Newspapers Confront Competing Realities

Mike Bloomberg and Rupert Murdoch both love newspapers. Murdoch loves the Wall Street Journal so much he bought it (even though he thought the articles were a bit long), made it lose weight, trussed it up a bit with color and reshaped it into a general interest newspaper.

Bloomberg speaks lovingly of the Financial Times. When asked recently if he might buy the paper, he responded “I buy it every day!” (Talk about a hedge.) His staff loves it too, believing it would be a game-changing platform for Bloomberg’s high-quality content, creating a new global forum for deep dives into business and finance that could, the thinking goes, fill a niche left underserved by Murdoch’s changes to the WSJ.

It all makes so much sense—except financially. And here’s the rub for the media business. A company produces an excellent product, which people love. There’s synergy (to use a cursed term) with the business operations of a potential deep-pocketed buyer. Yet, it’s still a tough sell, because it doesn’t make a lot of money. When quality and passion—even profits (but not much growth)—can’t get people to open their checkbook, what can?

Newspapers, whatever they try to tell you, are far from out of the woods, because it is still the case that digital advertising revenue cannot approach what can be earned from print. It’s not even close. It may be an old story at this point, but it’s no less critical an issue than it was a couple of years ago. Markets pay attention to trends, and even a paper with 600,000 subscribers and a robust paywall is a tough sell, because as subscribers move from print to digital, the ad revenue does not keep up. Without huge spikes in either subscribers or ad rates, the line will continue to point in the wrong direction.

Maybe Bloomberg could bring those new subscribers. Maybe ancillary products, licensing, services and events could fill the gap. Maybe—but it’s a risk. Maybe Mayor Mike should get Warren Buffett on the horn.

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