Dec 8, 2008 10:35 pm US/Eastern
Herald Sale Indicative Of Media Business Troubles
Tribune Company files for bankruptcy.
NBC Universal instituted conglomerate-wide staff cuts, eliminating 500 positions, or 3% of its workforce last week
ABC reportedly considering cuts to news division
MIAMI (CBS4) ―
Over the weekend,
The New York Times broke the story of
CBS4 news partner, the
Miami Herald being put up for sale. The news could be devastating to the parent company of the
Herald, The McClatchy Company, and a microcosm of what the media business and the overall economy might bring in 2009.
The
Herald is one of the largest of McClatchy's 30 daily newspapers, and probably the most prestigious, having won 19 Pulitzer Prizes. But that doesn't change the fact that Florida's real estate market is deep recession, according to
The New York Times, and with newspapers relying on spending from real estate, it's easy to see the
Herald's potential problems.
The problem for McClatchy Company is that finding a buyer, even for a paper like the
Herald, will be tough given the current credit crunch and the shrinking circulation base for most newspapers. Sadly, buyers may be more interested in the Herald's land than the paper itself.
"I'm disappointed but it's perfectly logical," says former
Miami Herald attorney Sam Terilli. Terilli suspects the future of South Florida's major papers will ride on their ability to innovate. "I don't think that you could have major markets such as Miami and Fort Lauderdale without a significant newspaper."
The shrinking circulation and ad revenue can also be seen in the bankruptcy of another newspaper/television group, Tribune Corporation.
Tribune owns multiple media outlets including the
Sun-Sentinel in Ft. Lauderdale and Channel 39. It also owns the
Los Angeles Times and the
Chicago Tribune, as well as the Chicago Cubs and Wrigley Field. The company, which was purchased and taken private last December by Sam Zell, immediately began cutting jobs in all divisions, with the
Los Angeles Times seeing some of the largest cuts.
But, even with the cuts, the company did not have enough cash flow to cover nearly $1 Billion in interest payments due this year, according to
The Wall Street Journal. Much in the same way McClatchy may have a hard time finding buyers for the
Herald, selling off the Cubs and other entities may be next to impossible for Tribune to pull off in time to stave off bankruptcy.
South Florida resident Walter Scott has always been a newspaper man. Lately, he's been reading the
Sun-Sentinel. "The
Herald made me mad one day and I switched over." Scott is just one of two homes out of seven on his block who still gets the paper. The trend is a growing one.
Dionne Nigro of Dania Beach cancelled her family's subscription. "We were getting it for a while and we found that we were mostly watching the news at night on TV and what we weren't watching on TV we would watch on the internet. So we didn't need the paper anymore."
Newspapers aren't just losing readers; they're losing advertisers. After all, why pay for classifieds when you can post on Craigslist? Why pay for print news when you can click around and find it for free online?
The struggles of the media business may pale in comparison to the overall number of companies that could fail in 2009.
The Financial Time of London reported the U.S. could see 62,000 companies go out of businesses next year. That number is compared to the 42,000 companies lost in 2008, and only 28,000 lost in 2007.
But even those numbers are no match for what could happen in Western Europe, where as many as 197,000 companies could be gone by the end of 2009. France could be the hardest hit, with 63,000 companies expected to hit insolvency next year, according to the report from German insurer Allianz, via the
Financial Times.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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