4.02.2009

What is killing newspapers? Not what you think

Finally, a look at the real reasons newspaper companies are failing. Yes, revenues are down everywhere because of a soft advertising market and a loss in subscription revenue as readers flock to the web, but, as Daniel Gross writes today in Slate, "not every newspaper company in the country has gone bankrupt as a result. And the failures may say more about a style of capitalism than an industry."

He cites the examples of Sam Zell, who put down 4 percent of the $8.2 billion asking price for the Tribune Co., somehow leaving it with an impossible-to-manage $13 billion in debt. Other, slightly less egregious examples are cited as well.

This proves, of course, that the calls from this corner and elsewhere that publicly traded companies should be prohibited from owning newspapers is not the answer. I still think it's a start. taking papers out of the hands of public companies that put profit gains before all else would surely help. A bill introduced by Maryland Sen. Ben Cardin that would allow newspapers to more easily operate as nonprofits is worth following.

Of course, you can't legislate stupidity, so problems like those brought on by Zell and others are hard to avoid unless the marketplace does a better job of stopping such maneuvers.

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