TV or Not TV?   

Some newspaper companies are unloading broadcast properties.

MOST NEWSPAPER-PUBLISHING companies seem to be making two different kinds of bets on the future--becoming solely newspaper operators, or expanding their holdings into broadcast and other media endeavors.
Now, some newspapers have owned radio stations since the dawn of broadcasting, and many were among the first to establish TV stations. What has changed in recent years is that a number of newspaper companies have withdrawn from broadcasting to concentrate on the newspaper business.
The most recent is Lee Enterprises, owner of dailies in nine states in the Midwest and West, which has just put up for sale its nine network-affiliated and seven satellite TV stations in nine states. The company said proceeds from the sales would be used to buy more newspapers and related online businesses.
Last year, Pulitzer Inc., owner of the St. Louis Post-Dispatch and other newspapers, spun off its nine TV and five radio stations and has been using the $450 million it cleared from the deal to buy more newspapers.
In earlier years, Knight Ridder, Times Mirror and McClatchy Newspapers sold off broadcast and other operations to concentrate on newspapers. (Times Mirror retained some professional-training businesses and magazines, but newspapers last year accounted for 83 percent of its revenue.) The three joined other companies that have always been pure newspaper companies--MediaNews Group, Central Newspapers, Journal Register Co.--and others that are nearly pure. The New York Times Co. gets 92 percent of its revenue from newspapers, Gannett Co. 86 percent.
At the other end of the spectrum are companies like Tribune Co., which last year received only 49 percent of its revenue from newspapers (that will rise to about 65 percent with the company's acquisition of Times Mirror). The rest comes from broadcast, entertainment and other ventures.
Cox Enterprises has transformed itself over the last four decades from a smallish newspaper company into a Goliath that now also has huge investments in television, radio, cable TV and other media-related operations. Other large newspaper-founded companies that have moved in this direction include the Washington Post Co. (39 percent of its revenue from newspapers), E.W. Scripps Co. (58 percent) and Media General (66 percent).
Why these different approaches to the future? Consider first the essentially pure newspaper companies. What distinguishes the newspaper business from most other media endeavors is its intense localness, in information delivered and revenue received. A local TV station may be local in its signal, but much of its content and a considerable portion of revenue come from elsewhere.
Newspapering on newsprint is pretty much a mature business, though. Growth depends on whatever population and household growth, if any, might occur in individual markets and a newspaper's success in capturing its share of that growth, and the ability of papers to raise advertising rates faster than the inflation rate.
Where real growth will come for newspapers is on the Internet, and it is no coincidence that the pure newspaper companies have been aggressive in transferring their brand names to local Web and portal sites and in feeding local news and advertising information into national newspaper consortiums. These pure newspaper companies are betting that the business they know best--gathering local information--will bring continued success as the Internet grows.
Tribune Co., by contrast, wants to marry newspaper and broadcast information-gathering in as many markets as possible (see "Tribune's Big Deal"). The company really doesn't care whether the money comes into its newspaper pocket or its broadcast pocket, so long as it comes in. Nor is Tribune any less aggressive than the pure newspaper companies in transferring local information--from newspapers and TV stations--to Internet sites.
Moreover, by operating in numerous large newspaper and television markets, the company benefits from economies of scale in buying newsprint, equipment and programming. And its entertainment division--a third pocket--benefits by having captive company broadcast operations to sell programming to. A relative lack of size in broadcast operations, and the lack of the advantages size brings, was the primary reason Lee Enterprises cited for putting its stations up for sale.
Which of these two bets will turn out to be best, of course, depends on an unknown future. It is conceivable, though, that both will be successful.