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Can Entrepreneurs Rescue the Newspaper Industry?

Can Entrepreneurs Rescue the Newspaper Industry?

(A version of tis piece originally appeared in The Fiscal Times)


Suddenly, the United States media eco-system is chock full
of mystery and intrigue, inspired by the merger mania that is sweeping through
the beleaguered industry.


The drama now centers on this question about anew crop of
potential saviors for the beaten-down newspaper industry: Can accomplished
corporate titans, who have established themselves in unrelated business by
innovating and thinking dynamically, transform newspaper publishers that have
been given up for dead?


Think about it. John Henry acquired the Boston Red Sox and
used modern computer analysis to help assemble a team of players good enough to
win the franchise’s first World Series title in EIGHTY-SIX years, in 2004 (for
good measure the Sox won it all again three years later). Meanwhile, in
Seattle, Jeff Bezos, once distinguished as Time magazine’s Person of the Year,
has redefined the online retail universe by making Amazon into a model company.


Henry gobbled up the moribund Boston Globe for
a mere $70 million (the New York Times Co. had obtained it in 1993 for $1.1
billion, by comparison). Bezos took over the Washington Post
for $250 million in cash.


What do Henry and Bezos see that most of us are missing –
those of us who lament that the digital revolution has overtaken the
traditional, advertising-reliant newspaper industry that we grew up with.


Of course, it is possible that the savvy Henry views the
Globe as an elaborate marketing tool to enhance the popularity and marketplace
value of Red Sox Nation’s beloved “Saux” baseball team. And maybe Bezos
envisions the Washington Post as a vehicle to enhance the prestige of Amazon –
or perhaps Bezos, who has achieved every financial reward imaginable, now wants
to accept the challenge of reforming the woebegone newspaper industry.


There is, of course, another possibility: Ego. Only the
owner of a successful local sports team can command comparable status in a
given U.S. city. Henry and Bezos now stand as the white knights of Boston and
Washington, respectively.


And there may be a new entrant. Speculation is rampant in
New York that brash billionaire Mayor Michael Bloomberg is seriously eyeing a potential
raid on the New York Times Co. after he leaves office at the end of the year.
Bloomberg brilliantly created and built the Bloomberg media empire before
winning his first mayoral election in 2001 – so perhaps he could work his
entrepreneurial magic on the Times, which sure could use a financial spark. And
if Bloomberg didn’t get to take control of the New York Times, he might just
gladly accept a sort of consolation prize, in the form of the highly respected
international newspaper, the Financial Times.


But it won’t be easy, even for a hard-charging mogul, to
save a newspaper because the industry is so woeful. Newspaper companies have
failed to date to monetize the Internet and adjust their out of date,
advertising-heavy business models.


The Washington Post Co. had a 14 percent decline in
earnings during the second quarter of this year.…



Newspaper companies have proven, for better or worse, that
merely throwing money at a problem won’t solve it. Look at events of the recent
several years. Rupert Murdoch, for instance, paid the lavish sum of $5.6
billion for Dow Jones in 2007 so he could control the Wall Street Journal,
giving him a new dimension of power and prestige in the U.S.


Murdoch made his much of his fortune in newspapers around
the world, but even he failed to make the Journal a financial juggernaut
despite his efforts to widen its editorial coverage to general news matters. He
recently placed Dow Jones in a separate, stand-alone company called News Corp.
Murdoch wasn’t alone, of course.


Then there was real estate tycoon Sam Zell. He talked
tough but even he couldn’t turn around the Tribune newspapers, the Los Angeles
Times and the Chicago Tribune, which commanded dominant positions in their
biggest markets. And entertainment impresario Philip Anschutz didn’t thrive in
newspapers in San Francisco and Washington.


Can the newspaper industry be saved? Is there hope now on
the horizon? It will surely take some daring thinking. The new leaders have
recognized that they must take approach the industry’s entrenched problem with
cold, hard analysis.


“There is one thing I’m certain about: there
won’t be printed newspapers in twenty years. Maybe as luxury items in some
hotels that want to offer them as an extravagant service,” Bezos was quoted as
saying last year.…


What’s required now is something bold – an entrepreneur’s
touch. To give hope to the newspaper industry, the new moguls – the John
Henrys, the Jeff Bezos and, who knows, the Michael Bloombergs – have to apply
innovation to the industry, as they did to the businesses that they created and
nurtured so well.




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