Real news raises newspapers' profits

by Dollars & Sense

When the Boston Independent Media Center and encuentro 5 brought David Barsamian, Cynthia Peters, and various representatives of Boston-based independent media together to discuss media issues last month, one topic that came up was the trend among the big media and entertainment corporations that own most daily newspapers for cutting newspaper staff—especially editorial staff—and citing declining newspaper readership and profits as their reason. John Grebe, host of Sounds of Dissent on WZBC, pointed out that we should look beyond the decline in profits and look at the profits themselves before we sympathize with this trend. Grebe cited reports of phenomenal 19% profit rates among entertainment and media conglomerates in 2005. Dollars & Sense's Esther Cervantes responded that, in that case, newspaper-owning corporations have the flexibility to support their newspapers rather than eviscerate them—if they want to.

It now appears that maintaining newspapers' editorial integrity need not involve a trade-off with phenomenal profits. Last week, Reuters reported on a University of Missouri-Columbia study that shows, based on ten years of financial data, that newspapers that spend more money on their content make more money. According to the study's author, Esther Thorson, "If you lower the amount of money spent in the newsroom, then pretty soon the news product becomes so bad that you begin to lose money."

If cutting newsroom staff isn't actually good business, then what are the real reasons behind the trend?

Thanks to Bob Harris for the link.

Labels: media

 

Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!).
2/21/2007 11:08:00 AM