Why media companies are ditching their newspaper operations

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• JUDY WOODRUFF:

  Finally, the latest turn in the evolving business of newspapers.

  After years of being one part of the media's broader strategy to grow and diversify, companies now are shedding print altogether. Gannett, which owns USA Today and many other papers, became the latest to spin off its print operations last week, that a day after The Tribune Company made a similar move and days after E.W. Scripps and Journal Communications announced similar plans as part of a merger.

  Ken Doctor covers media for his website, Newsonomics, and his column for the Nieman Journalism Lab.

  Ken Doctor, welcome to the program.

  And I have just named some of the spinoffs that have happened. Why is this happening now?

• KEN DOCTOR, Newsonomics:

  Well, it's financial. It's Wall Street.

  If you look at what's happened with the newspaper industry, it's been really a long dissent. Profits are down, work forces are down, products are thinner. And the broadcast industry is much healthier. So, on Wall Street, you want a healthy business. You don't want the distressed business.

  Essentially, the newspaper business is being sequestered or separated out from these better broadcast assets.

• JUDY WOODRUFF:

  So, this idea of having multiple platforms with television, with print and digital, that's just gone goodbye?

• KEN DOCTOR:

  It is kind of ironic now, because we heard from the CEOs of these diversified companies that synergy was very important.

  And, of course, on our smartphones and our tablets, we expect video from newspaper companies and we expect stories from broadcast companies. And one idea here was multiplatform, multidevice. But now these companies are separate.

  So, importantly, this is a financial move. It's not a strategic one and may not really be in the best interests of the communities they serve or their readers.

• JUDY WOODRUFF:

  Well, I wanted to ask you about that in a minute.

  But to pin down the financial piece of this…

• KEN DOCTOR:

  Yes.

• JUDY WOODRUFF:

  … what is it that Wall Street is looking for from these companies?

• KEN DOCTOR:

  So, if you look at Gannett, for instance, Gannett is the largest U.S. newspaper company. Only 30 percent of all its annual revenues come from broadcast, but 60 percent of its profits come from broadcast.

  So those lines are diverging. The print operations keep on losing money year over year, no growth for Gannett or the rest of the companies in essentially seven years. So the idea is, move those assets out of the way, as Rupert Murdoch did with News Corp. in the middle of last summer, and it works.

  Wall Street values the two separate companies more highly than the one company put together with newspaper and broadcast assets.

• JUDY WOODRUFF:

  And one of the divisions here is the division between publicly held media companies and those that are privately held…

• KEN DOCTOR:

  Right.

• JUDY WOODRUFF:

  … like Jeff Bezos of Amazon buying The Washington Post. The private model seems to be doing better.

• KEN DOCTOR:

  Well, a lot of this is early.

  Even the private models, Jeff Bezos, Washington Post, John Henry in Boston, another one in Minneapolis, they are all a year-old. Many of these splits are a year-old. So both things are happening at the same time.

  I do think the private model is going to be better, because these companies, these newspaper companies still have another good three to five years of transition. And being in the public markets as a stand-alone public company, with quarter-by-quarter results, is very tough. They may need to keep on cutting to maintain even small profits for their shareholders.

• JUDY WOODRUFF:

  So cutting how many? I mean, how many reporters are we talking about being cut? What is this doing to the journalism in the United States?

• KEN DOCTOR:

  It has been thinning for almost a decade now.

  So we have had 18,000 daily journalists lose their jobs. That's 30 percent of all the journalists working at the about 1,400 daily newspapers. And most of them are local in our country. And we see this. A lot of the losses are veteran reporters, who really have a deeper knowledge of their communities, but they're more expensive.

  So not only are jobs being cut, but hundreds of thousands of years of experience is being lost. It's hard to pinpoint, because we don't know what we don't know. But it's unmistakable across the United States.

• JUDY WOODRUFF:

  And consumers of news aren't noticing? How do you see that? Are they commenting on this? Are they speaking up about it?

• KEN DOCTOR:

  They are seeing it. We're seeing some commenting, not that much, because it's a slow phenomenon.

  And at the national level, there's really a great flowering. And you can make the case, as a national news business, we have more than we ever had. But we're a big country, 3,000-miles-wide. And we need these local newspapers people, because they generate most of the news.

  The brightest spot has been reader revenue, all these pay walls we talk about — and half of the newspapers now have them. The problem is, going forward, how much people are willing to pay for a product that keeps getting smaller and is put out by a smaller work force. That's the key problem going forward into 2015.

• JUDY WOODRUFF:

  So, just quickly, you see that as the way they survive?

• KEN DOCTOR:

  That is the key one, I think.

  You look at The New York Times now, 62 percent of its revenue comes from readers. The other companies, it's about 30 to 40 percent. But readers are going to have to pay more, but, of course, we want a better product. There are other things they're doing in terms of the advertising end, diversifying their businesses.

  And these will help, but they will take three to five years to really make a difference in the marketplace.

• JUDY WOODRUFF:

  Ken Doctor, Newsonomics, we thank you.

• KEN DOCTOR:

  Quite welcome.