On the southeast corner of 96th Street and Broadway, on any weekday morning, you would swear that the U.S. daily-newspaper industry isn’t dying. In the bodega there, New Yorkers who don’t already have the Wall Street Journal or New York Times tucked under their arms plunk down cash to buy the Daily News, the New York Post, and Newsday. At the nearby mouth of the subway, hawkers push the free tabloids amNew York and Metro at scurrying straphangers.
It’s a scene that doesn’t exist anywhere else in the country. In a city of outsize egos, you can credit some of the biggest in town for keeping alive at least the appearance of a once-thriving industry that is vanishing elsewhere. This is the biggest city in the country, and it’s the capital of capitalism, but why seven dailies? Why are there so many actual, physical daily newspapers you can hold in your hands, in an age where “thumbers” (as legendary newspaper columnist Pete Hamill calls them) can grab news for free on their iPhones and BlackBerrys?
“It’s not the health of newspapers. It’s the health of the newspaper owners,” quips NYU urban studies professor Mitchell Moss.
In other cities big and small, daily newspapers are stumbling toward the brink of financial ruin—and are increasingly the subjects of their own obituaries. Bars in other big cities make money off the wakes and reunions that reporters and editors conduct for their dead papers.
Big papers, we’re talking about. Denver’s Rocky Mountain News? Dead. Seattle’s Post-Intelligencer? Now online only. The giant company that owns the Chicago Tribune and Los Angeles Times? Mired in bankruptcy court. Chicago’s other daily, the Sun-Times, is trying to hold on long enough for a pending sale to go through. The Orange County Register and Philadelphia Inquirer? Bankruptcy court. The Boston Globe? Threatened by its owner (the New York Times) with extinction. San Francisco’s only remaining daily, the Chronicle? Barely hanging on. The McClatchy chain of papers, in such cities as Miami and Sacramento? Stuck in bankruptcy court.
Overall, newspaper advertising revenue throughout the country dropped 29 percent in the second quarter, according to the Newspaper Association of America (NAA). That translates to $2.8 billion less in revenue than during the same period in 2008 (which wasn’t a healthy year, either). The biggest portion of that drop was in classified advertising, which fell 40 percent in the quarter. Even before the Great Recession, ad revenues were plummeting, thanks in large part to Craigslist’s free classifieds and other Web-based operations that have changed the retail-ad landscape.
Less revenue equals smaller profits (or no profits) for these once-lucrative papers, which equals fewer jobs. The big papers have slashed their international and D.C. bureaus and have closed outposts for national coverage. Circling the wagons, they’ve abandoned even regional and state coverage and have abolished specialized beats. Columnists are vanishing like dodos as their dinosaur newspapers are dying.
“In the end,” says Hamill, also a former editor of both the Daily News and the Post, “it all depends on what’s in the newspapers. Someone has to acknowledge the notion that content costs money. A.J. Liebling is still as fresh today as he was in 1944, reporting from North Africa. But he didn’t do it for free. He got paid.”
Unlike most bloggers—many of whom used to work on newspapers, but now work for free—one out of every five journalists working in 2001 is now out of the business. John Sturm, president of the NAA, a trade group representing 2,000 papers, estimates that 30,000 jobs have been lost just since 2007, and says that newspaper readership is actually growing: “Newspapers’ print editions, combined with their websites, have a larger audience than ever,” he says, “and their content never has been more popular—even among young people. Although print circulation has fallen, the audiences for newspaper websites continue to grow at a rate that outpaces the losses in print.”
Despite all the buzz about newspapers’ charging for their Web content, Jeff Jarvis, a professor at CUNY Graduate School of Journalism, says the online pay model ain’t gonna fly.”That’s insane,” he says. “It’s like trying to attract customers by saying, ‘Our cars cost more to make. Pay us more.’ “
Even if Sturm is correct that readership is expanding online, newspapers still haven’t figured how to make money from it. Life magazine recently ran a photo spread headlined, “When Newspapers Mattered.”
But newspapers—the things you hold in your hands—still matter in New York City. Sure, New York’s newspapers are hurting. Revenue is down. Circulation at the tabloids is down. None of the papers, except the Wall Street Journal, has figured out how to generate steady, significant revenue off the Web. But none of them has gone out of business.
Of course, the number of New York City dailies today is only a shadow of those of the past: In the 1920s, there were 11 dailies published in Manhattan alone, and four in Brooklyn.
Yes, New York City is a special case: The Times and Journal are essentially national papers in scope, and the New York Post aims at being the nation’s brassy tabloid. Newsday (unlike the Post and Daily News) aims almost entirely at commuters, not the residents of the five boroughs. And yes, amNew York and Metro are much smaller and little more than headline services.
Still, seven dailies is a lot, especially these days. The question is, Why? Well, people who work on newspapers love to hate their owners, but their jobs might only exist for the mammoth size of owner egos.
Owning a newspaper “allows wealthy individuals the opportunity to be important,” says Moss, a professor at NYU’s Wagner Graduate School. “Without New York, who would take their phone calls?”
Even if papers aren’t lining their owners’ pockets with as much money as they used to, the papers are “providing status,” he says. “We shouldn’t underestimate the social and psychological purpose they serve. If you want a newspaper, you’re doing it for the persona. It’s a lot better than being a real estate developer.”
Moss’s not-so-subtle reference is to Daily News owner Mort Zuckerman, who makes his fortune as a real estate tycoon at Boston Properties, Inc.—he’s the only local newspaper mogul whose main income flows in from outside the media business. The other local big shots are Rupert Murdoch, international media baron and owner of the Post and Journal (not to mention The Simpsons and Fox); Arthur “Pinch” Sulzberger Jr., publisher of the Times and scion of the family that has owned the paper for a century; and James Dolan, son of Cablevision founder Charles Dolan and head of the company that owns Newsday and amNew York (and also the Knicks and Rangers).
The most visible and politically powerful media mogul in town, of course, is Mayor Mike Bloomberg, but his financial-news empire exists entirely on TV and computers and uses practically no newsprint. It helps that New York City is also the magazine- and book-publishing capital; the other moguls do get their share of ink in the only big city left, in which newspaper owners can still claim that distinction.
Lucky guys—they’re too rich to take the world’s only 24/7 subway system, but they benefit from it. “This is an information junkie’s paradise, and as long as people ride subways, they will read newspapers,” Moss says. “This is a city in which newspapers are an important part of our culture. The major newspapers in New York are not read by young people. Fortunately, we still have enough older people for whom it’s part of a daily habit.”
In addition, the city is more vertical than any other big U.S. city. Most other megalopolises, particularly in the West, sprawl, and covering them with newspapers is logistically difficult and no longer makes financial sense, says Rick Edmonds, a media business analyst with the Florida-based Poynter Institute, a major journalism think-tank.
“The areas in question are so big that if they try to really cover each locality, you have to have a lot of zoned editions, and it’s very expensive,” Edmonds says. “New York City is compact.”
And huge. With those huge egos. “The size of the market is number one,” explains Ken Doctor, an industry analyst with Outsell, Inc., in Burlingame, California. “But it is also the peculiar interests of the owners of the Post and the Daily News. We don’t have a lot of data, but we believe there’s a significant subsidy of money-losing operations there. It’s the anomaly of the egos and the ownership that is permitting it.”
These days, it’s possible to “maintain a competitive daily press” only if you’re willing to subsidize it to the hilt, says Doctor, adding, “For the Post and News, the question is just what the appetite is for continuing to lose money.”
Over the past six months, each local mogul has floated, or actually set in motion, actions they say will preserve their investments, no matter how much red ink they’re bleeding.
NEW YORK DAILY NEWS
Owner Mort Zuckerman continues to show that he has the will to make the Daily News survive, despite its 14 percent drop in circulation since 2005. This summer, Zuckerman went all counterintuitive and bought new color printing presses with $50 million from a stock sale and $150 million from other sources. He told the mayor’s Bloomberg News from Morocco that the new presses will make the newspaper look a lot better and thus bring readers and advertisers back to the paper.
“Beyond that, it’s a commitment I made two years ago,” Zuckerman was quoted as saying. “I can’t just walk away from it, and I don’t intend to walk away from it.” Reflecting just how much the paper’s existence means to him, he added, “I think it will make a great deal of sense for the Daily News, to which I’m also personally committed.”
Boston Properties, his real estate firm, which generates most of its money from vast amounts of office space in the nation’s cities, is currently trading at $66 a share, an increase from last March, when it had dropped to $32 per share. Just one year ago, the stock was worth more than $100 a share, but the commercial real estate market in general is in for some rough times, according to many Wall Street observers.
Nevertheless, Zuckerman plunged ahead with the new presses, which some observers take as an encouraging sign for the general state of the printed-newspaper industry.
