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Economics

Economics

By the Project for Excellence in Journalism and Rick Edmonds of The Poynter Institute

Newspapers have a tough time making the case that their business is headed in the right direction. The year 2006 was terrible in many respects, and there seems little prospect that 2007 will be much better.

The best that the industry can hope for is that some easing of costs — both paper and people — will improve earnings and that they can demonstrate continued strong growth in the range of their online and niche offerings and in ad revenues in the new media.

Even that last seems in doubt. Online revenue growth came in just below 30% in 2006 after years of 30%-plus growth.1 The rate is expected to fall to 22% in 2007, and for the first time newspaper sites are not maintaining share in total Internet advertising growth.

The grim 2006 picture contained these elements:

*Pre-tax earnings at print newspapers were off about 8.4% compared with 2005, and that was not an especially good year either.2 At companies with television holdings, that was softened by the predictable windfall of Winter Olympic and election advertising.

*Ad revenues were flat , despite contributions from online and niche publications that continue to grow at an average rate of 20% to 30% rate. Optimistic industry sources are predicting a slightly more positive 2007 for advertising.3 Most analysts, however, forecast that ad revenues will be down by 1 to 2%.

*After seeing their share prices drop an average of 20% in 2005, publicly traded newspaper companies lost another 14% of value in 2006.4 One of the gainers for the year was Tribune — but that came on speculation that it would be sold at a premium early in 2007.

There will be some good news on costs in 2007, though it comes with a caveat. Newspapers have been downsizing everything from their staff counts to the dimensions of the paper to the breadth of their coverage and the range of their circulation area. All of that flirts with the danger of chasing away readers from an inferior product. Executives argue that they must live within means, but some are also cutting way back on business-side staffing and circulation promotion, which will likely further depress circulation.

One unambiguous bit of good news is that newsprint prices, after three consecutive years of 10% increases, had softened by the end of 2006 and were expected to be flat or down in 2007. With smaller papers, a typical company can save 7% on newsprint spending.5

Looking for more fundamental reasons for hope, we find two. A year ago we noted that the impending sale of Knight Ridder was a likely “lose-lose” proposition — dooming the 32 papers to more deep cuts under new ownership or the industry to a sort of no-confidence vote if no buyer materialized.

In fact, the McClatchy Co., with a strong record of commitment to editorial quality, came away with 20 of the papers. All 12 of the papers McClatchy chose not to keep, in turn, found buyers among private companies and investor groups. But the fact that only one public company came forward did signal some lack of interest in newspapers generally. And some of those local and private owners have indeed made deeper cuts at the papers they purchased (See Ownership and News Investment).

The drama over newspapers’ appeal continued with turns at another company, Tribune, in 2006 and early 2007. With Tribune on the block, a trend may be emerging in which private investors see better possibilities for newspapers than Wall Street does.

Then there are indications that the industry is making progress toward a whole-hearted commitment to transformative online growth. Paul Ginocchio, one of our analyst sources, said after listening to company presentations during the December 2006 Media Week investors’ meetings he could now see at least the potential outline of a successful turnaround.

But the biggest question remains whether the economic model of the Internet can change as the audience moves more heavily to that platform. Until it does, it seems reasonable to foresee the economics of the newspaper business — even with an ever-larger online component — as one of erosion and shrinking horizons.

What Ails Advertising?

In the golden era of the newspaper business financially, from the 1960s well into the 1990s, newspapers had three big things going for them. The first was a lock on the highly profitable classified advertising business. The second was page after page of department store advertising — John Wanamaker in Philadelphia, Woodies in Washington, D.C., Dayton’s in Minneapolis, and dozens more. The third was the leverage to raise rates aggressively even as circulation was beginning to slide because of the numbers, the attractive demographics of newspapers’ readership and their near-monopoly pricing power.

You will find vestiges of all three in newspapers circa 2006-2007. But all three of those pillars are now badly eroded.

Classifieds are subject to massive competition from electronic companies like Google, Yahoo, Monster and Craigslist, plus an assortment of sites for autos and real estate.

The traditional department store has been progressively weakened by the growth of Wal-Mart, a very light newspaper advertiser, and other discount retailers. Remaining department stores have been consolidating over the last quarter-century notably in the merger of Federated and May stores, carried out over 2005 and 2006.

Stronger competition and faster circulation losses eat at newspapers’ ability to raise rates at will.

