Friday, April 24, 2009

Antitrust hearing focuses on diversity

Are antitrust laws killing the newspaper industry? That's the argument media executives from made to congress this week, asking for an exemption to the laws regulating media consolidation, arguing that consolidation is the only way to preserve the industry's falling revenues.

But few have been swayed by the request so far.

Bernie Lunzer, President of the Newspaper Guild, testified that allowing MediaNews and Hearst to absorb more newspapers into their regional chains may do "do more harm than good" to readers and communities.

The largest concern we have about such a monopoly in Northern California is that an answer to the very real problems that exist in our industry will remain unanswered and that real innovation will be stifled. The two large corporations behind this initiative will only have forestalled their inevitable reckoning. The result will be underserved communities.

Lunzer isn't the only voice challenging the perceived "need" to homogenize content and reduce operations by slashing staff. Many believe that this trend toward consolidation and cost-cutting - which began long before the introduction of the internet - bears at least part of the blame for newspaper's diminished relevance.

Ryan Blethen argues that media conglomerates have been imperfect stewards for newspapers, and increasing their presence won't solve the problem.

The public-ownership model is disintegrating. That is what Congress must understand. We have a chance to put newspapers and professional journalism back in stewardship of smaller entities that care about community.

Lunzer agrees that ownership models, not industry conditions, may be the best solution for the newspaper industry.

If there is to be serious consideration of the problems facing newspapers, Congress needs to look at alternative ownership ideas, like employee stock ownership, non-profit approaches and the new L3C concept. The L3C approach would allow publications to serve a stated social purpose in exchange for the ability to accept non-profit foundation money. Smaller, more committed news operations will be more successful in providing real coverage to communities. Bigger is not better. The current financial crisis is evidence of this.

It boils down to a simple question: Why are newspapers failing? If the answer is simply that archaic print media is no match for the faster, leaner online competition, then consolidation seems to make sense. But that argument overlooks the fact that for most community newspapers, there is no natural online competition. The internet is a boon for economies of scale, where your market is quite literally national, if not global. For most newspapers, this isn't the case. And there are few community-centric online newsgathering operations, and virtually none that operate on the scale of a local newspaper.

In other words, newspapers have stacked the table against themselves by relying on national and international content that puts them squarely at odds with online outlets. Wire news is cheaper - but the competition, as we've seen, is much stiffer. That's a fight most print outlets have been unable to win.

It's true that classified advertising is gone, or severely diminished, and those losses have hurt the industry. And there's no indication that money will ever come back. But the revenue losses from classified advertising alone aren't enough to put most newspapers out of business. Adjusting projections and expectations to more modest goals, and focusing on developing content that's truly relevant will do more to preserve newspaper fortunes than simply drawing more ink out of the same tired well, and running identical pages across several newspapers, in a region that's larger than many states. Readers are smart enough to know when they're not being served, and the earnings sheet reflects their disappointment. More of the same won't change that.

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