U.S. Newspaper Industry: A Digital Evolution

2012 words - 8 pages

US Newspaper Industry: Past and Present
It was the early 1900s in the United States and the newspaper industry was soaring. Everybody obtained the daily news from only one place, the newspaper, whether it was for local or national news. This was the golden age for the newspaper industry. Millions of people purchased newspapers each day because they could always depend on the paper to stay up to date and connected with the rest of the world. Investors were greatly interested in this industry because they continued to generate a steady profit year after year. Newspaper industries had continued success for decades, but came to abrupt halt after the popularity of the Internet swept the nation.

Decreasing Revenues
Over the past decade the newspaper industry has been hit the hardest from the digital revolution out of most of the media industries. Readership and circulation of newspapers has steadily decreased from 2002 to 2012. With each year comes lower numbers of readership of the newspaper. Revenues in the newspaper industry have also plummeted. The total revenue in 2012 declined by 2% from 2011, it was $39.5 billion but declined to $38.6 billion that year. Ad revenue alone took in $18.9 billion that year, comprising about half of total revenue (The Newspaper Association of America, 2012). The advertising revenues from newspapers have been on the decline. A large amount of newspaper revenue comes from selling advertisement space, so a decline in advertising means a decline in total revenue. Most blame the Internet boom for this decline in the industry, which is a logical explanation. To draw a comparison, the Industrial Revolution changed the way that companies functioned by introducing automation by machinery. This completely changed business models for thousands of businesses. A similar revolution is currently reforming the business model for the U.S. newspaper industry. The Digital Era has changed the way that the newspaper functions as a whole.

Most of a newspaper companies total worth is made up of its intangible assets. These assets include goodwill that cannot be sold easily during hard times to boost revenue. During the decline in newspaper revenue since the 2000s, many corporations saw a drastic fall in their total amount of goodwill. For these companies, goodwill increases total book value, making them appear more profitable. Decreasing goodwill brings the total book value of the company down by millions. Since intangible assets comprise a large portion of newspaper companies’ value, they are not very liquid. Less people invest in these newspaper corporations since they are becoming less and less profitable (Soloski, 2013).

“Since 2004 more than 160 newspapers have close some or all of their printing and packaging facilities and moved those operations to other sites”, states Chuck Moozakis (2013). One of the major players in the industry, Gannett, has decreased its printing operations by more than half of what it once was to save on...

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