Why Are So Many Newspapers Cutting Jobs?
Les Visible could not have been more correct; what you see is not what you get.
AP asks: Why are so many newspapers cutting jobs?
True, they are definitely losing business to the internet. But, to stop there would be to stop short of the more important truth.
"One of the biggest problems facing the industry is slower growth in advertising sales, which makes up some three-quarters of their revenues."
How do they make the remaining quarter of their revenues?
"[t]he main costs for newspapers are paper and people. Costs for employee benefits like health care have been rising steadily, and newsprint expenses are up some 10 percent to 15 percent this year."
That's easy, let's get rid of all the paper. And if that's not enough, let's get rid of all the people!
Or, maybe that's not such a good idea. Who will we collect money from? Okay. Let's look at our other expenses.
How much do we spend on INTEREST to capitalize all those printing presses we run?
But wait, "newspapers owned by publicly held companies earned an average of 20.5 cents on the dollar in 2004, a very healthy margin for any business. By comparison, companies in the blue-chip Standard & Poor's 500 Index of large U.S. companies made an average of 11.4 cents on the dollar in 2004."
So, why all the fuss?
"Investors are mainly concerned about what a company will make in the future, not what it's making right now." Well heck, that makes sense.
"And that goes for bond investors as well as stock investors."
Whoah!!! Wait a minute; these newspapers have bondholders? And they collect interest? Exactly how much interest are these folks collecting?
Maybe that's where the budget cuts need to start, because there are only so many jobs you can cut.
I mean, employees are the same folks who buy the product; who are you going to sell news to, even if it's all digital?!!!
Folks can't afford laptops and internet connections if they don't have jobs!!!