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Adam Ross -- A Newspaper Bailout?

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By Adam Ross
Friday, February 27, 2009; 12:00 AM

At a time when each day brings fresh news about the troubled media industry, American journalists may look warily to France. The French government has long assisted the country's ailing newspapers, and President Nicholas Sarkozy now wants to sweeten the deal with a 600 million euro (about $765 million) bailout. His offer includes a doubling of government advertising in print and online editions, tax breaks for delivery services and a free one-year newspaper subscription for teenagers on their 18th birthdays. But while a newspaper bailout may sound attractive, Sarkozy's gamble isn't likely to conjure a profitable egress.

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Unlike other industries that have been hit hard by the world economic crisis, and where government has seen fit to intervene, newspaper turmoil started well before the markets began to tumble. To be sure, in an industry where more than 80 percent of revenue comes from advertising, the precipitous drop in ad dollars has hurt. But the problems for newspapers in France and elsewhere require more than cash infusions. Sarkozy's intervention will only delay the strategic rethinking that must address declining revenue and structural problems unlikely to fix themselves amid any stabilization of the world economy.

Meanwhile, Sarkozy's plan to shove a broadsheet into the hand of every 18-year-old may be good PR, but it's not likely to reverse their migration to the Internet. If teenagers aren't reading the news already, it's not because they don't have access. This is the cohort that spends the most time online, where free has no apparent expiration date. It's also a group whose members are accustomed to determining how they consume their news -- from where, in what order, and with what devotion. These "digital natives" aren't likely to welcome the "you'll take what we give you" model of print. And besides, won't parents be tempted to cancel their subscriptions and read their kids' free papers?

Even if these questions are addressed, Sarkozy's plan may actually inadvertently turn away newspaper readers and crowd out advertising dollars. A reliance on government subsidies undermines the independence that gives media organizations their authority. Readers aren't likely to trust a newspaper that seems to be in bed with the government. And as Philip Meyer, author of "The Vanishing Newspaper," has written, the loss of trust translates into a loss of economic value. Meyer documented that newspapers rated as more trustworthy by readers were able to charge higher advertising rates and were more successful in resisting a decline in circulation.

So what would work better than a bailout? Strategic rethinking about the existing business model and the opportunities of multi-platform publication will be essential. So too will investment in the newsroom. Good journalism often has been unfairly pegged as too expensive and tangential to a healthy bottom line. But quality news makes good business sense. As far back as 1993, onetime New York Times Managing Editor Gene Roberts warned that cutting back on substance put newspapers at risk by making them less essential to devoted readers. And indeed, a 2006 University of Missouri study of 1,400 daily newspapers linked newsroom spending cuts to circulation and revenue losses, which of course leads to even deeper cuts.

"A great news organization is difficult to build, and tragically easy to disassemble," former Washington Post Executive Editor Leonard Downie Jr. and Post Associate Editor Robert G. Kaiser write in their recent book, "The News About the News." Given the mercurial nature of today's newspaper industry, the proclamation has a bit of an existential air. The Internet may one day have a far greater impact on profits, but the industry must maintain its venerable pillars: trust and good journalism. And while newspapers continue to think seriously about how to meld these values with the future changes, Sarkozy's 600 million euros is a reminder of how far the finish line appears to be.

The writer is a producer at washingtonpost.com and a graduate student of journalism at Georgetown University.


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