Silicon Insider: Saving Newspapers

The votes are now in: Newspapers are officially dying.

Now we need to figure out how to save them.

I took a lot of grief from the media last March when I announced in this column that the era of newspapers was over. I took as evidence the fact that I, a newspaper veteran, no longer felt the need to read my usual three dailies, but instead chose to construct my own 'virtual newspaper' from stories at many different sites on the Web. I quoted a friend, a two-Pulitzer winner, as saying much the same thing.

If we don't read newspapers, I asked, what does that say about the rest of the reading public, people with far less visceral connections to newspapers? I went so far as to predict, what with newspapers losing 1 percent of their readership per year, and with the rise of cable TV, online news and the blogosphere, that most newspapers will be dead by the end of the decade.

The news of the last week makes my original prediction seem almost upbeat. It began with word that the largest shareholder (19 percent) of Knight-Ridder, Private Capital Management of Naples, Fla., told KR's board that the company should be broken up and sold because its parts were worth more than the whole. Not long after, Henry Berghoef, speaking for Harris Associates of Chicago, KR's third-largest shareholder (8.2 percent) called for the same thing -- adding that he "remained a big fan of newspapers."

That leaves only Southeastern Asset Management, KR's second largest shareholder (8.9 percent) … and it has asked permission to speak to Knight-Ridder's board.

In other words, Knight-Ridder, the most progressive and most technologically astute of all the great newspaper chains, is toast. Tellingly, its stock, anticipating a sale, has jumped -- overnight accomplishing what several years of KR layoffs and cutbacks could not. But even those gains may be short-lived, as analysts wonder who would actually want to buy a newspaper these days.

Circulations on the Slide

Incredibly, that was the least of the bad news in the newspaper world. The big bombshell hit on Monday, when the Audit Bureau of Circulations, which tracks newspaper readership, announced circulation changes for 20 major newspapers during the past six months.

The numbers were so astonishing that even media pundits seemed dumbfounded. Only The New York Times circulation was up -- just 0.5 percent. Meanwhile, the other major dailies are watching readers flee: The Los Angeles Times -- down 3.8 percent; The Washington Post -- down 4 percent; The Boston Globe -- down more than 8 percent; and, most incredible of all, the San Francisco Chronicle, down 16.4 percent.

Now, double those numbers for an annualized rate and it becomes apparent that America's newspapers aren't just slowly fading away. Many have now crossed the tipping point, and are in a flaming death spiral. If the 140-year-old San Francisco Chronicle continues at its current pace, it will be dead in three years. Even earlier, in fact, as another tipping point looms: when circulation numbers fall so low that advertisers either flee or demand a cut rate, and revenues no longer cover the cost of staff, printing plant and office facilities. For big newspapers, that probably comes at the 50 percent mark. And you can be sure that if the owners see that day coming, they'll attempt a fire sale long before it arrives

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