Daily Newspaper Advertising Revenue
1984-2005
Design Your Own Chart
Source: Newspaper Association of America Business Analysis and Research Department

Here is a breakout of how those advertising troubles played out in 2006.

Retail The department store herd has been thinned dramatically. Some of the big-box stores — Best Buy and Home Depot — are at least reliable sources of insert income. In 2006, the Federated and May consolidation led to double-digit-percentage losses in local retail advertising in some markets.

Despite that, the overall picture for local retail advertising in newspapers is not so bad. The Newspaper Association of America found that spending on such advertising was up just under 1% from 2004 to 2005.6 In the first three quarters of 2006, spending on retail looks flat.

Classifieds Classified advertising has a more complicated set of troubles. From competition from online listing entities to companies connecting directly to the consumer through their own sites, skipping the middle man altogether, to the free pricing of Craigslist, classified advertising has entered a new era.

The online giant Monster Inc. built a huge business in employment listings through the late 1990s and early 2000s while newspapers were sitting on their heels. The industry finally countered with its own national service — CareerBuilder — which now edges Monster in volume but not profits. At the end of 2006 Yahoo, with its Hot Jobs (No. 3 in online job classifieds) signed an agreement with 200 papers. Monster, too, has begun to make newspaper affiliations.

After massive declines in ad revenue from employment classifieds in the 2000-2002 recession, the sector bounced back some in 2004 and 2005. But employment classified again declined in the second and third quarters of 2006, down 6.5% and 10% year-to-year, respectively.7 That leaves the marketplace unsettled headed into 2007, but this much is clear: the industry has lost its pre-eminent position.

Automotive classifieds had an especially bumpy 2006. One of Detroit’s responses to the deep losses of the domestic manufacturers has been to eliminate some local dealerships and reduce the advertising budgets of those that remain. Direct online-to-consumer communications, where car buyers can sample everything from interior color schemes to prices, have become a big factor in the business. (A current Toyota TV ad touts the Web site rather than the cars themselves.) New marketing dollars are sure to flow that way in years to come. Automotive classifieds have declined since 2004, and those declines accelerated through the first three quarters of 2006, hovering near 15%.8

Real estate classifieds were a bright spot in 2006, up about 20% year-to-year through the first three quarters, as a big inventory of properties stayed on the market for months at a time.9 But as real estate heads from slowdown into downturn in 2007, the industry will be pressed to stay even in that category.

For those three big categories of classified advertising and the smaller “other” (general merchandise and services), the industry faces killer competition from the communitarian-minded Craigslist. From a modest local start in San Francisco in 1995, it has expanded to 450 cities worldwide and posts 14 million new classifieds a month.10 Most listings are free. The service is now among the top 10 in monthly page visits and clearly has achieved the mass to do the job for a great many buyers and sellers.

National advertising was also weak in 2006, contributing particularly to the poor performance of large regional newspapers and of the New York Times, where the important movie advertising category has fallen considerably from its 2000 peak. Year-end spending in 2005 was down 18.5% from that 2000 high, representing a loss in revenue to newspapers of over $230 million.11

Another major source of national ad revenue is transportation advertising, which accounts for about 15% of the category (down from about 19% in 2000). As in the case of movie ads, newspaper revenue from transportation ads also fell, by 18.5%, from 2000 to 2005, representing a revenue loss to newspapers of over $265 million.12

There is a bright element in this dismal picture, however. Coupon spending, which currently accounts for approximately 17% of national advertising, has increased by just over 17% from 2000 to 2005.13

Ad Rates On pricing, the industry has a pair of problems. Online is competitive and priced accordingly. Google search produces results (and premium bid pricing for top placements) that the industry cannot currently match.

Even in the face of falling circulation, newspapers raised their stated rates in 2006 and have said they plan to do so again in 2007. But the higher rates may paint a misleading picture — some advertisers are simply choosing to take less space, something that is evidenced by the decline in total print ad revenue for 2006.

Discussions of newspaper economics are often thin on new trends in the advertising industry. At the moment, advertisers are moving their budgets not only online but also to non-traditional direct-to-the-consumer marketing. One example is Procter and Gamble, a bell-cow in consumer product marketing. It now has its own word-of-mouth agency, Tremor, with 800,000 registered panelists who agree to sample products and then talk them up to friends and acquaintances. The Web makes such “viral marketing” far more powerful.

