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RIP, the Daily Paper: As Headlines Document the Death of Print Media, How Will Quad Cities Newspapers Survive? PDF Print E-mail
News/Features - Media
Written by Jeff Ignatius   
Wednesday, 18 March 2009 06:00

Denver's Rocky Mountain News closed in February. The Seattle Post-Intelligencer published its last print edition on Tuesday, and the threat of closure has been levied against the San Francisco Chronicle - which lost more than $1 million a week last year.

Earlier this month, Time magazine identified the "10 major newspapers that will either fold or go digital next."

And the Associated Press summarized in a March 15 article: "Four newspaper companies, including the owners of the Los Angeles Times and Chicago Tribune and The Philadelphia Inquirer, have sought Chapter 11 bankruptcy protection in recent months."

Industry analyst Mike Simonton of Fitch Ratings has predicted: "In 2009 and 2010, all the two-newspaper markets will become one-newspaper markets, and you will start to see one-newspaper markets become no-newspaper markets."

This is a grim environment in which to operate, and the Quad Cities' daily newspapers are not insulated from it.

The Project for Excellence in Journalism's 2009 State of the News Media Report includes the following information:

• "We estimate that roughly 5,000 full-time newsroom jobs were cut, or about 10 percent, in 2008."

• "The physical dimensions of the daily paper are getting smaller ... ."

• "The stock of publicly traded newspaper companies fell 83 percent in 2008."

• "Most of these papers, however, are still profitable, and could continue in business once separated from the parent company's debt."

While this analysis addresses the newspaper industry as a whole (or, in the case of the last item, newspapers published by companies in bankruptcy), the gist also applies to the Quad Cities' two daily-newspaper publishers: Lee Enterprises (the publicly traded, Davenport-based owner of the Quad-City Times) and Small Newspaper Group (the privately held owner of the Rock Island Argus and the Moline Dispatch).

The Argus/Dispatch has made significant cuts to its news operations. Both dailies switched to a smaller physical size. Lee stock has plummeted over the past two years and now trades for less than a dollar a share. And Lee's debt continues to put it in a precarious financial position, although it recently averted default by refinancing and restructuring its debt.

But while the situations of the local dailies echo national trends, there's reason to expect that the Quad Cities will remain a two-daily-newspaper market for the foreseeable future.

While Argus/Dispatch Publisher and Editor Gerald J. Taylor conceded that the physical newspaper product is "a Baby Boom generation kind of vehicle, ... the good news for newspapers today is that we in many ways are still the mass medium in a local community."

It's becoming apparent, however, that in the long run, publications will need to find new revenue streams to replace the advertising that's leaving print - and online ads aren't the answer. Newspapers are just beginning to explore business models from foundation ownership to not-for-profit status to pay-per-view content.


"In Good Shape"

On an operational level, both the Quad-City Times and the Argus/Dispatch appear relatively well-positioned. While the past year was hardly a good one for either paper, they did better than the industry as a whole. And both the Quad-City Times and the Argus/Dispatch are profitable, representatives said.

Revenues for the Argus/Dispatch and related publications (except the Leader) were down 1 percent last year, Taylor said last month, "which we felt pretty good about, frankly. ... We're in good shape. Last year was a tough year in a lot of ways." Taylor estimated that circulation is down 2.5 percent over the past five years.

He added that the prognosis is "good" for Quad Cities newspapers.

That's in part because the newspapers aren't really fighting for the same audience; the Quad-City Times dominates the Iowa side of the river, while the Argus and Dispatch own the Illinois side, and neither company has been able to make significant inroads into the other's territory - a fact acknowledged by the Argus/Dispatch when it shut down the Iowa-side weekly Leader last year, and by both papers when they entered a joint-distribution agreement in December. ("Five years ago I'd have said that would never happen," Taylor said of the pact.)

"One of the reasons that this market has sustained as many publications as it has is because it's really not just a market; it's two markets," Taylor said. "The river is a lot wider than it looks in that sense."

Both newspapers measure their "reach" only based on one side of the river. Lee claims to reach with its print product 73 percent of its Quad Cities market, which it defines as Scott County. And Taylor said the daily Argus and Dispatch reach between 50 and 60 percent of the households in their "city zone," which basically comprises the Illinois Quad Cities. Combined, the company's publications hit 88 percent of the households in its city zone, Taylor said.

Although Lee Enterprises and Quad-City Times leaders declined to be interviewed by the River Cities' Reader, the company's report to its shareholders - released last week - noted that its newspapers' advertising revenues have "outperformed the industry every quarter since 2003. Over the last two years, Lee's advantage has averaged nearly 5 percentage points per quarter."

But advertising revenue for Lee newspapers was still down 8.8 percent from Fiscal Year 2007 to Fiscal Year 2008 (which ended September 30), and 15.2 percent in the first quarter of Fiscal Year 2009 compared to the first quarter of Fiscal Year 2008.

Lee President, Chair, and CEO Mary Junck told shareholders that "we believe the vast majority of our revenue downturn is directly related to the poor economy."

Yet that seems like a cop-out, because the crisis in daily newspapers was there long before the economy took a nosedive.

As the State of the News Media Report noted: "The problem facing American journalism is not fundamentally an audience problem or a credibility problem. It is a revenue problem - the decoupling, as we have described it before, of advertising from news." (For a summary of that report's conclusions, see the sidebar at

In other words, more readers nationwide are consuming the digital product instead of the print one, despite papers' efforts to stabilize circulation. But advertising revenues haven't followed them online. So while newspapers can rightly claim that their online audiences are growing, their revenues are declining.