Wednesday, April 22, 2009

The Way To Save Newspapers? Kill Some More Of Them

Newspapers will survive technological change. But as this article correctly predicts, consolidation will save the newspaper industry. We have seen this same consolidation occur across many other industries as well. The cable industry is a great example. Where once every community seemed to have its own cable system, today it is dominated by a few. The accounting industry once included "the big 8"; but now most are gone. Even the auto industry was once populated with many manufacturers; not today.

Newspapers can return a healthy profit. "Industry EBITDA (earnings before interest, tax, depreciation and amortization) margins are 14% to 16%, according to a recent J.P. Morgan analysis of public newspaper companies. While that's well below the peak of 25%, newspaper companies are generally still reasonably profitable." Who survives and who doesn't will have to be left to who best manages through these tough economic times. Will the New York Times survive; I bet they will.

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