Newspapers Reshuffle to Stay Afloat

As some big-city dailies fold, others adjust to changing demographics, stiff competition

MANY big-city daily newspapers, it seems, are going the way of manual typewriters, "Extra" editions, and teletype machines.

In the past year, the following newspapers have closed down or merged with competitors: the Dallas Times Herald, the Arkansas Gazette, the San Diego Union, the Richmond (Va.) News Leader, the Anchorage (Alaska) Times, the Charleston (S.C.) Evening Post, and the Daily Journal in Elizabeth, N.J.

In all, 19 newspapers went out of business in 1991 (no figures are available yet for 1992). This continues a trend discernible since World War II: the steady decline in the total number of newspapers in the United States.

According to the Newspaper Association of America, there were 1,763 daily newspapers in 1946; by 1991, the number had shrunk to 1,586.

What accounts for the gradual extinction of so many papers, even those with excellent editorial reputations, such as the Dallas Times Herald and the Arkansas Gazette?

Industry analysts say some of the recent losses can be attributed in part to short-term economic factors, namely a recession that has hurt major industries.

But there's more to it than that. Big-city dailies are closing because of structural changes that are sweeping through the newspaper market, changes that are transforming the way Americans receive their information about the world.

"Newspapers are an old, mature industry that is going through restructuring because of heavy technological change and changes in the marketplace," says George Harmon, a professor at Northwestern University's Medill School of Journalism. A fragmented market

The biggest trend affecting newspapers is simply the "information age." Most people no longer look to a morning newspaper first to find out what's happening in the world. Television news provides this information in a more timely fashion, as was vividly demonstrated during the 1991 Gulf war, when millions of Americans sat riveted before TV network news broadcasts and especially Cable News Network.

The growth of CNN is only one indication of what experts describe as the "fragmentation" of the media market. Desktop publishing, communications satellites, and other technologies have led to a proliferation of media outlets providing specialized information for select audiences.

This change in the media market has been paralleled by equally significant changes in demographics. The heyday of big cities populated by large numbers of blue-collar workers is clearly over. Most Americans now live in the suburbs and work in white-collar "service industries" rather than in manufacturing jobs.

As the old class of blue-collar city-dwellers has disappeared, so have the newspapers they used to read: gritty, afternoon tabloids. Many of those that remain, like the New York Post and the New York Daily News, are losing money at an alarming rate and are kept in business by huge subsidies from their owners. Sales stay flat

The new suburban dwellers no longer have much loyalty to the newspapers their parents read, analysts say. They prefer to get their news from cable television or small, local newspapers - or not to get their news at all.

Thus, the number of newspapers sold each day has stayed flat at about 61 million for several decades even as the population, and the number of households, has skyrocketed.

According to marketing surveys, faithful readers are aging, and young people in the 18-to-35 age range, much coveted by advertisers, are not becoming regular newspaper readers.

"The death of big-city newspapers is due to the continuing tendency of Americans to put their media loyalties in more specialized [print] media, such as suburban weeklies and dailies and specialized magazines," comments Byron Scott, a journalism professor at the University of Missouri at Columbia. "And advertisers are following them."

Indeed, fewer and fewer companies think that newspapers are the best way to reach their consumers. That is because newspapers deliver to broad audiences, including many relatively low-income readers.

Most companies prefer to target small, affluent segments of the market through advertisements in upscale magazines, direct mail, or other approaches. This has hit newspapers particularly hard since, traditionally, 80 to 85 percent of a newspaper's revenues have come from advertising. Survival of the fittest

The upshot of these changes in the media market is that competing metropolitan dailies are battling over a readership and advertising pie that is not growing. One paper's gains can only come at the expense of a competitor. And once a newspaper takes a significant lead in circulation, its competitor is almost certainly doomed.

In Anchorage, for example, the Daily News defeated the Times; in Dallas, the Morning News triumphed over the Times Herald; and in Little Rock, the Arkansas Democrat bested the Gazette. The battle is continuing in Houston, Denver, Boston, and other US cities.

"It's almost impossible for two metro dailies to survive with the economy the way it is," says Everette Dennis, executive director of the Freedom Forum Media Studies Center at Columbia University in New York.

The outlook for the newspaper industry is not entirely gloomy, however. It's important to put recent events in perspective, says John Morton, a newspaper analyst with Lynch, Jones, and Ryan, a brokerage firm in Washington.

"The daily newspaper business in the 1990s is probably not going to be two to three times more profitable than other manufacturing industries" as it was in the 1980s, says Mr. Morton. "But it will probably still be one to two times more profitable."

The demise of so many newspapers may even have had a positive side effect: It may have served as a shot across the bow to the survivors, warning them to become better and more efficient.

"The industry is healthy, even though economically inefficient newspapers are closing down," Morton adds.

"It is not a happy trend for someone who works [for a troubled newspaper] or someone like me who loves [newspapers], but it's inevitable."

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