I love Molly Ivins, but I wouldn’t go to her for business advice. Still, her column today reminds anyone who’s interested of a very good point about the recent sale of Knight-Ridder newspapers: that far from being failing businesses, the papers had a 20 percent profit margin.
Lots of business would kill for that kind of margin. Then why did the KR board bail? Because newspapers are seen as a "failing" business, one "in decline." It’s true that they’re losing circulation, but that could be perfectly good thing: why spend oodles of money reaching the N+1th reader who doesn’t see the value in your product? (Propping up circulation, by the way, is what killed Life magazine; circ acquisition and retention was costing more than the marginal rate increase the ad sales people could charge per reader.)
Of course, seeing a newspaper as a local branded information resource rather than a bunch of pulped pine trees might extend profitability. But that would require looking at a financial enterprise as more than a quarter-to-quarter business. As Molly says: