What is the newspaper model? When did it break? Who really cares?

McClatchy’s stock is worth a gallon of gas, about $4.50. Think about that the next time you fill up.  Even the New York Times total assets are worth no more than its new building and the stock has no voting rights. A bargain at $13? You think?

 

As the pink slips fly this summer at the old, elite daily newspapers from coast to coast, I continue to hear editors say “the model is broken.” That’s a tip that they know not what they do. Corporations don’t call operational or marketing plans models. Businesses run on plans, financial reports including daily sales, expenses, industry trends, local trends and regroup when “off plan.” There is always Plan B.

Now a columnist at the Poynter Institute, the non-profit think tank created by Nelson Poynter to continue the St. Pete/Clearwater Times past his death (and keep the company operational after the Democrats’ death taxes), is saying this is a good time to buy newspaper stock. Not so much.

McClatchy’s stock is worth a gallon of gas, about $4.50. Think about that the next time you fill up.  Even the New York Times total assets are worth no more than its new building and the stock has no voting rights. A bargain at $13? You think?

But before you make a play at any of these stocks, remember the ancient Chinese saying, “Do not try and catch a falling knife.”

What is a newspaper worth? Compare it to an airline. Both industries have major payrolls, they are labor intensive, service businesses and both have major fuel costs. (Yeah, boys on bicycles don’t deliver papers anymore). Add newsprint to the newspaper costs.

Airlines sell seats. Newspapers sell space.

The airlines have business travelers and summertime vacationers. They have not lost any business class revenue and have done well with family fares because it is cheaper to fly than drive this summer. An airline can just cut back on less popular destinations. Keep the plane behind schedule and get a few more seats filled.

Newspaper revenue comes from advertising. They sell pages or column inches of advertising space instead of seats. But the newspaper planes take off every morning. They are flying the planes with a lot of empty seats.

The newspapers are run by the editors and sub-editors. Are airlines run by the flight attendants and pilots? I think not. Well, one is in a way. It’s not doing very well.

Advertising revenue is filling up the seats of the new online airbuses: Google, Yahoo, Drudgereport and Craigslist, with targeted advertising buys. The new online media has attractive “destinations:” young, well-educated middle class.

The newspapers destinations are not so hot. Think of 70 year olds in black socks, sandles and checker shorts, sitting at a park in Cleveland. “Wish you were still here.”

Not a pretty picture.

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