Monday, March 19, 2007

Morton & Miles give up

The most authoritative newsletter covering the newspaper industry issued a gloomy prognosis for the business today and then, tellingly, went out of business.

Many newspapers in the largest markets already “have passed the point of opportunity” to save themselves, says the Morton-Groves Newspaper Newsletter in its farewell edition. “For those who have not made the transition [by now], technology and market factors may be too strong to enable success.”

The newsletter was launched in 1976 as the Newspaper Newsletter of Morton Research, and initially written solely by John Morton, the dean of American newspaper analysts. In 2002, John was joined by Miles Groves, a former economist for the New York Times Co. and the Newspaper Advertising Bureau. Both men will continue their independent consulting practices.

Tweaking “the free-riders who read but did not subscribe” to the newsletter, John and Miles said that, “sadly, we have concluded that the financial reward” of continuing the publication “is not worth the effort required.”

In a parting missive entitled “Passing the Inflection Point,” the newsletter delivered the following synopsis of the industry’s weakening vital signs:

:: Industry profitability grew from an average of 15.7% in 1990 to 22.6% in 2002, but slipped to 17.8% in 2006. (Newsosaur comment: Would that the industry had the wisdom to invest in its future during those fat years.)

:: Advertising share declined from 24.9% in 1990 to 15.8% in 2006.

:: Although 62.4% of adults read a newspaper on an average weekday in 1990, the Newspaper Association of America reported that “regular readership” dropped from 51% in 1997 to 46% in 2002. The NAA hasn't issued a comparable figure since then, according to John and Miles.

Exiting with a bang, not a whimper, John and Miles said publishers had the chance to leverage “the power of the local brand” to shift from “ink on crushed wood” manufacturing to modern marketing and customer-service enterprises.

“Sadly, the ‘straw man of failure’ provides a barrier that industry stakeholders have not been able to shake,” they write. “Instead of making the technology, personnel, marketing and product investments critical for success, industry leaders have accepted that desirable circulation levels are not sustainable and declines are inevitable.”


Anonymous Anonymous said...

For years, John Morton has met or seen few newspapers he hasn't diagnosed as dying. He has written several premature obits on the New York Daily News, the paper nearest and dearest to me for more than four decades. Yes, it's true that the industry has been in a survival struggle for many years, as it has done its best to contend with changes in technology, economy, etc. But isn't every industry, at some point, in such a struggle?
Still, it's sad to see the old Cassandra go; who'll tell our gloomy fortunes now?

12:58 PM  
Anonymous Anonymous said...

The greatest investor of modern times recently said in his shareholder letter that if cable TV and the Internet came along first, newspapers would have never existed. Pretty powerful statement from a guy that has made a lot of money investing in papers, in fact he still owns WPO, which has diversified the business to some degree through investments in eductation.

1:15 PM  

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