DISCUSSION

Turning Points 2008: The Death of Print

December 10, 2008Written by Tom Ryan

Editor's note: In what we plan to make an annual end-of-year tradition, RetailWire has compiled a list of the most significant retail industry "Turning Points" of 2008. (See our news release...) What follows is the first of a series of 12 discussions based on the list.

Retailers and brands continue to look to newspapers, particularly Sunday circulars and free-standing inserts, to most directly communicate with customers and drive traffic. But steep advertising and circulation declines along with the massive staff layoffs this year have caused even dedicated readers to wonder whether newspapers have a future.

In the third quarter, revenues declined 11 percent at Gannett, nine percent at The New York Times, and 16 percent at McClatchy. Given that television news viewership in the period grew robustly due to the U.S. presidential campaigns and the Beijing Olympics, the results were especially disappointing. With advertising revenues expected to receive another series of hits from the recession, Fitch, the debt ratings agency, last week predicted several cities could go without a daily print newspaper by 2010. Just this week, Tribune Co., publisher of the Baltimore Sun, Chicago Tribune, and Los Angeles Times, became the first major newspaper publisher to file for bankruptcy protection.

The causes of the diminishing readership are readily apparent: television news viewership has expanded; the internet has taken away readers as well as essential advertising streams, such as classifieds; and all the while, environmentalists complain of print's impact on trees.

More recently, some wonder if the newspaper product has gone down hill with all of the bureau closings and layoffs. A recent New York Times article compared the situation directly to Circuit City's decision in March 2007 to fire its most experienced employees to stave off competitive pressures.

"Circulation declines were deeper in the last period, and I have to say that I think it has to do with the quality problems from cuts," Ken Doctor, a media analyst at Outsell Inc., a market analysis firm, told the Times. "It is not just the cutting, but the cutting of more-experienced staff, a kind of slow-motion suicide. Circuit City cut its own throat by not realizing what their competitive advantage is, and newspapers are doing the same thing."

But a PEW survey of newspaper executives in July found that cuts to crossword puzzles and TV listings were the biggest complaints from readers, rather than decreasing news quantity or quality. To little impact, newspapers have cut pages, shortened stories, combined sections, reduced foreign and national news, while strengthening local news and continuing to focus on investigative reporting.

Newspapers hope online journalism eventually pays off, but any successes on the internet side have been more than offset by the print declines.

One believer is Rupert Murdoch, the chairman and chief executive of News Corp. In a recent speech entitled "The Future of Newspapers: Moving Beyond Dead Trees," the media mogul, who counts The Times of London, The Wall Street Journal and The New York Post among his properties, said that while some newspapers will lose circulation in coming decades, people are "hungrier for information that ever before" and still look to newspapers as trusted sources. Moreover, critics underestimate how online news sources will expand rapidly not only through web pages and RSS feeds, but also e-mail that delivers customized news and ads to mobile devices.

"In this coming century, the form of delivery may change, but the potential audience for our content will multiply many times over," he said.

Discussion Question: How are the problems at newspapers transforming the way retailers communicate with consumers? Are other media (TV, internet, etc.) proving to be as or more effective in driving home brand messages and store traffic?

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