Saturday, February 28, 2009

The Sky was NOT and is NOT Falling

GM's problems are not the end of the Auto. AIG's problems are not the end of Insurance. Citicorp's problems are not the end of Finance. Newspaper company problems are not the end of either Print or Newspapers.

It might be the end of commercial models based on value chains instead of facilitated user networks. That's a big problem for the people and companies with legacy commercial models that have to change for a new environment.

But that's not my problem. I have enough of my own problems to solve.

read at INMA
- No Iceberg: Separating Truth from Fiction About Newspapers In This Recession:"The death of the newspaper is one of the great exaggerations of today's economic downturn.

It is a myth being perpetuated by people, companies, and the trade press that serve them that are in seeming cardiac arrest -- many of whom have amassed debt beyond their means, possess business models vulnerable to today's environment, and are unused to competitive profit margins.

No matter how unbiased or agnostic we try to be, we are all creatures of what we read and what surrounds us.

Being based in the United States, I am surrounded by extraordinary negativity. Not just talk about advertising declines, classified migration to the internet, and circulation woes. The talk in the States is about the death of newspapers, the death of the traditional print business model, and the death of companies that own today's newspapers.

Recently, I decided to reach out to INMA members worldwide to understand the precise colour and tenor of this downturn.

Is the extreme negativity justified?

This brief report for INMA members is a summary of my findings. It is a narrative, based on the confidential discussions with senior executives in Asia/Pacific, Europe, Latin America, and North America. . . .

. . .

I've heard that one of the Tribune Company's leading newspapers may have made a US$100 million profit in an otherwise horrible 2008 due to cost containment and targeting its opportunities. But put that in the context of the US$13 billion debt the Tribune Company has amassed and must service!

You can throw off impressive profits, but the way newspaper companies structured their debt to acquire other newspapers assumed they could lift 20 percent margins to 30 percent and more. Little thought was given to the idea that margins could drop from 20 percent to 10 percent or less.

That is turning into a Shakespearean miscalculation.

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