In the face of all this, newspapers need to protect their share of flat traditional-media budgets, continue to grow online and invent some new lines of e-commerce — all three at once.

Making the Best of It

While advertising has not declined at the same pace as circulation, there are parallels to the two stories. Repeated reports hammering newspapers for circulation losses tend to overlook the 50 million-plus buyers and 120 million-plus print readers on an average day.

On the advertising front, all the challenges and losses may obscure something about the enduring financial muscle of newspapers: Taking into account the loss of some advertising and the simultaneous arrival of new business, newspapers annually are holding on to the vast majority of their advertising base.14

Loyalty and inertia play a role; local advertising practices don’t turn on a dime. So does the perceived effectiveness of newspapers, especially when advertising a store’s sale prices. The Newspaper Association attempted to highlight those elements with a campaign hailing newspaper advertising as “a destination not a distraction.” The study, by MORI research, includes a barrage of survey statistics on how many readers consider advertising a welcome information resource. The “distraction” is a thinly veiled dig at television, where blocks of commercials are a repetitive irritant increasingly vulnerable to being zapped by TiVos and other DVRs. In short, newspaper ads, executives believe, still have distinct advantages, especially as the landscape of options becomes more cluttered.

Newspapers also continue to field the largest advertising sales force in most communities. We are told anecdotally that there has been a steady effort to upgrade sales people and particularly managers, recognizing that simple order-taking will not suffice. With the boom of online and niche publications, those sales people now have a portfolio of products to sell.

Newspaper pricing practices also help. Advertisers earn big discounts if they commit to a fixed-amount annual contract. That can help lock up budgets against other alternatives.

Costs

On the cost side, mark 2006 down as a transitional year. Throughout the industry (not just at public companies under Wall Street pressure) newspaper executives were judging that their cost structure was out of whack with revenues and future prospects.

Many reduced the page width, paper weight and space allocated to news. The Wall Street Journal shrunk to five columns, instead of its former six, and a 12-inch page width with its first 2007 edition, a 20% trim in the physical size of the page. The Journal expects to net $18 million annually in newsprint-related savings from the downsizing.15 The New York Times will follow later in the year, the last of the big-circulation broadsheets to take a trim.

Another cut was of distant, so-called “vanity” circulation, basically to readers who live too far away to be of interest to advertisers. The Dallas Morning News for instance, eliminated all distribution beyond a 100-mile radius in 2006 and will cut back, with a few exceptions, to a 50-mile radius in 2007.

One negative in 2006 was the rising price of paper. Newsprint costs were up for the fourth consecutive year in 2006 to the tune of 7% to 8%.16 But with the ad slump and the shrinking dimensions discussed above, demand was off dramatically by the fourth quarter. Prices are expected to flatten or even fall during 2007. Another positive factor, we were told by William Dean Singleton, CEO of MediaNews Group, is that imported Chinese newsprint, less expensive and high-quality, is now an option, especially for West Coast publishers.

The most conspicuous attempt to rein in costs was another round of staff reductions, both in the newsroom (discussed in the News Investment section of this chapter) and elsewhere in the operation. Many of those were in the form of buyouts of more experienced and better-paid staff members. There will be savings in 2007 and years to come, but in the short run, the reductions are an expense. At the Washington Post print edition, for instance, the pre-tax profit margin would have been about 10% had the paper not bought out employees.17 With the plan, it fell to about 5%.

In previous editions of the Annual Report, we have not treated labor issues. But 2006 ushered in a trend of hardball negotiations that seemed likely to continue. Block Communications used non-union help in the production departments of the Toledo Blade and threatened to sell both that paper and the Pittsburgh Post-Gazette unless unions agreed to new contracts with deep concessions on benefits and work rules. The National Labor Relations Board ruled the lockout at the Blade illegal in December 2006, but in early 2007 the situation remained unresolved. Blade management said the paper lost $5 million in 2006.

Dean Singleton’s MediaNews Group got the Newspaper Guild at the San Jose Mercury News to agree to discontinuation of a pension plan, a new employee contribution to health benefits and a two-tier wage scale with lower pay for new employees. In exchange management agreed to a 2% wage increase and fewer layoffs than previously planned.18

In Philadelphia, the Guild made loud noises about striking but reluctantly voted in early December to accept a disappointing contract rather than further endanger the financially precarious position of the Inquirer and Daily News. At the Boston Globe, the Guild agreed to tie future raises to revenue increases at the paper and its online operation.

