by Chris Jennewein / Times of San Diego / December 20, 2021
Three decades ago, when America’s local newspapers were at their peak, I attended a dinner for publishers at a mid-sized chain. After dinner, the president rose to speak and asked everyone to clap for one publisher whose newspaper had exceeded a 50% profit margin in the previous month.
At a 50% margin, half of every dollar from subscribers and advertisers went directly to the bottom line. Sure, there was depreciation to account for, and some taxes to be paid, but overall that’s a level of profitability that would make a pharmaceutical company blush.
Profits aren’t a bad thing if they’re invested in building the business. Drug companies typically invest in drug discovery, which is an expensive and risky process. But newspapers typically invested in stock buybacks, which rewarded shareholders but starved the business.
During those glory days of high margins, newspapers experimented with online publishing, but it was always with pennies on a dollar of profit. Internet publishing was tolerated, but the focus was always on the print edition.
No newspaper group hunkered down and “bet the farm” on a full-scale transition to the Internet. Few executives or owners saw — or perhaps admitted –that the future might not include printed newspapers.
Now many of those newspapers are suing Google and Facebook …
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Chris Jennewein is editor and publisher of Times of San Diego. His career spanned reporting, editing, management and executive roles at six newspaper companies before turning to Internet publishing startups.
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