The Case for Turning Around Print Media Companies

The media and publishing industry — and print publishing in particular — doesn’t have to show up to its own funeral.

There’s still opportunity to enable profitable, desirable businesses. We’re not suggesting that a recent uptick in advertising sales is a sign that publishers can go back to the old days of 25 percent net profit margins. Media companies had been so profitable for so long that eventually both owners and banks that were the beneficiaries of the cash flow from over-leveraged franchises left them needing reinvestment capital.

Let’s forget for a moment that the change brought by the digital evolution has chased off some print dollars, perhaps for good. The ugly truth that no one seems to want to face is that 1) many media companies need better and more efficient management techniques and 2) many of these same organizations are starved for capital investment and innovation.

It is the perfect time to bring change into such companies to allow them to create efficiencies that fund their own sorely needed capital investment. Many industries would kill for a 15 percent net return, and media companies, print included, can easily sustain that into the foreseeable future.

THE PROBLEM OF ACCIDENTAL OWNERSHIP

Few industries can withstand economic downturns. It is our view that while revenues for cable, network television and radio are off, they will return to traditional levels once the economy recovers. The fastest return will be felt in online media.

Print publishing is another matter. Newspaper Association of America statistics show that newspaper ad revenues have fallen for 13 quarters in a row as of 1Q 2010, or off 46 percent from four years ago. Moody’s recently came out with a prediction that the 22 percent decline in 2009 will be followed by a 10 to 15 percent drop this year, with a possible slight increase in 2011. While local newspaper ad revenues are growing, national print advertising that departed for digital media and Internet-based direct marketing will never return.

See full article at:  MediaShift . The Case for Turning Around Print Media Companies | PBS.

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