The squeeze is on for No. 2 papers
As demonstrated in Denver and Seattle, not even joint-operating agreements have been enough to save the weaker competitors in those two-newspaper markets.
With the worst economy in decades compounding a fierce secular contraction of the newspaper industry, the challenge for No. 2 papers will be stiff for standalone papers in places like Boston, Chicago, Los Angeles, Miami-Fort Lauderdale, Minneapolis-St. Paul, Philadelphia, New York and San Francisco.
No. 2 papers in joint-operating agreements in places like Detroit, Salt Lake City and Tucson also have to be concerned about their long-term viability. (While the partners in Detroit previously announced a curious plan to sustain both papers by eliminating home delivery several days a week, a number of observers [including yours truly], have come to believe the more likely outcome will be the shutdown of the Detroit News).
The reason No. 2 papers are endangered is simple:
When ad dollars shrink in a metropolitan area (as they are doing), they do not shrink proportionately among the competing papers. The largest share of dollars goes to what advertisers and readers perceive to be the stronger of the two papers. This starves the already-lean flow of advertising to the second paper, strangling its profitability to what in many cases may prove to be the breaking point.
In the cases of both the Rocky Mountain News in Denver and the Seattle Post-Intelligencer, the owners of the newspapers engaged in joint-operating agreements have said they will shut their papers if buyers are not located within a matter of weeks. Given that buyers are unlikely to emerge in the most toxic environment for newspapers in history, the announcements amount to death warrants.
With respect to some multi-newspaper towns, it is not clear which of the two competitors might succumb first:
:: The Star Tribune is reported to be on the verge of bankruptcy but the precariously financed MediaNews Group owns the cross-town Pioneer Press.
:: The New York Daily News and New York Post, which both are believed to be losing money, are supported by billionaire patrons. The respective patrons are Mortimer Zuckerman and Rupert Murdoch. If either blinked, his paper would fail.
:: The over-leveraged McClatchy Co. reportedly has put up the Miami Herald up for sale with know known interest. But the Tribune Co., the owner of the neighboring Sun-Sentinel, already has filed for bankruptcy.
:: Both papers in Philadelphia are owned by a home-grown investment partnership that has been struggling to avoide default. In the interests of streamlining the organization to enhance its profitability, the Philadelphia Media Group might find it necessary to fold eiter the Inquirer or the Daily News, which, incongrously in this day and age, compete against each other.
Even in Seattle, as Mark Potts notes, it was a jump ball as to whether the P-I or the Seattle Times would fold first.