Thursday, April 2, 2009

Reading: Daniel Gross: "Newspapers aren't assets to be flipped, leveraged, and stripped"

Well, except that they are when they're in the hands of dummies.

This picks up on a thread TJ launched at LO a few days ago with a picture he captured on his iPhone. The question: Are newspapers failing because Craig's List has stolen their ad revenue, or because their content is either not interesting or not to be believed?

Along comes Daniel Gross, author of Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, who argues pretty convincingly that this isn't the right question. Rather than asking "why are newspapers failing?" we should be asking "which newspapers are failing?"

The answer:

While newspapers have serious problems, the recent failures of several newspaper companies (here's a list of list of four others that have gone BK in recent months) shouldn't necessarily lead to visions of the apocalypse. Virtually every newspaper in the country has experienced a sharp drop in advertising and is suffering losses. But not every newspaper company in the country has gone bankrupt as a result. And the failures may say more about a style of capitalism than an industry. Each company was undone in large measure by really stupid (and in one case criminal) activities by managers. […]

All newspapers—all print media—have been hit hard in this recession. All face an existential crisis and may ultimately face the prospect of bankruptcy. Those whose owners saw papers as assets to be flipped, leveraged, and stripped are already bankrupt.

The article is going onto the Readings list in the sidebar.

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