Can Online Editions Rescue Newspapers?

Since newspapers typically have the best-trafficked Web sites in their markets and the sites’ ad revenues have grown at a 30% rate for five years now, it would be appealing to think that readership and advertising will simply transfer gradually to the Web.19 Thus could the expensive news-gathering function and newspapers’ public service mission be preserved, and without the cumbersome costs of printing and delivering the paper.

Unfortunately, after all that growth, online typically still contributes only 6% or 7% of ad revenues.20 So while developing the new platform, papers can ill afford to take their eye off the ball of a print operation that constitutes 94% of the business.

As we noted last year, Rick Edmonds of the Poynter Institute, a co-author of this chapter on newspapers, in January 2005 ran a rough projection estimating that it would take online a dozen years to pass print as a revenue source, assuming continuation of the trends of 2003 and 2004. Built into that model, in other words, online would have to continue to grow by a third each year. Print revenue would grow modestly, by 3%.

Two years later, it probably makes sense to adjust downward the assumption that print will grow at 3% a year for a dozen more years.

But it also seems overly optimistic, absent some surge from new and unanticipated lines of business, to think that online can keep up that percentage growth.

Partly that is just the law of large numbers. As the base gets bigger, even substantial gains are not so large a percentage (a phenomenon that soured Yahoo’s earnings reports in 2006).

More mature newspaper Web operations, particularly those of the national papers, are now growing annually in the 20% to low 30% range. Gannett executives told analysts in December that USA Today.com would end 2006 with 25% revenue growth and was estimated to grow 18% to 20% in 2007.21

Industry online growth fell just below 30% in 2006, and the Newspaper Association forecasts that it will grow just 22% in 2007.22 That is still robust growth, but not a third a year. So it still seems reasonable to expect that the industry is a decade or more away from seeing online business contributing half of revenue What can newspapers do to maximize sustained online growth? The consensus strategy heading into 2007 is to get more people to visit and more often (especially with breaking-news updates) and to stay longer (especially with new multimedia and interactive features). More page views can equate to more advertising opportunities.

A second strategy is to redesign, reduce clutter and create better display space for advertising. The industry’s current mix depends lopsidedly on classified (roughly 75%).23 But some speculate that the mix could shift as national and regional advertisers gradually develop the capability for integrated campaigns that include more online display advertising, some of it now in video or even interactive video.

A shift of readership from print to online cuts several ways for newspapers. The commitment of time and attention is so much less that online readers do not command the premium rates print can charge. Paul Ginocchio, a Deutsche Bank analyst, estimates that a print reader is worth $350 a year to a newspaper, an online reader 10% to 15% of that.

Since only the Wall Street Journal and the New York Times charge for all or part of their daily content, newspapers are losing circulation revenue every day, month or year that a potential reader opts instead for the free Web version.

On the other hand, in theory, there should be a critical mass of Web audience that will allow newspaper companies to save at least on paper costs and perhaps on printing and delivery capacity.

So the potential profitability of news Web sites theoretically is high but also conjectural. One can envision a scenario in which lucrative Web operations carry costs for a newsroom that serves both the site and a slimmed-down and more targeted print edition. But it is just too early to predict that. Nor is there evidence that papers are using the savings from online production and distribution to reinvest in news staff.

Donald Graham, CEO of the Washington Post Company, has a reputation for plain-speaking on the topic. He noted in a December 2006 presentation to investors that the Post already gets 11% of revenue from online (nearly double the norm) and reaches a huge national and international audience who are not served by the print edition.24 But even with those “strong cards to play,” he concluded, “I simply have no way to tell you” what combined newspaper print and online revenues will be like in five or ten years. Extrapolating from the last several years doesn’t work because trends could easily change, he said.

Niche Publications, Acquisitions and Collaborations with Google and Yahoo

Companies have several additional strategies to keep overall revenue growing as the print newspaper falters.

As discussed in earlier editions of this report, most have added a family of niche publications as a way to target audiences that the main paper is starting to miss. Some of the more ambitious go after a Spanish-language audience with separate daily editions where concentrations of immigrant Hispanic population are highest — cities like Miami or Dallas. Others target young adults, with free dailies in the big cities, weeklies elsewhere.

