Hope for struggling newspaper companies and discouraged journalists came from an unlikely quarter this week.
Lauren Rich Fine was the most powerful media-stock analyst on Wall Street for more than a decade. She built her career telling newspapers how to maximize profits to boost share price, then retired a year ago. Thursday she delivered an unusual message:
Make less money. Get off the stock exchange.
Her column at paidcontent.org was published the same day that Canada’s largest media company became a penny stock.
Canwest’s fall below a dollar wasn’t worth a big headline – after all, there was much more dramatic financial and economic news on which to dwell. But it was a reminder of the dangers facing all media companies in North America.
The gut-wrenching queasiness of your stock plummeting in free fall is a familiar feeling to media owners and executives. Shares of newspaper and television companies have been dropping steadily for more than a year. Share prices in Canada’s biggest newspaper companies (Torstar, Quebecor, FP Newspapers Income Fund, Transcontinental) have dropped an average of 42 per cent since September 2007.
Those figures don’t include the dismal record of Canwest Global Communications Corp., which owns the Global TV network and 10 major newspapers across Canada, including the National Post, Ottawa Citizen and Edmonton Journal. It traded at more than $8 a year ago, and just 93 cents yesterday.
The news is similar south of the border, with media stock prices collapsing for more than a year and the beleaguered McClatchy Corp. playing the role of Canwest, having lost more than 80 per cent of its value in one year.
This is very sad for the people who own this stock. But it is even more worrisome for those who believe the world needs reporters and editors to ferret out and broadcast the truth about the events, trends and people that affect our society.
The response to falling share prices has been to cut back and outsource, to find every way to boost the bottom line by reducing expenses. This has meant thousands of job losses in Canada alone, and tens of thousands in the United States. Not all of those losses have been out of newsrooms, but many have.
Unions and journalists have pushed back, largely without success.
This week’s controversy over CBC’s decision to axe iconic correspondents Don Murray and Patrick Brown is typical.
Twenty-six well-known CBC journalists sent a letter to CBC vice-president Richard Stursberg and publisher John Cruickshank on Tuesday, as did former CBC honcho Tony Burman, complaining that the loss of Murray and Brown would hurt the network. Burman added that the decision to let them go violated a contract with the two journalists that he negotiated and signed in 2006. A CBC spokesperson was quoted in the Ottawa Citizen dismissing the complaints as the predictable move of colleagues simply trying to stick up for one of their own.
Journalists who complain about cutbacks have been ignored or patronized, dismissed as fuzzy-minded idealists who don’t understand that the money for their paycheques has to come from somewhere, and that the interests of stockholders count, too. Certainly some journalists are that naive, but not many.
The doyen of Wall Street echoed journalists’ common concerns in her Thursday column. Lauren Rich Fine pointed out that most newspaper companies are still making money, though they are keeping far fewer pennies from every dollar they take in. Even McClatchy, the poster-child for the illness afflicting North American media companies, made a profit in the last quarter.
Adjusting to the new reality, according to Fine, requires that newspapers be liberated from the pressure for constant growth exerted by anonymous investors.
Her conclusion is worth repeating.
“For an industry that well understands it serves the greater good, come to terms with lower margins. And then go private!”
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