First, there was the troubling news about the SF Chronicle. Then Scoble made a ridiculous, uninformed hyperbole claiming “newspapers are dead.” I’ve already written about the inability of “newspapers are dead” (NAD) crowd to intelligently analyze the newspaper industry. Some people are looking at ways to save newspapers. The newspaper industry is facing a transition, not its death.

Let’s look at some FACTS about the industry

Here are the facts (ref, ref2, ref3, ref4):

  • Newspapers are a $59 billion industry in North America
  • In the US, advertising growth is flat, with online growth (up 35% Y/Y) covering the loss (down 2%) in revenue from print
  • Baby boomers have spending power of $2 trillion and 52% read a newspaper on a daily basis
  • In 2005, US dailies had a 53 million Weekday circulation and a 55 million Sunday circulation, representing a change from 1960 of -9.4% and +15.9%, respectively
  • Newspapers control 19% of the total advertising market in the US
  • Larger dailies sell for 10 to 14X EBITDA and we have seen most transactions occur at the high end of this range

Newspapers are NOT dead and will adapt

Sure, print subscription is in slow decline, but niche properties and constantly changing demographics will always provide support. Local newspapers will always be an authority on the news for their given geography. Newspaper reporting contributes to the vast majority of news. Online is another medium and distribution method. It will not kill off newspapers. Newspapers survived Radio, Television and they will survive the Internet. They will adapt with the internet and demonstrate the value of their demographics and advertising relationships.

Newspapers have an incredible amount of value

I’m very glad no one in the NAD crowd is an executive or has enough money to buy newspapers. They would waste our time as advisors. We know for a fact that newspapers are valuable because we’ve sold newspapers to every major company in the industry. When private equity folks call us and tell us they are looking for newspapers at 3 to 5X EBITDA range, we have to laugh and have to tell them the truth.

People who analyze the industry with tunnel-vision and broad sweeping generalizations scream uninformed and demonstrate an inability to correctly understand an industry that HAS value.