The myth of the 20 percent profit margin

Via Romenesko, John Carroll praises the St. Petersburg model because it doesn’t push for 20 percent profile margins.

A few thoughts:

  • Not every report I’ve heard about St. Pete leads one to believe its a particularly well run business and its online efforts are particularly uninspiring, nor is it out there winning Pulitzers at a greater rate than other papers, so I can’t say the model is working out all that well.
  • Not all public companies put the emphasis on profit margins.
  • There was a time, within my lifetime even, when profit margins were 35 percent or higher, and even as profit margins sank, newspaper stock prices soared … just about every stock I’ve looked at hit all time peaks around 2004. What concerns investors now isn’t lack of sufficient profits, but lack of a plan to survive the current transition to digital media.
  • Many privately held newspapers work hard to maintain 20 percent or better profit margins. Go research how many privately held newspapers have instituted hiring freezes and eliminated newsroom jobs.

The point for journalists is, stop worrying and profit margins and start figuring out how to grow online audience. It will take online audience growth to grow top-line revenue, and without that we can neither protect nor save jobs as print continues to decline.

2 thoughts on “The myth of the 20 percent profit margin

  1. Agreed. Instead of spinning fantasy yarns about how much better things would be if only we had a Fairy Godmother owner who didn’t care about profits, our time is better spent building strong local news organizations.

    The fact is, many corporations do put an ungodly squeeze on newspapers. But, surprisingly, the result of that is that some papers, forced for the first time in memory to make hard choices, are actually improving. Instead of trying to be all things to all people (a role usurped by the internet), local papers are getting a lot better at being, well, local.

  2. I agree with the local focus. Re-packaging information that’s already available at easy-to- use sites will never add large numbers of readers. You need to re-package information you sense will be valuable to local readers that’s scattered across the Web on sites that are poorly organized or difficult to access. There is a time-saving element that can be leveraged here–not to mention stressed in your promotion.

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