Newspaper Business Grows Up At Last   

Today, trained professionals apply strategic thinking to problems posed by competition and changing lifestyles.

At one time, making money in the newspaper business was easy and did not require aggressive management. Lack of competition meant that local advertisers had little choice – advertising for the most part meant spending money with the local newspaper.

Thus, historically the newspaper business was not particularly well managed. The situation was compounded by the nature of newspaper ownership. Most newspapers were family enterprises and naturally, family members tended to move into top management positions, regardless of whether they were the most qualified.

Moreover, the fact that family members often occupied the upper rungs tended to discourage ambitious non-family executives from sticking around, or even joining up in the first place.

Obviously there have been effective family newspaper executives, and I have no intention to sully all family managements for what has been a general tendency. But the tendency, combined with the fact that the industry has a large number of owners, meant that for a long time newspapers usually reacted to well-established competitive problems rather than developing a strategy to thwart emerging competition before it could do harm.

Two things have changed in recent decades. The first is that competition has become fierce. The creation and spread of television is the earliest and most obvious example. Before television, many newspapers got as much as 25 percent of their advertising revenue from national advertising; now it is down to between 6 percent and 7 percent for most. The other notable competition examples include direct-mail operations and the Yellow Pages, which together have grown to take away large chunks of local advertising from newspapers.

Adding to these competitive problems have been lifestyle changes. According to various surveys, most people devote more time to their employment – 49 hours a week on average – than they used to, partly because of ever-lengthening commuting times. In half of marriages, both spouses work, and 60 percent of all women work. These changes increase time pressure and take away from newspaper reading.

And people generally have become more insistent on doing things at their convenience – and in effect are more willing to pay for time and convenience – in ways that detract from newspaper advertising. More people, for example, are buying merchandise from mail-order catalogues and home shopping channels on cable.

Fortunately, the second major change in the newspaper industry enables most newspapers to counter the effects of growing competition and changing lifestyles. That change is what I perceive to be a dramatic improvement in the quality of newspaper management.

Part of the improvement stems from the inevitable effects of ownership concentration. As newspaper companies have become ever larger, with properties scattered throughout several states, day-to-day management has been taken over by non-family executives. Families generally have remained in control – this is true even for most of the large publicly owned newspaper companies – but the corporate culture of their enterprises has changed markedly.

Now there are clear career tracks that attract ambitious and well-trained professionals, even, saints preserve us, MBAs. And the level of training itself has gone up dramatically. Scarce is the advertising, circulation, editorial or production department these days run by somebody who learned by the seat of his pants. Professionally trained executives usually are better-rounded and have more insight into how the entire newspaper operation must work in order to compete effectively.

One of the hallmarks of this improved management is an emphasis on strategy.

An example is investment in technology. Spending on production and distribution equipment is no longer driven solely by cost savings, important as that is, but more by the need to improve service to readers and advertisers. Later deadlines and creation of new special interest sections and community zones enhance the editorial product. Later deadlines for advertisers make newspaper advertising more attractive. Better color printing attracts both readers and advertisers and makes newspapers more competitive with high quality brochures and catalogues sent through the mail.

Newspapers now tend to think of these technology investments as money that must be spent just to stay competitive.

This strategic thinking extends as well to devising new ways to market the newspaper's database. Forward-thinking companies are seeking or have already established alliances with telephone companies, cable operators, computer networks and others to develop ways to sell information electronically (see AJR, October).

None of this means that making money in the newspaper business will ever be as easy as it once was. But it is encouraging that most newspaper managers are trying to respond now to the problems of the future. l