This should piss off a lot of journalists — Jim Cramer says, “fire them all.”
Here’s a rough transcription of Cramer’s interview (I didn’t try to capture every word or the questions, but I’m confident this is very accurate for what it does capture):
Advertisers want a certain cohort â€“ 18 to 35. That cohort has stopped reading newspapers.
Whatâ€™s happen is advertisers canâ€™t reach who they want (though newspapers).
People running news organizations who tend to be in their 40s, 50s and 60s, continue to make deals without recognizing the tremendous demographic shift away from newspapers.
They keep thinking that if they change content, if they become more forward in their content, but this has directly to do with itâ€™s not the means that people get information anymore. Newspapers are very typewriter versus word processor.
Theyâ€™re not businesses. Theyâ€™re not businesses. Theyâ€™re not businesses. A business is something that grows and throws off cash flow. When a business shrinks and has diminishing cash flow itâ€™s not a business.
I think that GM is a declining business, but we accept the fact that GM is a business.
I think what they have to do is fire everyone. Now thereâ€™s a sense that there is some shred of journalism at these places. So the New York Times has a $500 million newsroom, so maybe you cut that to $100 million. You fire a lot of people.
When youâ€™re in trouble, what you do if your Bethlehem Steel, you have 100,000 people, you cut it down to 10,000, because what you want to do is get ahead of it on the expense side.
These guys donâ€™t know how to grow the rev. Now the thing the business guys, the CFOs, will realize is that this journalism stuff is just crap. We donâ€™t need it. Itâ€™s obvious that itâ€™s costing a lot of money, but what they donâ€™t recognize is that the only reason theyâ€™re read is because of journalism, but journalism is the most expendable part of their businesses, so they have to cut it out.
Who cares (what it means to the 4th Estate). Itâ€™s just another business. You can do it on the web. Look, Iâ€™m very accepting of the world and this is Wall Street Confidential. Am I at the American Society of Magazines where I say, â€œwoe is meâ€?? No. I could give a, Iâ€™m trying to make people money. I need them out of Gannett and get them out of the New York Times. I love journalism dearly, so what?
Cramer’s contradictions above should be self evident (it’s not a business, but is a business; people read papers because of the journalism, but it’s the most expendable part of newspapers, etc.).
News is not a product like steel, where if you start selling less, you start producing less. You can’t produce less news and expect to make more money. You might save money, but there is always a point of diminishing returns. Somehow, I don’t think the New York Times would survive as a shopper (I mean, if you cut all the journalists, what do you have left but a bunch of ads?)
Clearly, Cramer hasn’t thought deeply about this issue or kept abreast of industry trends. The situation is far more fluid and dynamic than his facile analysis suggests, and his prescription is hardly a cure for what ails the industry. His short term thinking is the caricature of the ugly American investor. It’s not, I don’t think, the thinking of a calculated investor, who is looking at long term prospects. Unfortunately, as we’ve discussed before, the newspaper industry hasn’t done a good job over the past decade of articulating a long-range plan.