I often find the column form to be highly constricting. Today was one of those cases. There was about 15 inches worth of stuff I had to cut in order to jam it in. Actually, I had to cut a lot more than that, but I only missed the three chunks that made up the 15 inches, because they helped explain some things.
The first chunk addressed some of the responses I got the last time I wrote about the paper’s, and Knight Ridder’s, profitability. Readers pointed out the inadequacy of comparing the percentage of profit margin of our business versus Wal-Mart’s comparatively pitiful (and people who know a lot more than I do about business have said it was low, too) margin. OK, I thought, I’ll put it another way. Hence the following paragraph:
We do a whole lot better than Knight Ridder as a whole, which made a pitiful (by Wall Street’s expectations of the newspaper business) profit margin of 19.4 percent last year. You know, only like twice the average of companies in the S&P 500.
The fact is, it’s absolutely ridiculous that a) investors aren’t satisfied with the margins most newspapers make, and b) analysts have so bad-mouthed newspapers as an investment in recent years that they have driven down the stock to something like 25 percent below what it ought to be, as a function of the profits they produce. The "reasoning" of analysts on this point goes along these lines: "Sure, they’re still making money now, but with all that competition on-line for the advertising dollar, this can’t last." The gaping hole in that logic is that newspapers are also on-line, that our on-line ad revenues are more or less doubling each year, and that we have an advantage that competitors can’t match: An exclusive franchise in local news — which has tremendous appeal among the customers our advertisers want — as an added inducement to come to our sites and see the ads. Our competitors either have NO content, or content that you can find in a thousand other places. Anyway, the second chunk was on the subject of the industry’s future:
Contrary to what those idiots on Wall Street say, this newspaper would be an excellent investment. You see, in spite of all that stuff you hear, newspapers are going to be around for a long time. If The State didn’t exist, somebody would start something like it in its place. Why? Because the demand is there.
It would actually be a huge boost to our business if people suddenly did decide they don’t want their news printed on dead trees. That would leave us growing online, and would cut our operating expenses almost in half: We could take those gargantuan presses and create artificial reefs off the Grand Strand. No more newsprint and ink to buy by the trainload. No more huge distribution center with its complicated equipment and large labor force for physically stuffing in ad inserts and bundling papers. No more delivery trucks; no more gasoline. No more page-sized typesetters or plate-making machinery. No more waiting half the night from the time we’re done putting the news together to when it’s placed in your driveway.
We would simply finish writing and editing, press a button, and you would have your news instantly. Which is actually how it works now, from our end — the fact that you don’t get it for hours after we press the button is purely a function of the fact that the market still wants a newspaper.
I’ve been looking forward to the day when that demand would evaporate since the early 1980s, which is when we started writing and editing the news completely with computers. You see, there’s nothing sacred to me about the paper part of the paper. Our value is in our content, specifically our local content, which no other entity in the world has the resources to duplicate.
But I’ve come to realize that the demand for the hard-copy version isn’t going away in my lifetime. So we have to continue the extremely expensive practice of producing the paper while still innovating online. Our online revenues, by the way, have been growing at a phenomenal rate. And with the talent we already have in-house in that arena, we could do a good deal better without folks in California trying to tell us how to do it.
Then, there was the bit where I explained why I needed somebody to just give me the money to buy the paper, rather than help out some other way. On the one hand, this was tongue-in-cheek. On the other, it explains why I seriously would worry about some wealthy local individual (other than me, if I could join that category) to rescue us from becoming part of some other large corporation.
You say you’d rather lend me the money? OK, but don’t hold your breath to be paid back, since I plan to plow all profits into improving the paper. You want to put together a deal to buy the paper yourself and just let me and my colleagues run it for you? Well, that could work, but it’s fraught with risk. No matter how good your intentions, it might be tough to resist the temptation — having spent all that money — to influence the way we write about your best friends, or your worst enemies. For those of us who are used to criticizing everybody, that could be problematic.
You see, the one advantage of being owned by a publicly-traded company from the other side of the continent is that they don’t give a damn about what sorts of editorial stands we take. In fact, they don’t care about much any more besides the bottom line, which is where we get into the disadvantages.
So if it’s all the same to you, I’d rather just have the cash, free and clear, with no strings attached. I may seem to be asking a lot, but it’s for a good cause, and as you see, I have my reasons.
Ultimately, there’s just no substitute for the perfect situation of owning the paper myself. Even Mark Whittington should be able to agree with me on that — the workers (or, in this case, worker singular) owning the means of production. Well, actually, he probably wouldn’t, since I’m envisioning a benign despotism rather than collectivism.
Anyway, as the song says, God bless the child that’s got his own. Newspaper, that is.