts. I think if the Titanic were a newspaper, it would have been unable to swerve at all and struck that iceberg head on! But let’s not single just them out as being unusually short-sighted about the world-wide web, when so many other industries out there are still struggling to create new business models to adapt to it. How many “pure play” businesses are there, that are still not even profitable themselves? I don’t know the answer to that, but I wouldn’t be surprised if that percentage was considerably higher than the percentage of “unprofitable” newspapers operating today.

At some point, hopefully sooner rather than later, some newspaper is going to hit upon the model that’s been eluding them all, and things will turn around. “News” is too much in demand for them to let things be otherwise.

And I agree with the comments here about most newspaper website designs. Whatever your opinion about sites like “Drudge,” they are easy reading because they present the news as most readers want it— with just headlines first, for quick scanning.

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Neal Obermeyer March 13, 2009 @ 2:54 p.m.

The Arkansas Democrat-Gazette was, I think, the only major daily that actually increased circulation last year. It was less affected by the internet changes for a few reasons — the publisher had foreseen what would become craigslist and had been giving away free classifieds for decades, and they also charged for the paper's online content (I'm going off hazy memory, so forgive me if some details are off). But now even they are laying people off.

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Don Bauder March 13, 2009 @ 2:57 p.m.

Response to post #17: Such a statement shows inability to think such a question through. However, I must say this: I hope I wasn't the editor who told you that the Internet was a fad. In the late 1990s, I kept ridiculing the dot-com stock market bubble. I hope that during that period I didn't ridicule the Internet itself. Best, Don Bauder

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Don Bauder March 13, 2009 @ 3:05 p.m.

Response to post #18: I do now remember ridiculing product sales over the Internet. I didn't do it in my U-T column. It was on TV. I was called by KUSI for a comment on Internet sales, then in their infancy. As I recall, I pooh-poohed the concept, saying it was more expensive than shopping at a retailer. Then my wife told me that she was doing a high percentage of her shopping over the Internet and it was not more expensive. The question is when I did this. I used to be a regular on KUSI in the early 1990s -- for two or three years, as I recall. But I think this happened later than that. In any case, mea maxima culpa. Best, Don Bauder

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Don Bauder March 13, 2009 @ 3:08 p.m.

Response to post #19: Everything moves more slowly in Arkansas. Best, Don Bauder

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Sportsbook March 13, 2009 @ 4:18 p.m.

Newspapers are still making money. A lot of money actually. However it is their debt loads that are killing them.

Many papers on the verge of BK are there, not because they are unable to make debt payments, but because their covenants have been breached, and with this lending market, getting a wavier is prooving to be difficult.

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Don Bauder March 13, 2009 @ 4:48 p.m.

Response to post #23: Good points. One newspaper broker estimates that profit margins have dropped from 20 percent to 10 percent. But 10 is still good. I think that estimate is on the high side, particularly with a lot of papers and chains deeply in the hole. Yes, debt is usually the problem, but not always. As I have pointed out, AH Belo Corp. has three major dailies (in Dallas, Riverside and Providence) and about as much cash as debt. Still, the market has slaughtered this company, which is losing money. The stock closed at 78 cents today (March 13) and the market capitalization is only $16 million. You could buy the company for not much more than $16 million -- another reason why I wonder what the Union-Tribune is worth. Also, Hearst, which is privately held, is supposedly in pretty good shape financially. Yet it looks like it will axe the Seattle Post-Intelligencer and possibly the San Francisco Chronicle, too. Best, Don Bauder

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SurfPuppy619 March 13, 2009 @ 6:37 p.m.

Many papers on the verge of BK are there, not because they are unable to make debt payments, but because their covenants have been breached, and with this lending market, getting a wavier is prooving to be difficult.

By Sportsbook

Nonsense.

The newspaper decline has been around for the last 7,8, 9 years- years before this recent credit crisis of the last 7 months.

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Don Bauder March 13, 2009 @ 9:54 p.m.