“It shows it’s not dead,” says Maurice “Mickey” Carroll, a former Times and Newsday reporter who is now a pollster for Quinnipiac University. “In the first place, no one can read news online. Yes, you can skim it. So I think you’re going to have to have something in your hand.”
Veteran newspaper-industry analyst John Morton says bluntly, “The Daily News is owned by someone with the resources and the will to keep the paper going. The purchasing of the presses shows he intends to stay.”
But Doctor says the purchases “seemed anachronistic,” adding, “There is some money to be made from better presses, but you’re investing significantly in a declining business.”
News spokesman Robert Leonard wouldn’t discuss the company’s finances, but he did say the paper has no plans to charge for online content.
Doctor does say that he likes one idea of Zuckerman’s: allowing sports gambling on the Daily News website, a practice that is currently against federal law. He floated the idea in an interview with Forbes earlier this year. “There is something that can be done [to save newspapers], and the federal government ought to do it: allow sports betting on newspaper websites,” Zuckerman said at the time. “Plenty of British papers do this—for them, it’s a crucial part of their net revenue stream. I know a major newspaper in London that makes $15 million a year from sports betting alone.”
WALL STREET JOURNAL
No other city in the country has such a powerful business paper, but no other city has Wall Street, either. The Journal is unique among the city’s big dailies: Only one in nine of its readers lives in New York State. Even more than the New York Times, the Journal is a national and international newspaper.
Rupert Murdoch’s News Corp.—already an international empire, with papers in London, the Fox network, and satellite companies—bought the Journal and Dow Jones in 2007 for $5 billion. There was some hair-pulling about Murdoch’s well-documented history as a meddler in many of his media properties, which include tabloids like the Post, serious papers like the Times of London, cheesy soft-core rags, and partisans like Bill O’Reilly. A cluster of Journal reporters pleaded with the Bancroft family not to sell the paper to Murdoch, arguing that the mogul would try to influence the paper’s coverage of the burgeoning economy in China, where he has business interests. The sale went through anyway, and though the paper hasn’t been remolded into the Post, it has been, as media analyst Lauren Rich Fine put it, “migrating” toward more of a general-interest style.
The Journal has been charging for Internet access for years, and the strategy has worked. News Corp. claims that the Journal‘s website is more successful than almost any other paid website.
Still a work in progress is how Murdoch plans to integrate the Journal into his empire, which includes the embryonic Fox Business News channel. “News Corp. needs to figure out how to use Journal content with its worldwide infrastructure,” Doctor says. “When he bought it, the question was, ‘How much did he overpay?’ But the payoff is that they could be the No. 1 business brand in the world.”
Always ahead of most other old-media companies in figuring out how to make money through new technology, the newspaper will start new charges next month for content sent to mobile phones. The fee will be $1 for subscribers and $2 for non-subscribers. The paper also has plans to start a San Francisco edition.
It wasn’t only the Great Recession that dragged the stock price of News Corp. down to as low as $6 a share, from $24 in 2007. The price started dropping right after Murdoch bought the Journal. Like many other stocks, however, News Corp. has rebounded: It’s now selling at $14 a share.
NEW YORK POST
The brash Post gets a lot of attention for its snappy headlines and gossip-mongering, but its bottom line is no laughing matter. In an SEC filing earlier this year, News Corp. acknowledged that the paper’s revenues were falling because of competition from new media and “shifting preferences among some consumers.”
“The Post has been losing money for decades,” Morton says. “But Murdoch has made clear that he intends to keep it going.” Jarvis calls the Post “Murdoch’s bully pulpit.”
The paper and the Daily News are locked in a neverending tabloid-to-tabloid contest. When the Post slashed its newsstand price to a quarter, circulation jumped; when the price went back up to 50 cents, circulation naturally dropped back down. The paper’s circulation, in fact, rose dramatically from 2000 to 2005, but has fallen 16 percent since then.
A recent makeover of the Post‘s website makes it much easier to navigate, but the free ride for online Post readers may be about to end. “Quality journalism is not cheap,” Murdoch said in early August. “We intend to charge for all our news websites.” The Post will not only start charging for its online content (probably sometime next year), but also may aggressively go after people who lift its content and post it elsewhere for free.
The Journal has been successful in charging for access, but the Post is not exactly full of specialized data and news pored over by lawyers and corporate types. Putting up a pay wall for the Post, says Doctor, would be a mistake. “It’s like putting up a white flag of surrender,” he says. “It just doesn’t seem to fit.”
