Why Newspapers Are Dying

It is a small and obscure agency in Washington, but the five-member Postal Regulatory Commission has just made a decision that could have a profound influence on the economic future of newspapers, including The Boston Globe.

At stake is the roughly $1 billion profit that goes to U.S. newspapers from those inserts in your Sunday newspaper. Under a deal that one analyst told the Associated Press would be “lethal to newspapers,” the Postal Service would now get $15 million over three years from the huge marketing company Valassis Communications Inc., in exchange for a discount on the ads it sends through the mails. Not bad for the beleaguered Postal Service, but for newspapers? Well, “lethal” sounds about right.

Newspaper managements failed to recognize how drastically the Web would disrupt their comfortable niche.

Newspapers don’t need any more bad news. As more and more ad dollars move to the Web, newspapers’ advertising revenues are evaporating at an alarming rate, from $49.4 billion nationally in 2005 to just $23.9 billion last year, according to the Newspaper Association of America. Newspapers were so profitable for so long – margins often reached the high 30s – that when the Web came along, managements that had grown fat and complacent failed to recognize how drastically it could disrupt their comfortable niche.

The result has been a frantic effort to save themselves, with no one quite sure how to do it. Some have simply raised the price of a print subscription. Others, including The New York Times, the Wall Street Journal and the Globe, have built paywalls around their online news. But those have met with mixed success at best – so far the Globe has just 23,000 Web-only subscribers, about a tenth of its print readership – and only about 300 of the country’s roughly 1,700 dailies have put them up.

Still other publishers are pursuing a different strategy. Advance Communications, owner of the New Orleans Times-Picayune and other papers, is reducing the Times-Picayune staff and concentrating on its website – and publishing a print newspaper just three times a week. The new schedule, which begins Oct. 1, will leave one of the country’s major cities without a daily newspaper.

In August the Advance-owned Harrisburg (Pa.) Patriot-News and its sister Syracuse, N.Y., Post-Standard announced they too will soon become three-day-a-week papers. Advance is trying to convince the cities where it owns newspapers that their websites will take up the slack when the papers reduce their schedules, but no one ought to be fooled.

A month after the Times-Picayune made its announcement, the ax fell on 84 of 171 newsroom staffers. Editor Jim Amoss toed the company line: "We're committed to being the journalistic watchdog of our communities. We're committed to the high quality of journalism our readers have come to expect from us, produced by a formidable news staff.”

How a newsroom that loses nearly half of its experienced staff can produce watchdog journalism was not explained by Mr. Amoss.

Which brings us to Boston, where the question is whither local journalism?

It is simply unthinkable to contemplate public life in Massachusetts without a daily print Globe, diminished though it has been since its purchase by The New York Times in 1993. The Globe sets the agenda even as it fights to stem the loss of readers.

Its coverage of the two subjects that have a firm hold on Bostonians – sports and politics – set it well above its print, Web and broadcast competitors, despite bizarre news judgment and a top management that often seems out of touch with local concerns.

It’s not just nostalgia that makes me say so: Boston would be lost without Globe columnists like Adrian Walker, Brian McGrory and Kevin Cullen who puncture the balloons of blowhards and help preserve Boston’s colorful history and fast-dying blue-collar culture. The paper’s investigative journalism on subjects as diverse as fish marketing standards and the $360,000 annual salary of the Chelsea public housing director is unmatched. Its news reports, even from a staff no longer as muscular as it was, still holds government, especially state government, accountable. And it still provides much of the content for the city’s TV newscasts.

Last Sunday, the Globe hit my doorstep with 10 advertising inserts, including RedPlum, a 30-page booklet of coupons and sales come-ons. RedPlum is a product of Valassis Communications – yes, the same company that, unless a federal judge reverses the deal, could soon find it easier and cheaper just to send its ads through the mail.

The New York Times doesn’t break out the earnings of its New England Media Group, which includes the Globe and the Worcester Telegram & Gazette, so it’s hard to know how much revenue the RedPlum insert generates. But the Times is fighting to stay profitable and has shown it’s not reluctant to shed some of its losing properties, such as its 16 smaller regional newspapers and, last month, its web venture About.com.

In 2009, when the Times was locked in a dispute with the Globe’s unions, demanding pay givebacks and benefit cuts (a dispute they won), a local group stepped forward and offered to buy the paper. Then, the Times turned them down. Now, though, I can’t help wondering if the Postal Regulatory Commission’s Valassis deal will mean the local group might get a second chance to buy the Globe.