Another layer of niche products, many of them monthly and in magazine format, focus on health, home design, travel and fashion, often with an advertising-driven agenda of reaching the well-to-do. Gannett now has 1,000 such publications in its 90 newspaper markets, 100 in Phoenix alone and 40 in St. George, Utah, where print circulation is just 24,000.25

The companies now routinely lump those niche efforts together in reports to investors with online as a part of a growth story in counterpoint to the negative trends for the traditional paper. Our read is that niche publications remain significant but less of a novelty. They aren’t expanding as quickly as a few years ago, hence a lesser part of the growth story. The St. Petersburg Times and the Virginian Pilot in Norfolk, Va., launched free youth dailies in 2006, but the pace of such launches is slowing. In several markets, Spanish-language launches have met strong competition from established family-owned publications or community-based start-ups.

A second approach has been to acquire online companies, often information-driven but not strictly news. Examples include E.W. Scripps’s Shopzilla, a comparison-price shopping site, and the New York Times Company’s About.com, which offers information on more than 500 topics, produced by freelance “guides.”

The acquisitions bulk up and diversify online operations, adding further counterpoint to profitable, slow-growing print operations. Most of the acquisitions took place in 2005, and it is not clear whether the best properties had been picked over by 2006 or whether the companies were marshalling cash for other priorities. Gannett did add Planet Discover, a small company that provides technology for local search. Scripps acquired U-Switch, a British company that lets consumers switch utility providers online (legal there but not in the U.S.).

What was new at the end of 2006 was joint ventures with both Yahoo and Google — a sign that the industry had gotten past wringing their hands about the huge upstart competitors and started figuring out ways to make money together.

In the Yahoo deal, put together by Dean Singleton, 200 newspapers will partner with the online giant. Initially that will mean placing online classifieds through Yahoo’s Hot Jobs (third in listings behind Craigslist and Monster). But the partners envision later sharing content and mounting an initiative to build local search advertising (essentially the equivalent of Yellow Page listings for specific goods or services). That would combine using Yahoo’s technology and the newspapers’ advertiser contacts within their markets to ramp up an emerging base of new business.

The venture is open on the same terms to any other newspapers that wish to join. Media General, owner of 25 newspapers (with a circulation of over 850,000), did so weeks after the initial announcement. The deal is being celebrated as “transformational” by several of the participants, and could be so if it opens a new front on local search, which Google dominates. The market analyst Gordon Borrell estimates that local paid search and e-mail advertising will be the hot growth areas online in the next four years, and that newspaper sites are in danger of losing share unless they strengthen their effort.

The Google deal is entirely different: a 90-day trial in which Google is placing ads from its base of search clients into 50 newspapers with digitized “bid” pricing. Initially it was for so-called “remaindered” space in which newspapers typically place house ads but it has been expanded to guaranteed placements. The buzz at the December investment meetings where major media companies talk to Wall Street analysts was that Google had met its three-month revenue projection in the first three weeks.

Each of those experiments is new enough that the results cannot be predicted (nor were the revenue splits disclosed). But they add one more piece of evidence that the industry is no longer committed in wishful fashion to doing all the traditional things the traditional way.

If all goes well, the deals might help increase ad revenues as well as pave the way for licensing content to Google and Yahoo, a far more realistic prospect for newspapers than charging local customers directly for content.

Newspaper Next and the New Business Model

If one thing seems inevitable, it is that the newspaper industry is moving toward a new business model, though no one seems certain what that will be. The turmoil of 2006 prompted many proposals (see sidebar).

The one attracting the most attention was a year-long, $2 million project of the American Press Institute entitled “Newspaper Next” and based on work by Clayton Christensen and others at the Harvard Business School.

In essence, the Harvard team concluded in a report released in September, all of the above — the print edition, existing online sites, niche publications and acquisitions — may not be enough.

Newspapers were urged instead:

*To be much more committed to a systematic approach to innovation, scoping out unmet “jobs to be done” for consumers and advertisers in their communities.

*To settle for projects that can be started quickly on a modest scale and be readjusted if the initial plan is flawed, as it likely will be.

*To consider a broad cooperative industry-wide effort to sell and place national online advertising.