News Corp. strategists are probably having a difficult time figuring out what to do with the Post. “There must be pressure inside News Corp. about where the Post is going,” says Doctor. “The conclusion has to be that it’s not going to contribute to the growth of the company.” Moss takes a broader view of the Post, noting that it has “a certain following.” “It has a national audience,” he says. “It’s really a British paper with a New York twist. They understand the appeal of headlines and cleavage.”
The company that once published a separate Pulitzer-winning paper in the city, called New York Newsday, has retreated to its Melville citadel, where the bosses focus on preserving the newspaper’s grip on the Long Island market. Despite its monopoly, the paper’s circulation has dropped 36 percent since 2000.
Beginning in 1995, with the closure of its city paper, Newsday has gone through a long series of cutbacks, layoffs, and staff buyouts as it has moved from control by Times-Mirror to the Tribune Co. and now to Cablevision, which also has a cable monopoly on Long Island.
The paper was still profitable enough that a bidding war for it erupted in 2008 among Murdoch, Zuckerman, and the Dolans. Cablevision wound up spending $650 million to buy it. Newsday also owns the free subway weekly amNew York, which essentially has replaced its New York City bureau.
“Newsday has retreated to Long Island to make a stand,” says one of its many former reporters. “Newsday‘s struggle is not with another newspaper. It’s with generational change, and somehow convincing a new generation to buy the product.”
Wrestling with the same problem faced by other newspapers—how do you make money off the Web?—Newsday is currently working on a scheme that would require non-subscribers to pay for some articles. Details haven’t yet been disclosed, but the paper may have enough specialized content in its monopoly market to pull it off. “Newsday has a better shot with the pay site than other papers because it dominates the Long Island market,” says Morton, but he adds, “I think it’s going to be a struggle at first.”
Doctor notes that Newsday meshes well for its cable owners. “What I liked about the Newsday idea,” Doctor says, “is that they force you to take newsday.com with your cable television, and they assign a value to that bundle—say they charge an additional $2.95 a month for newsday.com access on your cable bill.”
In any case, the Dolans can now play hardball with their new-technology competitors. Last month, the cable company’s newspaper refused to accept advertisements from arch rival Verizon to hawk its FiOS Internet service.
THE NEW YORK TIMES
The Times won five Pulitzers in April, but the Sulzberger family can’t pay its debts with those trophies. Shortly after the good news, the New York Times Co. disclosed that revenue had dropped nearly 19 percent in the first quarter of 2009. Other less-than-prize-winning news: The debt load was at $1.3 billion. Operating profit was $6.2 million, with an operating loss at $61.6 million. The paper blamed the global downturn, a decline in ads, and what it called “secular changes” in the news biz. In January 2004, the company’s stock was trading at almost $40 a share, and, as recently as April 2008, it was still in the $20s. Now, it’s at $8, up from a low of $4. Not immune to the industry’s continual shedding of jobs, the Times laid off 100 business-side employees this spring and ordered a 5 percent pay cut for the survivors. The New York Times Foundation stopped giving grants; the company sold its New York City radio station and is mulling the sale of its portion of New England Sports Ventures, which includes the parts of the Boston Red Sox and a regional cable sports network. The Times is still trying to unload the Boston Globe, for which it paid $1.1 billion in 1993.
Amid other belt-tightening, including the shuttering of some of its extensive foreign bureaus, the paper folded its Metro section into the A section. Readers used to feast on the paper one section at a time, which lent each separate section a certain gravity, so this change was a big deal when it came to the Times. “The Times is the way that the elite talks to the elite—the people in Manhattan, Chappaqua, Montclair, and Brooklyn Heights,” Moss says, and the decision to do away with a separate metropolitan-news section has cost the newspaper some clout.
“Ever since it got rid of the Metro section, its local presence has suffered,” Moss says. “The Times has the lowest penetration of any major daily in its own city. It’s a national newspaper with a local name.”
Shrinking as other papers are, the Times has also folded its sports section into its business section, and editors have sharply reduced its Sports of the Times column from five writers to two, with one of those about to retire.
Murray Chass, the paper’s veteran baseball writer who took a buyout last year, is sharply critical, writing in his blog: “It’s like parents, knowing they are going to die, killing their children because they won’t be able to live on without them. The problem with this warped thinking in the case of the newspaper is the demise of the column, and the thinking behind the act will help hasten the newspaper’s demise.”
