Mar
01
2007

Wall Street's Panic, Democracy's Trouble

I don't so much mind that newspapers are dying—it's watching them commit suicide that pisses me off.

Let's use this as a handy exercise in journalism. What is the unexamined assumption here? That the newspaper business is dying. Is it? In 2005, publicly traded U.S. newspaper publishers reported operating profit margins of 19.2 percent, down from 21 percent in 2004, according to the Wall Street Journal. That ain't chopped liver, friends—it's more than double the average operating profit margin of the Fortune 500.

So who thinks newspapers are dying? Newspaper analysts on Wall Street. In fact, the fine folks on Wall Street just forced the sale of Knight Ridder Inc. to McClatchy Co., a chain one-third KR's size. McClatchy's CEO, Gary Pruitt, pointed out in an op-ed piece that investors are so chicken that his company picked up KR for a song. (Actually, he said no such thing—he was far more dignified. But that's what it comes down to.)

So if newspapers are so ridiculously profitable, how come there's panic on Wall Street about them? Because we're losing circulation—2 percent in 2004, and down 13 percent from a 1985 peak, says the Newspaper Association of America.

So we're looking at a steady decline over a long period, and many of the geniuses who run our business believe they have a solution. Our product isn't selling as well as it used to, so they think we need to cut the number of reporters, cut the space devoted to the news and cut the amount of money used to gather the news, and this will solve the problem. For some reason, they assume people will want to buy more newspapers if they have less news in them and are less useful to people. I'm just amazed the Bush administration hasn’t named the whole darn bunch of them to run FEMA yet.

What cutting costs does, of course, is increase the profits, thus making Wall Street happy. It also kills newspapers.

Aside from my own sentimental attachment to newspapers, I have no objection to all of us shifting over to the Internet and doing the same thing there. You'd still have the two big problems, however: A) How do you know if it's true? And B) how do you put a lot of information into a package that's useful to people?

If newspapers were just another buggy-whip industry, none of this would be of much note—another disappearing artifact, like the church key. But while Wall Street doesn't care, nor do many of the people who own and run newspapers, newspapers do, in fact, matter beyond producing profit--they have a critical role in democracy. It's called a well-informed citizenry.

We are in trouble.