After years of bad headlines the newspaper industry finally has some good news
IN A recent issue of the beloved comic book, Superman’s alter ego, Clark Kent, quits his job as a journalist at the Daily Planet because the paper has gutted its news coverage. Is the outlook for newspapers really so dire that even superheroes have given up on them? Ever since 2006, when The Economist asked on its cover who had “killed the newspaper”, the industry’s pains have only intensified. Advertising has plunged. Readers have kept moving online. Revenues of newspapers continued to fall, dropping to $34 billion last year in America—only about half of what they were in 2000.
Yet things have started to look a bit less grim, particularly in America. Revenues from advertising are still falling, but those from circulation have at last started to stabilise. At some papers, such as the New York Times, circulation revenues this year are forecast to offset the decline in advertising for the first time in at least five years.
Some newspaper stocks already reflect this good news. Over the past six months the New York Times Company’s share price has risen by 37%. Those of Gannett and McClatchy, two other big publishers, have climbed by 34% and 24% respectively (although part of Gannett’s gain is attributable to its television unit, which was boosted by America’s election campaign). Hearst, a private company, has seen profits at its newspaper group rise by 25% this year and is having its best year since 2007, says Lincoln Millstein, an executive at the firm.
In May Berkshire Hathaway, Warren Buffett’s firm, bought a legion of local papers from Media General. Some may see the celebrated investor’s blessing as a sign of better days ahead. In any event, it is a bet that papers with strong brands and no competitors in smaller towns will be able to charge for content and be profitable.