Chass acknowledges that newspapers have to change in the Internet age, “but why would the Times want to hasten its demise by eliminating a staple that attracts readers and prompts them to buy the paper?”
Doctor says the Times has been “dodging bullets, doing what it needed to do.” This includes raising money from Mexican billionaire Carlos Slim (whom it once savaged in its news pages as a shady character), trying hard to rid itself of the money-losing Globe, and eventually selling other regional newspapers that it owns.
Still, the paper’s circulation has held steady in the past 10 years, in part because it has sought subscribers across the nation. “They’ve been on a program for at least a decade to replace New York metropolitan subscribers with national subscribers,” says Poynter Institute’s Edmonds. Indeed, figures comparing 2004 with 2009 show that while the Times‘ circulation within New York State has slipped, the numbers of subscribers outside the state has increased, according to the Audit Bureau of Circulation.
Doctor criticizes the company for not diversifying (the Washington Post, for example, rakes in cash from its Kaplan schools subsidiary): The Times, he says, is “wholly dependent on news. Most of the revenue comes from the U.S., but a third of their online readership is outside the U.S. Most of their revenue still comes from print.”
Back in May, the New York Post claimed that the Sulzbergers had lost more than 86 percent of their fortune, and suggested that the family might have to sell a controlling stake to an outsider. Family members may rush to sell their holdings before the worst happens, the Post intimated.
But Carroll says Sulzberger is committed. “You may argue with a lot of what they have done, but he’s fighting tooth and nail to keep the newspaper in the family,” says Carroll.
Henry Blodget, banned from the securities industry in a famous scandal earlier this decade and now a respected blogger of Wall Street’s doings, wrote last spring that the Times will reach the ceiling of its ability to borrow money by early next year. A couple of months later, though, Blodget lauded the Times for weathering a 32 percent plunge in advertising revenue during the second quarter of this year by cutting costs, selling assets, and successfully restructuring its huge debt load.
But to save itself over the long term, Blodget insists, the Times should charge for its highly influential online content. The newspaper tried that a few years ago with TimesSelect, but even though it attracted 200,000 subscribers, it was dropped.
Now, the paper’s execs have begun to talk openly about a new paid-content scheme, possibly geared toward “special content” or one that would kick in when readers want to delve further into a subject with the paper’s exhaustive archive of stories.
The paper seems to be preparing for the possibility of even more significant changes in how it markets its valuable product, which other news organizations and bloggers depend upon. Executive Editor Bill Keller noted last month in a letter to the New York Review of Books “a lamentable decline in the supply of professional journalism.” He predicted a “journalistic landscape five or ten years from now that will be a mix of survivors and start-ups,” with the distinction between mainstream and new media diminishing.
Ominously, for readers who don’t at all mind the ink rubbing off on their fingers, Keller added, “We will survive in print as long as the revenues justify it [and, thanks in part to growing circulation revenues, they still do], but we will grow, adapt, and ultimately prosper on all manner of nonprint platforms.” In sum, it seems as if Keller would have no problem going all-online, if necessary.
amNEW YORK and METRO
True throwaways, amNew York and its main competitor, Metro, were blamed for being the significant cause of track flooding—subway tunnels get clogged with newsprint tossed by readers—and were partly responsible for the massive subway flood back in 2004.
Of the two, amNew York (owned by Newsday) seems to be doing somewhat better than Metro, whose roots are in a European chain of similar little tabloids. CUNY’s Jarvis says there’s probably room in the market for only one of them to survive.
“Free papers are having real problems,” Doctor adds. “Print advertising is going down. When the economy was good, their pitch of reaching younger readers worked. But as advertising dried up, free papers were seen as a discretionary buy by advertisers.”
In the next year to 18 months, assuming the economy recovers, Doctor says, newspapers will feel as if they got something of a reprieve. “Not all of the advertising will come back, but some of it will,” he says. Indeed, Murdoch said at a Goldman Sachs press conference recently that the advertising market has improved in the past couple of months.
“I’m not an economist,” Murdoch said, “but my guess is that the consensus is about right, and [the economy is] going to get a nice bump, and then it will settle back to a fairly slow recovery.”
Which means that none of the city’s dailies, aside from the two free ones, are likely to die anytime soon. Moss is optimistic: “If you survived this downturn, why would you sell a newspaper now?” he says. “These are very resilient newspapers. If you’ve survived this economy, you can survive anything. And there’s a lot to be said for New York as a place to own a newspaper.”