One of six pilot projects, at the Dallas Morning News, involved setting up a Web site for mothers, with lots of informative listings on camps, after-school programs and the like. The appeal to a set of advertisers is obvious if the targeted audience is assembled. The idea is catching on fast. By the December investor meetings, Gannett and Journal Communications announced that they had similar sites up, running and off to a fast start at the Indianapolis Star and Milwaukee Journal-Sentinel, respectively.

Another pilot paper, The Oregonian, sought to tap into the “non-consuming” youth population of Portland and learned that its potential audience primarily demands local and entertainment information. The newspaper is developing a product to meet those needs.

The Boston Globe, like the Richmond Times-Dispatch, is focusing on marketing, using search engine marketing (SEM) programs for its Web site that guarantee advertisers with small budgets a certain number of clicks from high-potential customers.

Yet another of the pilot papers, the Desert Sun in Palm Springs, Calif., asked employees to take a close look at the pages of their own paper to identify what they read regularly. Executive Editor Steve Silberman found his reporters consumed little of their own product, and when he asked them to write in a way that they would be more inclined to read, the result was that stories shrunk in length.

Ultimately, the “Newspaper Next” project’s strategy is to encourage newspapers to experiment outside of their core news product to compete with cheaper alternatives, or what Christenson refers to as “disruptive” products that are proliferating online and as niche publications. Such changes may seem radical to some or a sign of desperation in a beleaguered industry to others. But as one of the organizers remarked, the motivation for change shouldn’t be fear, but enthusiasm. For now, it may be both.

Profits, Stock Performance and the Dividend Question

Newspaper stocks staged a “mini-rally” late in 2006, but it was another year of falling valuations. Having lost 20% on average in 2005, shares declined another 14% in 2006.26

There was substantial variation company by company. The biggest losers were Journal Register, which experienced some of the sharpest advertising revenue declines, and McClatchy, a former market favorite, which in Wall Street’s view doubled down at the wrong time by purchasing Knight Ridder.

Newspaper Company Stock Values
2004 vs. 2005

Company 12/31/2005 12/29/2006 % change 2-year peak Decline from peak
Gannett
$61/share
$61/share
0%
82 (2/05)
-26%
Tribune
30
31
3%
42 (2/05)
-26%
New York Times
26
24
-8%
41 (1/05)
-41%
Dow Jones
35
38
9%
43 (1/05)
-12%
E.W. Scripps
48
50
4%
52 (4/05)
-4%
McClatchy
59
43
-27%
75 (04/05)
-43%
Washington Post
765
746
-2.5%
928 (2/05)
-20%
Lee
37
31
-16%
46 (2/05)
-33%
Journal
14
13
-7%
17 (4/05)
-24%
Journal Register
15
7
-53%
19 (9/05)
-63%
Media General
51
37
-27%
69 (7/05)
-46%
Belo
21
18
-14%
25 (1/05)
-28%

Source: Yahoo Finance, PEJ Research

Dow Jones, improving on several years of poor performance, saw a nearly 10% rise in the value of its shares.27 Scripps, Washington Post and Gannett were all roughly even for 2006. Tribune stock was declining for the first part of the year but rallied on the announcement that it was being put up for sale.

Pre-tax earnings margins for the public company group fell to roughly 17%.28 Individual papers, including the San Francisco Chronicle, Seattle Times and Boston Globe, now report losing money.

Various analysts suggest that newspaper companies could boost their appeal to shareholders by paying out a big dividend (a reasonable course for a business with strong cash flow but slow growth). The companies have resisted, saying they need to keep those earnings to cover the cost of new ventures, acquisitions, debt repayment, and the transition to online.

GateHouse Media Inc., a New England-based chain of weeklies and dailies, had a successful initial public offering in part by saying it planned to pay a 7.5% dividend, more than three times the industry norm.29

Conclusion

What are the chances of the industry’s making a successful transition to a new business model? Newspapers are embracing transformation as a concept and a slogan. The Newspaper Next project even provides models of what new lines of business could look like.

Still, a pessimist might note the number of competitors that have emerged from nowhere so far this decade — Google and Craigslist siphoning off ad dollars; Wikipedia, My Space and YouTube capturing audience and attention. Isn’t it reasonable to expect more of the same new ventures at regular intervals in coming years?

There is a case too, however, for a more positive long-term picture. Newspapers remain the pre-eminent source of news, recycled by aggregators and blog commentators. The aggregators, at least, are now signaling that they may prefer cooperation to a duel that continues to diminish newspapers’ capacity.