Response to post #25: First, this is a debt crisis as much as a credit crisis. Second, the newspaper decline was only somewhat in evidence 8 or 9 years ago. The crash came within the last two. Best, Don Bauder

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Ponzi March 14, 2009 @ 10:30 a.m.

Sales over the internet is nothing more than mail order. But the webpages replaced the catalogs that once clogged our mailboxes.

In other words, the mail order companies "got it" and rapidly adopted to internet commerce. It also lowered the barrier of entry to mail order because the biggest expense for mail order houses was advertising expenses; catalog printing, buying mailing lists from brokers and postage.

The newspapers were oblivious to that transition and information distribution migrated to the internet.

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Don Bauder March 14, 2009 @ 1:14 p.m.

Response to post #27: I think you are right on all counts. There is a massive shift going on in retail. The old department stores are hurting. Ditto many of the big box stores. Some catalog retailers are doing well: they still distribute a printed catalog (e.g. LL Bean) but also do business over the Internet. Look what happened to the record stores like Tower; they are gone -- replaced by the web. Best, Don Bauder

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Sportsbook March 15, 2009 @ 7:51 p.m.

Response to #25. The decline in readers and ad sales have gone down, but had newspapers not bulked up their debt for either: Acquisitons, or paying off family members (GRRRR) some of the chains that are in risk of BK wouldn't be. trust me

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Don Bauder March 15, 2009 @ 9:25 p.m.

Response to post #29: You say the decline in readership and ad sales has gone down; that's news to me. Are you thinking of a specific paper, or papers generally? Yes, bulking up debt for acquisitions and for handing money to family owners has put papers at greater risk of BK. Best, Don Bauder

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Don Bauder March 16, 2009 @ 7:58 a.m.

Response to post #31: Yes, Sportsbook sounds like a U-T insider, or ex-insider. He or she has had some very perceptive comments in the past. Best, Don Bauder

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sanman March 16, 2009 @ 8:47 a.m.

Most newspapers were able to see the coming of the internet and the migration of readership to online. The UT started SignOnSanDiego many years ago buy the ad revenue derived from their website was never going to be enough to offset the loss of print revenue. The internet ad dollars are growing overall but it is the perfect example of how big a problem fragmentation is in the advertising business.

At the UT the real estate bubble bursting was the final straw for several reasons. 1.) San Diego businesses were living off of home refinancing. As long as people could pull equity out of their homes, business was good. When that money dried up and people couldn't pay their mortgages, local businesses didn't have money to advertise. 2.) Real Estate advertising was a cash cow for the UT. The UT led all major Metros in revenue growth for a couple of years because real estate advertising was growing at a huge rate. 3.) A dynamic economy, both up and down, has caused many mergers in the wireless and retail industries. All of these market changes have have had a dramatic affect on newspaper revenues.

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Don Bauder March 16, 2009 @ 12:08 p.m.

Response to post #33: Good points. U-T real estate advertising soared with the market, and plunged with the market's crash. Also, the newspaper relied heavily on auto advertising. That industry is now in a tailspin. Of course, as Craigslist came on, the U-T lost classified advertising. Sinking consumer spending, along with prior mergers among department stores, hurt retail advertising. As you point out, the online product is growing, as it is almost everywhere, but wooing advertisers to the web has proved a difficult sell. Best, Don Bauder

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Sportsbook March 16, 2009 @ 1:49 p.m.

I am a newspaper industry "insider" but not the UT.

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Don Bauder March 16, 2009 @ 2:38 p.m.

Response to post #35: You certainly seem knowledgeable. Best, Don Bauder

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pascal March 16, 2009 @ 3:31 p.m.

I figured "Sportsbook" as possibly a newspaper insider, but probably not with the U-T. His comment about newspapers "paying off family members (GRRRR)..." kind of begged the question as to who, exactly, David Copley would have in his "family" to pay off?

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Don Bauder March 16, 2009 @ 4:15 p.m.

Response to post #37: A U-T staffer could GRRR that David Copley is taking money out of his company to spend on $33 million yachts instead of on up-to-date computer equipment, e.g. That's the way I interpreted what he said, anyway. Best, Don Bauder

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