The market value of the American newspaper publishers entering 2008 as independent, publicly traded companies has fallen by $23 billion, or 42 percent, since the end 2004, the year before the wheels started coming off the industry, says Allen Mutter, managing partner at Tapit Partners.
The change is akin to similar changes happening in the global telecom business. Some legacy products are in irreversible decline, be that newspapers, wired access lines used for voice, dial-up Internet access or expensive, high-margin stand-alone long distance.
That doesn't mean people aren't "calling," or "reading" or "communicating." But products built on those activities are assuming new form. Newspapers won't disappear tomorrow.
As long distance prices have been in continual descent for decades, so newspaper readership and revenues will simply drift lower. The issue that must be faced is a transition of the assets to new formats and services.
Newspapers are both media--content creators--and a distribution format. Distribution clearly is changing more than the value of content creation. Voice is both an application and a driver of "access lines" or distribution. In both the newspaper and voice cases, the applications remain important. The distribution is becoming less relevant.
The issue is when a tipping point is reached, and decline becomes a problem executives no longer can manage. Something might be happening in the newspaper area, in that regard. One can fairly safely say the voice tipping point already has been reached, in many respects.
Nearly half the slide in the market capitalization of newspaper stocks came in 2007, when the shares lost a collective $11 billion, or 26 percent, of their value, Mutter notes. Newspapers lost nearly as much value last year as they did in the two prior years put together.
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