Toronto journalism nerds are flocking to a sold-out event this evening, provocatively titled "Yes, Genius, the Sky Is Falling. So Now What?" I have thus been provoked to pen... er, pixel this contrarian view.
The event features David Carr, media critic for the New York Times, who was a key figure in last year's documentary Page One: Inside the New York Times. Here's why they brought him in, according to the event's web site:
"It's clear that between evaporating business models and dispersing audiences that legacy media is on the run. Would it be better to blow it all up and start over or can the dinosaurs dance to a new soundtrack? David Carr, business columnist and culture reporter for the New York Times, examines the value of traditional media in a very cluttered, confusing age. In conversation with Michael Enright, host of CBC Radio One's The Sunday Edition."
There's only one small problem. The business model for legacy media isn't evaporating. It's actually quite robust, because it allows them to cut costs almost as fast as their advertising revenue falls. I said almost.
Remember how a few years ago everyone was predicting the death of newspapers? Since the Rocky Mountain News and Seattle Post-Intelligencer folded in early 2009, how many major newspapers have bitten the dust? None. The Honolulu Advertiser and Star-Bulletin, both of which were owned by Victoria newspaper baron David (the other) Black, merged in 2010 to form the Star-Advertiser. The New Orleans Times-Picayune is planning to cut back to thrice weekly publication this fall, as both Detroit dailies did several years ago. Times are tough in those cities, but it remains to be seen whether cancelling print editions on unprofitable days will be good for the business model long-term or not.
The most recent research I have done shows that none of the 14 major publicly-traded newspaper companies in Canada and the U.S. suffered an annual loss between 2006 and 2011. Most are making profits in the teens and some are even over 20 per cent.
'Myth of newspaper poverty'
What media critic Ben Bagdikian called the "Myth of Newspaper Poverty" has worked wonderfully for publishers for decades. They quietly raked in outrageous profits while publicly pleading for regulatory breaks from government to stave off impending doom. In the U.S., the payoff was the 1970 Newspaper Preservation Act, which allowed once-competing dailies to go into business together in Joint Operating Agreements, under which they could legally agree on advertising rates and split the profits. In Canada, no such legislation was needed because the anti-trust laws were so weak they could not prevent even the most blatant newspaper combinations, such as the 1957 merger between the Vancouver Sun and The Province.
And you must remember that little kerfuffle a few years ago when the TV networks in Canada were asking Ottawa to force the cable companies to pay them 50 cents per subscriber or else they would have to close a bunch of stations? "Save local TV" was the advertising campaign they subjected us to endlessly, until the cable companies ran their own called "Stop the TV tax" and the whole thing went to CRTC hearings. CTV complained it had lost $100 million that year, but a bit of investigative reporting found the network actually made a profit of 9.7 percent, or more than double the historical average of 4.7 per cent for a Fortune 500 company. The research I did for this article began in an attempt to document the financial distress the networks were in, but after I saw the numbers for myself I decided to put quote marks around a word in the title.
The "catastrophe" was not a financial one for Canadian television networks, but instead described the failure of converged Canadian journalism to tell the real story. The most lucrative news media corporation Canada is now also the largest, as Quebecor regularly pulls in profits north of 30 percent.
Profitable companies dumping journalists
The ones the sky is really falling on, of course, are the journalists who are losing their jobs in droves to prop up corporate profits. Postmedia, the latest incarnation of the once-proud Southam newspaper chain (for which I toiled 14 years), is the most recent to plead poverty. It announced more job cuts a few months ago after posting a $12.1 million quarterly net loss. The largest chain of Canadian dailies, which was eaten up and spit out by Conrad Black in the 1990s and basically destroyed by debt heavy Canwest Global Communications in the 2000s, is now owned by a group of equity investors composed mostly of the creditors who forced Canwest into bankruptcy recently. But take a closer look at the financial figures. The $12.1 million net loss was only arrived at after some whopping deductions from $36.1 million in operating earnings, including $16 million in interest expense and $14.7 million in restructuring costs. The newspapers themselves are very profitable indeed, generating a healthy return on revenue of 17.1 per cent.
So save your tears for Old Media, because they're doing just fine, thank you very much.