What’s The Biggest Threat to Newpapers? Maybe the Executives
So newspapers are in big trouble. We all know that. Could it be that the fault of failure belongs with newspaper executives; just like in the American steel and car industry they seem to be populated by risk adverse laggards who get large salaries, but lack vision. Okay, that’s not exactly how Robert G. Picard puts it, but why soften the truth, especially when journalism and everyday workers’ jobs are being flushed away because of these woefully inadequate executives.
Here is Picard in the Nieman Reports:
About 90 percent of shares in newspaper companies today are held by institutional investors-pension and investment funds, insurance companies, and financial institutions. Although those who are critics of public ownership often accuse these institutions of only being interested in short-term profits, the truth actually lies somewhere else. What these investors are looking for is a good return on their money; to get that they are willing to trade short-term profit for long-term growth and stability. But most publicly traded newspaper companies offer no credible plans (or a vision) for anything beyond the delivery of higher-than-average quarterly profits. With this mentality in place, investors pressure boards and managers for high returns so that they can recoup their investments in a shorter period of time….
Few real innovations to expand markets, reach new audiences, or provide new products related to company growth and sustainability have actually been made. In short, such surface change has done little to alter negative investor perceptions of the industry.
Concurrent with these limited innovative efforts has been a constant and deleterious chipping away of resources within newspapers. But such measures are only effective if they are accompanied by strategy-driven reorganization and reconfiguration that produces new value, improves the quality of products and services, creates something new, and attracts new customers. Such enterprise is what appeals to investors. Yet newspaper executives are rarely engaged in this developmental part of the change process; instead cost cutting is their standard annual activity. This, however, abets uninterested investors by draining resources from newspapers they believe have a limited (or no) future and leaves newspaper enterprises without sufficient resources to renew themselves. The prospect of demise, coupled with the lack of strategic vision, becomes a self-fulfilling prophecy….
To create lasting value, the business fundamentals of who they are, what they are, and how they serve readers and advertisers need to be examined by newspapers. What is offered in print must be unique and extremely relevant to the lives of readers. To do this might mean publishing not one but different types of newspapers for varied audiences in their markets. And because newspapers gain the attention of regular readers for only about three percent of their waking time, new delivery methods are necessary to entice customers at different parts of their day.
I am looking forward to reading Picard’s longer research paper entitled: Journalism, Value Creation and the Future of News Organizations. August 2006.
January 29th, 2007 at 12:05 pm
Yes. I saw this same sentiment expressed on Steve Yelvington’s blog recently. Seems a spot on assessment. Back in the day, newspapers’ main innovative need was how to justify full-color on the front page. Times have changed, and everyone realizes those rules don’t apply any longer. There’s more competition, more options, and fewer resources.
Very disruptive. I’d gladly buy a newspaper company if I had the money, but only to shake it up and see how to reinvent and succeed.