America’s Newspapers Are Fighting for Survival

In the U.S., the number of newspapers is decreasing. Readership is shrinking and advertising sales have collapsed.

The American press now finds itself the subject of bad news. Last Friday, the Rocky Mountain News in Denver ceased circulation. Prior to that, the Philadelphia Inquirer and the Journal Register Company filed for bankruptcy. Founded in 1829 and Pulitzer Prize-winning, the “Inquirer“ is not only the third oldest newspaper in the U.S., but also one of the most renowned. In 2006, investors took control of the newspaper and since then have racked up $400 million in debt. The Inquirer will continue to be published for the time being. The owners are scheduled to present a new business model to the bankruptcy judge in four months. The Journal Register Group, which publishes 22 newspapers in the northern part of the U.S., is drowning in a sea of debt of nearly $1 billion and is negotiating with its creditors to find ways to refinance. The San Francisco Chronicle is another quality newspaper that has recently announced deep budget cuts. The publisher is not ruling out the possibility of shutting down the newspaper.

Since the start of the year, 33 newspapers in the U.S. have filed for bankruptcy. The remaining newspapers are searching for new investors, reducing coverage and staff, and experimenting with various models to stay afloat. For instance, the highly acclaimed Christian Science Monitor will only be available online starting in April. Fueled by the economic crisis, a familiar trend is being accelerated. Since the mid-80’s, newspaper readership has decreased by two percent per year. Last year’s readership dropped by five percent. Circulation of the Inquirer has fallen by 10 percent since March 2007 to the present date and it is still distributing 300,000 copies daily. According to a new survey, people are not even reading newspapers online. Only 40 percent of Americans stay informed about current events by reading newspapers either online or in print.

Leading newspapers like the New York Times and Washington Post have the potential to significantly increase their presence on the Internet. However, even these newspapers have been affected by the collapse in advertising revenue. This was illustrated in the Washington Post’s quarterly report last week, which showed a 21 percent decrease from the same quarter last year. The Internet is not offering any relief either. For instance, in the fourth quarter of 2008, American newspapers earned $8.2 billion in advertising revenue, with only eight percent of that derived from online ads.

Clearly, newspapers’ traditional sources of revenue are crumbling and the Internet is not bringing in the revenue needed to survive purely online. Therefore, Max Frankel, one of the most well known journalists in the U.S., expects more newspapers to fail in the upcoming year. The former chief editor of the New York Times explained, “Existing or future news institutions will only be able to survive if they find an Internet-based model that reaps enough profit to cover the costs of serious journalism. However, this model has yet to be developed.” From Frankel’s perspective, an American democracy without an independent and research oriented press would be unimaginable. As a result, he and other experts anticipate that not for profit foundations will step in to fill the shoes of newspaper companies to a certain extent.

Market leaders like the New York Times believe in the commercial viability of their business. The new buzzword in the industry is “the last man standing.” The New York Times found a new financier in Mexican billionaire Carlos Slim and is feverishly expanding its online content. Print coverage has been significantly reduced. This is how they plan to win the battle for readers online, but mid-sized papers like the Inquirer and the Chronicle may have to call it quits. It is possible that within a couple of years, only a handful of national papers like the New York Times, the Washington Post, and the Wall Street Journal will compete for readers and advertising revenue online.