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Ownership

Ownership

Hundreds of owners run the nation’s 1,457 newspapers, but about two dozen companies dominate.

Percent of Daily Newspapers Owned by Largest Newspaper Groups
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Source: Editor and Publisher Yearbook; PEJ research
* The largest groups include the 22 newspaper groups with a combined daily circulation of over 500,000.
Percent of Daily Circulation Belonging to Largest Newspaper Groups
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Source: Editor and Publisher Yearbook; PEJ research
* The largest groups include the 22 newspaper groups with a combined daily circulation of over 500,000.
Percent of Sunday Circulation Belonging to Largest Newspaper Groups
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Source: Editor and Publisher Yearbook; PEJ research
* The largest groups include the 22 newspaper groups with a combined daily circulation of over 500,000.

In order to get an accurate view of the major newspaper groups’ influence, consider a few numbers: In 2002, the 22 largest newspaper chains owned 39 percent of all the newspapers in the country (562 papers). Yet those papers represent 70 percent of daily circulation and 73 percent of Sunday. And their influence appears to be growing. These circulation percentages are a full percentage point higher than in 2001, even though the number of newspapers owned by these groups dropped slightly.1

Top Ten Groups’ Percent of Total Weekday Circulation
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Source: Editor and Publisher Yearbook; PEJ research
* The top ten groups are by combined weekday circulation.
Top Ten Groups’ Percent of Total Sunday Circulation
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Source: Editor and Publisher Yearbook; PEJ research
* The top ten groups are by combined weekday circulation.

The circulation power is even greater for the biggest of these companies. The top 10 chains account for more than half of all circulation in the United States – 51 percent daily and 56 percent Sunday.2

The power is also seen in the economics. Overall, the newspaper industry in 2002 took in more than $55 billion in total revenue.3 Yet the 14 biggest companies took in about 40 percent of that, or nearly $22 billion in total revenue.4

Publicly Owned Companies

Four of the large chains stand out due to their size: Gannett, The Tribune Company, The New York Times Company and Knight Ridder. Not only are these companies much larger than their other public company counterparts, but they also enjoy a greater profit margin (23 percent).5 Meanwhile, some of the smaller chains were able to realize large profit margins, but saw stagnant revenues. For these companies, profits do not necessarily mean growth.

Gannett

Gannett is the largest of the four big chains, with annual newspaper revenue approaching $6 billion. Gannett was also the only of the four chains to see revenue growth in both 2001 and 2002, even with a drop in income. Gannett manages its news operations very tightly, and sharply cut back at some of its newspapers, such as the highly regarded Des Moines Register and The Courier Journal in Louisville. Since 1991, the company has increased its revenues by 54 percent in inflation-adjusted dollars (including new acquisitions). Since 1992, Gannett has maintained an average profit margin of 25 percent, including a 25 percent margin in 2001 when total advertising dropped 9 percent in the industry.6

Tribune

The Tribune Company is the second-largest newspaper company in terms of revenue due to its acquisition of the Times Mirror Company in 2000. This drove revenue from $1.4 billion in 1999 to more than $4 billion in 2000, before slipping in 2001 and 2002. Before 2000, The Tribune Company experienced a nine-year stretch of stagnant revenue, in inflation-adjusted dollars, although it had earnings margins of well over 20 percent. The company was hit hard in 2001, with a 34 percent drop in income, but saw a steep rise in income in 2002 and the first half of 2003.

New York Times

After several years of stagnant growth, The New York Times Company managed to nearly double its inflation-adjusted revenue from 1991 to 2000. After taking a hit in 2001, The Times is starting to see higher margins, with a 17 percent rate for the first six months of 2003.

Knight Ridder

Knight Ridder has had less growth in recent years than the three other large chains, and in 2002 was off nearly $400 million in revenue from its peak in 1999. In 2001, the company cut 10 percent of its jobs. The chief executive, Tony Ridder, indicated that most of those jobs would not be restored, which led to a greater profit margin in 2002 without a rise in revenues.7 Criticism over Knight Ridder’s approach was embodied by the resignation of Jay Harris, publisher of The San Jose Mercury News, in 2001 when he said that further cuts threatened the journalistic integrity of the Knight Ridder newspaper.8

Changes in Ownership

There was a slight increase in the mergers and acquisitions front in 2003, although still not to the levels reached from the mid-1990s through 2000, during which The Tribune Company purchased Times Mirror and Gannett bought Central Newspapers.

Perhaps the most meaningful sale in 2003 was that of the family-owned Freedom Communications, a 65-newspaper chain, which includes The Orange County Register in California and 27 other dailies. According to Advertising Age, the chain had newspaper revenues of $662 million in 2002.9 In the end, it was sold to a consortium of family members. But the highest of a number of bids were from Gannett and MediaNews. That could signal that a faster pace of acquisitions is about to resume – though there are probably not so many desirable properties left as in the l980s and l990s.

The other major story in the newspaper industry was the continued fight between The Seattle Times and The Seattle Post-Intelligencer. The two papers have a joint operating agreement under which The Times (which is 50.5 percent owned by the Blethen family and 49.5 percent by Knight Ridder) has merged non-editorial operations and splits any profit earned with the Hearst-owned Post-Intelligencer. The Times says it has lost money for three consecutive years and has sued to end the operating agreement, which Hearst has said would lead to closing The Post-Intelligencer. A September 25th 2003 court decision ruled against the Times, not allowing the first year of its loss to be counted inside the operating agreement because it was incurred partly because of a strike. This keeps the agreement active for another year, but the battle will continue in 2004.

And the prospect that Hollinger newspapers would be sold due to financial improprieties by its top executives, including the press baron Conrad Black, is a further signal of more merger activity to come. Still more mergers are possible, too, given intentions by the Federal Communications Commission to allow companies to own outlets across different media platforms (newspapers and television stations, for example) in the same community. (See Local TV). But Congressional and judicial action blocking the FCC deregulation for the moment has put the prospect of such deregulatory merger activity on hold.

Footnotes

1. Editor and Publisher Yearbook Online data, 2003, www.editorandpublisher.org

2. Editor and Publisher Yearbook Online data, 2003, www.editorandpublisher.org

3. Lauren Rich Fine, Newspaper Industry Primer, 7th Edition. Merrill Lynch, July 9, 2003, p.7

4. Morton Research, unpublished “Newspaper Segment Data,” Silver Spring, Maryland. The 14 companies are A.H. Belo, Dow Jones, Gannett, Hollinger, Journal-Register, Knight Ridder, Lee, McClatchy, Media General, New York Times, Pulitzer, E.W. Scripps, Tribune, and the Washington Post.

5. Morton Research, unpublished “Newspaper Segment Data,” Silver Spring, Maryland.

6. Newspaper Association of America, “Quarterly Newspaper Advertising Expenditures,” http://www.naa.org/UtilArtPage.cfm?AID=1399&TID=378

7.”Even when the economy recovers, many newspapers that have gone a lean diet won’t be bulking up again,” Editor and Publisher. March 4, 2002, www.editorandpublisher.org

8. Poynter Online, “The Harris Case: What Next for Newspapers?” http://www.poynter.org/dg.lts/id.13025/content.content_view.htm

9. Advertising Age, “100 Leading Media Companies,” AdAge.com, August 2003. Companies are ranked by their total media revenues collected in the United States in 2002. The list is available at http://www.adage.com/page.cms?pageId=1018.