(This is excellent. – promoted by JulieWaters)
For a while now, I’ve been pondering the sad state of three major information sources: newspapers, radio, and bookstores. All three are in financial decline, and their response is the same: cut costs, and reduce the quality of the product on offer.
But something I heard Wednesday (2/25) on “Marketplace” finally spurred me to write. It was an interview between host Kai Ryssdal and David Westphal, former editor for the McClatchy chain and now associated with the Annenberg School of Journalism at USC. Here’s the key passage:
WESTPHAL: …for many newspaper companies, they’re so over-leveraged, so in debt, that it [turning to the Internet] doesn’t work.
RYSSDAL: Well, that’s a great point. And we should point out the Tribune Company, which owns the Los Angeles Times here in town, is in bankruptcy, in large part because of its debt. How much of a problem is it that the corporations that run some of these newspaper enterprises are so overburdened with debt?
WESTPHAL: Right now, it’s the thing that’s killing major metro newspapers. There are 1,400 daily newspapers in the United States. I would guess the large majority of them are actually doing all right. They’re being hurt by the recession, they’re being hurt by the Internet, but they’re still making pretty decent profits. But the major metros, and especially the ones that borrowed billions of dollars to expand, are the ones that are in real trouble now.
Did I hear that right? Debt load is the thing that’s killing our major newspapers? Not Craigslist, or GoogleNews? Not rap music or the almighty Wii? Gosh.
Okay, so how did these papers get so deeply in debt? Buying delivery trucks? New computers? Barrels of ink? Hiring too many reporters or columnists?
Noooo… it came from corporate takeovers of newspapers. The consolidation into big chains. The LA Times is in bankruptcy, not because it’s a financial wreck on operations, but because of Sam Zell’s leveraged buyout of somebody else’s LBO-built newspaper empire. (Zell was a lot like a homeowner who over-invested in residential property when times were high — except ol’ Sammy and all his high-flying buddies somehow escape the blame routinely assigned to individual homeowners caught in our financial maelstrom.) If newspapers were still independent entities, they would be in much better shape to face the issues raised by new media, rather than just cutting and cutting until there’s nothing left.
Okay, radio. With the exception of a handful of Radio Vermonts, and I consider myself damn lucky to be able to listen to one, the radio business is the province of a handful of giants. Clear Channel, Cumulus, Entercom, etc. These corporations were built through cheap-credit-fueled buying sprees; they often entered a market and snarfed up as many broadcasting properties as they could legally hold, at prices far higher than the stations’ intrinsic worth.
Anecdote: Years ago in Detroit, there was a commercial station called WQRS that broadcast classical music. It had a small, loyal, upscale audience, and it consistently generated modest profits. Then a big conglomerate bought it. And, in order to carry the debt load incurred in the deal, the conglomerate needed more than consistent modest profits — it needed a home run. So the format flipped to yet another variant of Hot Hits/Classic Rock/some such garbage, in an attempt to crack the top of the ratings. It didn’t work; and instead of a viable, commercially successful classical station, Detroit had yet another cookie-cutter format. A true cultural resource was lost. Another abandoned strip mine appeared on the media landscape. This tale has been repeated literally thousands of times across America. And people wonder why radio is becoming an irrelevant medium. It ain’t because of satellite or Internet radio; it’s because broadcast radio SUCKS.
Sorry this is getting so long, but I’ve still got bookstores. Once upon a time, Borders Books was a single store in a university town owned by two brothers, Tom and Louis Borders. It was a fabulous store — tens of thousands of titles, a very deep selection, and an extremely knowledgeable staff, most of whom had majored in literature or history.
Then, Borders began to expand — at first, under Tom’s control. A limited number of high quality stores in select markets. But eventually, the company needed deeper pockets to continue its growth. So it was sold to — wait for it — K-Mart. For a while, K-Mart let Borders grow pretty much on its own terms. (I don’t know who owns Borders now; I’m almost positive K-Mart sold it, probably to some vulture-capital outfit.)
But now, the joyride has ended. Faced with online competition, Borders stores are shrinking before our eyes. Big displays of current bestsellers, bargain books, cards, wrapping paper, CDs, DVDs, and gifty crap (not to mention coffee shops) have replaced much of the formerly glorious selection of books. (I’ve been back to the original store recently, and it too has gone to hell. It was that visit, around Christmastime, that first got me thinking of strip mines.)
As it grew, Borders displaced a lot of locally-owned bookstores. In many cases — at first — it was a decent trade. Those early Borders stores were quite good, and a lot of indy bookstores really were not. But now Borders is in trouble, and all those indies are not coming back to fill the void. The book marketplace has been strip-mined by Borders’ corporate parents.
Three major communications media, all significantly degraded by corporate invasion: takeover by entities interested only in maximizing financial return, not in the quality of communication or in building a solid business for the long haul. All three media have been treated like commodities and exploited to near extinction. And there are no laws or regulations whatsoever governing this kind of cultural strip-mining.
Pardon my extended rant. And it’s not exactly relevant to recent postings about tactical maneuvers in the VDP. But that Marketplace interview got me going. Thanks for reading, if anyone did.
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