A recession strategy for newspapers

On Dec 12, The Tribune Company, which owns iconic newspapers such as the Los Angeles Times, Chicago Tribune, Baltimore Sun, Sun Sentinel, Orlando Sentinel, Hartford Courant, Morning Call and Daily Press, announced that it was seeking bankruptcy protection (click here).

Circulation numbers for US newspapers have declined significantly (Sep'08) compared to last year.


Leading newspaper companies in the US (New York Times, Gannett, and Tribune) have witnessed significant declines in advertising revenue and slow growth/ stagnancy in circulation revenues in Q3 (ending November'08).
Industries that used to drive newspaper advertising (Real estate, Financial Services, Retail, Airlines, Autos) are not doing well. This has led to tremendous pressure on advertising revenues.

I can't help but think: How can newspapers compete (with other media, online players,etc) during this recession?

Here are my suggestions based on my preliminary analysis:

• Put a value on content. For several years, advertising has subsidized the price of a newspaper. Newspapers have even being giving content out free online and over the mobile phone (in the hope that advertising from these exciting new platforms will subsidize the cost of content). Newspapers need to reconsider that. They could consider publishing article extracts free of charge online and charging for entire articles. If the newspaper is against charging for online content, it should at least make readers register with full information (and make themselves available for better online targeting) to access full content.
  

• Optimize newspaper price. As the chart above shows, circulation revenue is reasonably sticky and inelastic. The New York Times has been able to increase circulation revenues even though it has increased its price. As shown below, most newspapers get less than 20% of their total revenues from circulation (NYT and WSJ are exceptions). Newspapers should consider increasing newspaper prices to maximize total revenue.
  
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• Save costs on international coverage: Newspapers (especially local/ community papers) should consider outsourcing international coverage through tie-ups with international papers. There is an interesting news-gathering start-up called GlobalPost that has 65 international correspondents who live in different cities globally and cover international news (click here).
  

• Consolidate national news coverage: Newspaper companies with multiple local/ regional newspapers (e.g., Gannett, McClatchy, New York Times, Tribune) should consider consolidating national news coverage and articles. The local newspaper could have access to all the national news articles written for the newspaper group and could focus on gathering and reporting local news.

• Divest unrelated unprofitable assets: I know this is a touchy topic.... But the Boston Red Sox, About.com, and some TV stations would qualify under this category.
  

I would love to hear your thoughts ...