The downward side of the curve

It's hard to find someone in the daily newspaper business who is predicting where the bottom is or when they will get there. Daily newspapers are buzzing around the real estate decline, the bailout of Fannie Mae and Freddie Mac and investment banks going belly up, but the steep decline in their own business and the accompanying human toll is being pretty much ignored even though daily papers are ideally positioned to report this story in detail. Reporting bad news isn't much fun when it's happening to you.

Selling a printed newspaper to adults under age 35 who have been reared on getting their news free from a computer screen is difficult. Some 30-plus years ago, the same age group led the parade from the AM radio dial to the FM side, and now AM radio is mostly inhabited by seniors. While some newspaper executives continue whistling in the dark, others are starting to acknowledge the lost generation of subscribers and those who will follow. To reach those younger readers, someone has to figure out how to make newspaper Web sites profitable with declining content from their printed product.

For daily newspapers, the trip down the slippery slope has already begun with redesigns, smaller papers and fewer reporters and editors through buyouts and forced resignations - all with the goal of lowering operating costs. Now dailies are cooperating with each other to cut the cost of circulation and carrying the other guy's news. In Editor & Publisher (E&P), a newspaper trade publication, Butch Ward, a former managing editor of the Philadelphia Inquirer, called the industry turmoil not an "appetite for change" but "an appetite for survival."

The downsizing of the News & Observer in Raleigh caused one attorney to file suit for breach of contract on behalf of subscribers though he later dropped the suit. Two industry leaders in Seattle have openly called for a government bailout of newspapers. If that happens, the U.S. could truly be called bailout nation.

There is an option under more active consideration: taking the word daily out of the phrase daily newspaper. This month, a small daily in Wisconsin shifted its publication to its Web site with printed copies two days a week. The Hopewell News used to be printed five times a week but became twice a week two years ago. E&P quotes one executive who acknowledged "for 20 years [newspapers] have had blueprints for killing days of the week."

"We are going to get to a place where we look at format and frequency," Tampa Tribune Executive Editor/VP Janet Coats told E&P. That Florida newspaper, owned by Media General, which also owns the Richmond Times-Dispatch, has been particularly hard hit.

Stock analysts recognize the vulnerability of newspapers. The big sell-off on Sept. 15 found Media General to be a big loser. On heavy volume, its stock closed at $8.54 a share, down about 20 percent for the day with a previous high of $31.04 in the past 12 months. The stock finished the week up at $13.26, but it's been a steady drop from March 2004 when Media General traded at $72.

Nationwide, weekly newspapers are reporting small declines in revenue for the first quarter of 2008 compared to much larger ones for dailies, including those in Virginia. In contrast, business is up for the Chesterfield Observer for the year, which is why we increased circulation 12 percent earlier this month. The number of mailed copies increased from 39,064 to 45,051. Adding the free pickup copies around the county should put the paper's circulation at about 54,000 - the third largest for weekly papers in the state.