Fall 2012 issue of Horizons

Decreasing Revenues Paid circulation for newspapers began decreasing in 1986, and it has continued to decrease every year since. But the real plunge started in 2005. From 2005 to 2009, advertising revenues decreased 44%. Larger newspapers have moved to online versions, which have stabilized the large metropolitan market papers. The Wall Street Journal began including paid online subscribers in its circulation in 2003, and has seen relatively flat weekday circulation over the last nine years, while other large metropolitan papers such as the Washington Post have continued to see significant decreases. According to the Bureau of Economic Analysis, print ad revenue was down almost 30% in 2009 and another 10% in 2010. An interesting turn in 2012 has been the divestiture and investing activity in the newspaper industry. Investing In Newspapers Berkshire Hathaway has added to its already media intensive portfolio (the company’s 13th largest stock holding as of March 31, 2011 was Washington Post, holding value of $578.5 million for a 22.38 percent stake, and 11th largest holding is DirecTV at $1.08 billion), purchasing newspapers such as Media General and Omaha World-Herald at 5.0 and 5.9 EBITDA multiples, respectively. Because of his world-renowned successes, when Berkshire Hathaway CEO Warren Buffet buys shares of a company’s stock, it changes market and consumer confidence in the company’s continued success. The confidence in small-town newspapers, where other methods of obtaining local news aren’t as readily available, may indicate some promise for the newspaper industry.

1950s, circulation as a percentage of the population has decreased year after year.

In 1970, Congress recognized the financial duress the evolution of information was putting on newspapers and passed the Newspaper Preservation Act. This legislation gave struggling newspapers limited exemption from antitrust laws by making it possible for competing newspapers to combine advertising, production, circulation and management functions into a single newspaper corporation. Cross Ownership Issues While technology changed the traditional models of publishing, other factors impacted it as well. In 1975, Congress passed federal regulations making it illegal for a single company to own multiple media properties, such as a newspaper and a television or radio station, in the same metropolitan market. Publicly, the legislation was passed to prevent monopolies and ensure a diversity of opinion, but there were rumors of political motivations as well. The Washington Post uncovered the Watergate scandal, prompting President Richard Nixon’s 1974 resignation. Blaming the Post for his political disgrace, Nixon was recorded telling two of his top aides in 1972 that the paper would “have damnable problems out of this one …they have a television station … and they’re going to have to get it renewed.” Three years after that conversation, the Federal Communications Commission barred cross-ownership, forcing the Post to swap its local television station with one in Detroit. A direct connection has never been established between Nixon’s threats and the ban, but that event marked the beginning of allegations that politics play a part in media policy. Loosening of this cross-ownership ban was attempted again this year in 2012; however, the Supreme Court ruled not to hear the appeal of the FCC media ownership rules, much like it did in 2007.

Book Publishing While newspapers fought to maintain readership with the evolution of radio and television, book publishers faced the

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