Newspaper profit margins and private ownership

I have been watching with some dismay as newsroom budgets are not just cut, but slashed, and as newspapers are bought and sold left and right in an attempt by publishing companies to increase the bottom line or dump "loser" properties. It's either please the shareholders and their never-ending desire for more and more share value or let someone else try.

In 2006, a "bad" year for newspapers, publicly traded companies sported an average profit margin in the 17-18% range (1). Granted, that is down from the 2000 numbers, which were 22% to 29% (2). Both are above average for most industries: about 8.3% over the past 25 years ago (3). For comparison, ExxonMobil, which is being hammered for record profits while prices at the gas pump skyrocket, sported only a 10% profit margin in 2005 (3).

I have to admit I don't understand how money, profits and the stock market work exactly, but it seems to me that trying to please shareholders is the main problem. That has led to cutting newsworkers as if they were simple workers on an assembly line. But newsworkers create the product in a way that assembly line (or other typical) workers do not. Cutting newsroom budgets is like cutting important ingredients that are critical to your product. Yet that seems to be the management answer. That's good: cut the heart out and then wonder why the patient dies.

So I am all for the private people who are buying newspapers. Run smartly, newspaper companies can still make money if they don't have to keep voracious shareholders happy.

(1) http://www.cjr.org/issues/2007/2/Kuttner.asp
(2) http://www.pbs.org/newshour/bb/media/jan-june01/profits_3-22.html
(3) http://www.commondreams.org/views06/0322-28.htm