It would be good for journalism if we could figure out how to keep the greedy bastards happy

If only it were so easy to let the government solve all our problems, or to expect some Utopian charity-model to save newspapers. Jason Salzman is the latest to pontificate on such magical thinking.

Despite the undeniable importance of newspapers, circulation is sliding, particularly among young people.

Economic models are not built on importance. They are built on supply and demand, need and desire.

You can create all the tax incentives you want, and cajole any number of rich people to turn newspapers into philanthropic causes, but if the product doesn’t serve a purpose that sufficient numbers of people find useful, or if it fails to adequately address competitive pressures, it will not thrive, and it may not survive.

In the end, newspapers still need to be run like businesses. No matter what the ownership model, newspapers employ real people — people with spouses and children and mortgages and car payments and aspirations for a better life. Ownership, no matter who or what it is, has a certain moral obligation, to keep the doors open.

You’d think newspapers are losing money. But no – the average profit margin for newspaper operations at publicly held companies was 17 percent during the first nine months of last year, according to Morton Research.

Sounds like a good money to me, and ad revenue from newspaper Web sites is climbing.

Yet, it’s not good enough for Wall Street.

The problem with blaming Wall Street is that Wall Street isn’t uniformly focused on short-term revenue. A good segment of investors, especially institutional investors, are more concerned about long-term viability. Sure, profit margins are 17 percent, which sounds great, until you consider that just a few years ago they were 20 percent, and a decade or two earlier, 30 to 35 percent was common. When profit margins fall that dramatically, any investor should get nervous. At the same time, newspapers have failed to articulate a vision for survival or demonstrate a basic grasp of the turbulent media environment, which further erodes the Street’s confidence in our industry.

The exception, of course, is the Rocky’s owner, E.W. Scripps, which is one of only a couple media companies holding newspapers that Wall Street likes.

Rocky owner E.W. Scripps announced Jan. 30 that it has no plans to sell its newspaper division, an idea that had been floated previously and sent Scripps stock to a 52-week high. After its announcement, which included lower-than-expected first-quarter earnings, Scripps stock witnessed its biggest single-day decline since 1990.

Except that, the issue isn’t necessarily that investors view Scripps newspapers in bad light; it’s just that the rest of the company is doing so much better than the newspapers. The rest of the company has an obviously bright future, and while (as a former employee of Scripps) I have a great deal of confidence in the division, Scripps still hasn’t found the baby’s arm holding the golden apple. That’s not good in a sector that is viewed as regressive and shortsighted by investors.

Meanwhile, the rest of the company — HGTV, Food, Shopzilla — are focused on something entirely different than newspapers — the broadcast and digital holdings are focused on giving people what they want (and doing it very well), while newspapers tend to focus more on giving people what journalists think they need.

And here we hit the crux of the problem that no amount of government interference will solve (btw: Do journalists really want to be that beholden to the government?). What good are tax breaks if newsrooms are producing products nobody wants?

Which brings me back to my point of running newspapers like a business: There has got to be a willingness to balance all of the journalistic idealism with an understanding audiences, strategy and creating products that remain relevant and desired. If we can’t figure out how to do that, then neither the government nor charity can save us. And if we can, the greedy bastards who own us will be very, very happy.

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