The Problems Newspapers Face

A letter to our readers
Dear Readers:

We at the Chattanooga Times Free Press have had to revise our long-term plans to continue publishing a high-quality newspaper. We want to share our conclusions with you, our readers.

The Chattanooga Times Free Press has, for many years, kept its home delivery prices lower than most newspapers our size across the region. In fact, at one time we had no subscription price increase for over 10 years.

We kept our pricing low intentionally to maximize our circulation. By doing so, we delivered the maximum audience to our advertisers.

Newspapers have historically offered a unique value proposi- tion. Until a few years ago a typical newspaper would derive 80 percent of its revenues from advertising and 20 percent from circulation. As a result, much of the cost of producing the newspaper was covered by advertising revenues, allowing circulation prices to remain low. Yet, advertisers also benefited by having low circulation pricing, as that maximizes the circulation reach of their advertisers.

Since 2006, the advertising business, the newspaper business and media in general have changed. At any given time, there is a fixed demand for advertising. But in the past decade, there has been an enormous increase in the number of companies selling advertising. From local cable television and niche magazines to satellite radio advertising, from the Internet to mobile phones and general sites like Google, Facebook and Groupon, the choices have multiplied.

As a result, ad revenues in traditional media like radio, television, newspapers and magazines have declined. Newspaper advertising in the United States has declined every year for the past six years with combined newspaper revenues for all daily newspapers decreasing from $49 billion in 2006 to approximately $22.5 billion in 2012, a decline of 54 percent. Much of this decline has come from large national chains or “big box stores,” with a number having ceased operations altogether.

As a result of the advertising losses, newspapers have reacted in numerous ways to reduce costs. Newspapers have reduced staffing. Some metropolitan newspapers have cut their newsroom staffs by over 50 percent. Many have also reduced the amount of space they devote to the news. Others have shifted from being a newspaper of record to focusing only on local or hyper-local news. Many newspapers have intentionally eliminated circulation in outlying areas, even in the areas where readers wanted the newspaper and responded to the advertising.

At the Chattanooga Times Free Press, we, too, have made difficult decisions to ensure the newspaper’s livelihood and longevity. But in many ways we have charted a different course. Rather than cutting back on circulation in outlying areas, we have continued to be a regional newspaper with readers in Tennessee, Georgia, Alabama and North Carolina. Our newspaper circulation and readership have increased during the past several years while most newspapers have had substantial circulation declines.

Although we have had some reductions in our news staff, they are relatively minor compared to most newspapers around the country. We believe providing unique, relevant and important news is at the very core of our mission and future. We also continue to provide complete coverage of all news, whether it is foreign, national, state or local. We believe our readers deserve and expect that from us, and that our readers want more than just local news.

Despite all of these efforts, our advertising, like that of most newspapers, has continued to decline. Even though advertisers tell us they get good results from advertising with us, they have far more options on where to advertise today.

With this loss in ad revenues, and by maintaining our circulation and news reporting, we have seen our profits dwindle to unsustainable levels. For a newspaper to be viable and successful, it must be profitable. Newspapers, like all businesses, must make some profit in order to reinvest in the business.

We have recently watched as some major newspapers have taken extraordinary steps like switching from daily to weekly publication cycles. The Detroit newspapers were the first major newspapers to reduce their home delivery from seven to three days a week. And now as you are probably aware, the newspapers in New Orleans, Birmingham, Mobile, and Huntsville only offer home delivery three days per week.

Our plan is to continue to publish every day. We plan to maintain our news staff and provide the type of complete, in-depth reporting that Chattanooga has expected from us for decades. But with continued advertising declines, we can see no other way to do this other than by fundamentally changing our revenue base. In the future, we will have to rely more heavily on revenue from readers and subscribers.

We wish we could continue our old business model of relying mostly on advertising revenue. It worked great for years. But it is not working in today’s environment. We believe our newspaper, like every institution and business, must adapt to change. If you as our readers will support this change, we can continue to have a newspaper that all Chattanooga can be proud of as one of the best in America.

Sincerely,

Walter E. Hussman Jr.,

Chairman and publisher

That is sad. While cable TV, Facebook, Groupon, etc. may have increased the number of advertising choices available to retailers, they've certainly done nothing to increase the number of reporters out there keeping their eye on the powers that be and reporting what they do to inform the public.

I think we're going to have to see a huge jump in media non-profits if we want to continue to be consumers of anything besides national news, or what passes for reporting on television.