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Desperate ‘Times’ Call For Desperate Measures

Daily newspapers are in a death spiral. The New York Times provides the latest spin with a new round of price increases for newsstand buyers and home delivery subscribers.

The Times raised its weekday cover price yesterday to $2 from $1.50. This weekend’s Sunday edition will cost $1 more, at $5 in the New York area and $6 nationally. Home delivery users in metro New York are seeing their rates rise by about 10% this month, only a few weeks after the parent New York Times Co. said it would hold the line on home delivery prices for the time being.

Customers are being asked to pay more to get less. To save on newsprint, distribution and staffing costs, The Times has cut out its stand-alone metropolitan section along with regional sections on weekends. The newspaper hopes to save $12 million a year on newsprint consumption. This will not go far toward staunching the parent company’s red ink hemorrhage, which reached $74 million in the first quarter of this year. But every little bit helps. Or does it?

Newspapers have two main revenue streams: advertising and circulation. Both are drying up. The New York Times Co., which publishes The Boston Globe, the International Herald Tribune and 15 other dailies, saw ad revenue drop 27% in the first quarter from the previous year. Much of this was due to the souring economy, but advertisers want an audience, and the audience has been going elsewhere. Across the industry, circulation is down 7% over the past year. The Times’ daily circulation is down by about half that rate, but the latest price increase -- the paper’s third in two years -- is not going to help.

Publishers are gambling that loyal readers will pay more to support the news-gathering to which they are accustomed. But they are also scrambling to cut costs, which means delivering less news. Eventually readers recognize the diminished value and go away. At that point so do the advertisers, and the business model collapses.

The Times is not alone, of course. In Fort Lauderdale yesterday, I stared at a vending box showing the Sun-Sentinel’s recently increased daily price of 75 cents. I can afford 75 cents, but I just was not willing to pay it. The paper’s owner, the Tribune Co., is one of seven newspaper publishers that have filed for bankruptcy protection in the past year. It has systematically stripped the paper of almost all its local coverage beyond the police blotter, to the point that even the front page is nearly consumed by a bloated graphic of the day.

Of course, I can see whatever the Sun-Sentinel offers online, for free. Newspapers have not figured out how to get people to pay for their content online. And why should anyone pay, when the content is so largely generic that it provides little value?

Journalism will survive. People will always want to stay informed. I suspect the future belongs to tightly focused vehicles that go into great depth on topics from foreign affairs to the local Little League. But the all-things-to-all-people model of the daily metropolitan newspaper is ending. The spiral is spinning faster all the time.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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