Analysis of the Status of the Newspaper Publishing Industry and the Potential Threats - Research Paper Example

The present report is an effort to analyze the current status of the newspaper publishing industry and identify the potential threats. Another major goal of the effort is to provide the newspaper company The Chronicle Gazette with solutions to resist the current challenges of the industry mainly posed by the emergence of internet and other electronic sources of news and information. These potential sources have posed major threat and raised a question on their survival. This report proposes solutions which could be adopted by the company to overcome the current tough situation. Current state of newspaper publishing industry Data on declining circulation and revenue The global newspaper industry has shown a mixed trend in recent past years. It is very much true that the industry have been influenced by the global changes in many factors such as socio-cultural, political, technological, and economical factors. According to Gavin O’Reilly, president of the World Association of Newspapers (WAN) the global circulation of the newspaper has shown an upwards trend with a value of 1.3 percent in 2008 and it has grown by 8.8 percent in the past five years. The president of WAN has also added that the newspaper publishing industry has been largely impacted by the financial crunches which they have observed from their declining trend of revenue. The industry has still remained as industry which had least effect of the financial crisis. Some of the locations such as North America have seen a decreasing trend but on the other side the print media has remained a major medium of communication. The newspaper circulation has decreased in North America with 3.7 percent while the South American newspaper circulation has increased by 1.8 percent. The president of WAN also said that the newspaper industry has adopted many changes with the changing environment (Menezes, 28/5/2009). Status of newspaper leaders Some of the major brands of the newspaper industry have shown declining trend which are reflected from their activities in response to the adverse business conditions. McClatchy Co. is one of the major publishers around the world with total thirty newspapers which are published daily including newspapers such as The Miami Herald. In the adverse business conditions the company declared to cut its workforce by fifteen percent of the total which is a significant loss for the company. The company has cut total 1600 jobs in the company and also shrunk the salaries of its executives of top level to reduce its financial burden. According to the Associate Press the decision taken up by the McClatchy has relations with its plan to save an amount of $110 million in the next financial year. Another report from Bloomberg described about the brand name The New York Times in the adverse business scenario. The reputed brand of newspaper industry The New York Times declared to sell off its space which it possesses at its Manhattan Head quarters for an amount of $225 million. The New York Times declared the intention behind the selling of their spaces is to repay the debt of the company (Bachmann, 9/3/2009). The Christian Science Monitor is another major brand which has seen huge loss at the rate of $18.9 million every year due to which it decided to bring its daily printing of newspaper to an end. The company started to publish their news weekly instead of daily prints. The Rocky Mountain News closed it news publishing business with its last released publication on 3rd of April and the company has its existence since 149 years in the publication industry. The company lost around $1.5 million per month. The San Francisco Chronicle has also its name in publishing industry from last 144 years which has also arrived to the verge of its closing. The company decided to cutback its employee’s salaries to save the business. The company faced a massive loss of $50 million in 2008 which broke its spine bring it to an end. The company named the Tribune Company got bankrupt by December 2008 and was under the debt of $13 billion. The New York Times has also been influenced by the amount of their huge debt of $400 million (Mahmud, 7/5/2009). Reasons behind the declining trend of newspaper publishing industry External Assessment Economic Forces The industry has seen drastic fall in their finances with minimizing capital amount needed for the business operations. The economic factor influences the newspaper publishing business because of the value which is associated with the economic changes taking place across the globe. The global newspaper publishing industry has realized a huge impact from the social and economic factors which has almost made the industry to think of their survival in the adverse business conditions. Many organizations have tried to renovate their newspaper through innovative concepts and make it more attractive and readable for all the customer groups. These all strategies have direct link with value creation for the customers which has concern with the economic factor in influencing the business operations (Picard, 2006). A major fact about the economic impact on the newspaper industry is related to the shares of these newspaper brands which are majorly hold by the institutional investors. These investors include the funds generated from the sources such as the pension and investment sources, and also the insurance and other financial products and services. Organizations which have public ownership are more criticized for their interest in short term profits which have relations with long term stability of the organization. The privately owed newspaper organizations focus more on the returns on their investments made by the owners. Reason which lies behind the desire for financial gains is the losing financial stability by the organizations which are also seeking huge capital investment into their business for their survival (Picard, No date). Social, cultural, demographic, and environmental forces The downfall of newspaper publishing industry has been majorly contributed by the factors which are of socio-cultural, demographic, and environmental nature across the globe. These specific factors have seen drastic and continuous change over the past years which have provided numerous scopes of information and news reducing the importance of newspaper publishing industry. The social factor is responsible for the lessening of the people interest in news and major occurrence around them. It has remained a consistent perception of common people towards the news and source of information on current affairs which is very less and nominal. From the very beginning most of the people have shown their interest in knowing only the superficial information about the events. New organizations tried their best to attract majority of readers by adding numerous areas of interests of people like sports, entertainment, lifestyle, and other interesting information. These variable number of segments attracted people from different age groups though it does not signified the end of the problems for newspaper publishing industry. People tend to switch to other mediums of news and information which emerged later on and proved to be faster and user friendly – internet and other technological development serving news and information to customers. The initiation of digital entertainment has also contributed immensely into the difficulties for the newspaper publishing companies. At present the digital entertainment and electronic media is serving as the major obstacle for the newspaper publishing companies across the world. The newspaper publishing industry has already taken major initiatives to overcome the situation and resist the changes of the present business environment. The technological development has offered news and information rapidly as compared to newspapers due to which they gained a competitive edge over the newspaper publishing industry (Picard, 2006). The social and cultural factors have though not forgotten the importance of newspaper as it has certain traditional values which keep it alive across the globe. Political, governmental and legal forces The industry of printing and new publishing has remained attractive and of good use for political and governmental bodies as they serve to be major source of communication with the outside world and the people around them. During the traditional days it remained under the control of parties and political bodies who governed the press and news providers. These political parties and government entities dominated the news publishing industry (Nebraska Newspaper Project, No date). The initiatives taken up to bring the news online have been brought into the scene by the government bodies such as British Broadcasting Corporation (BBC) and the Postal department of Britain, British Post Office. The press organizations during the initial days were not of private nature and belonged to the governmental authority. But with the privatization of the sectors the newspaper publishers have also commercialized and formed private bodies involved into news and information selling (Currie, No date). In Eastern Europe the nations have underwent a transitional phase due to which the media and press of the nations have been freed of the governmental barriers. More of the media and publishing companies have privatized afterwards which resulted into more private investments into the media and newspaper publishing industry. Moreover the views of the governments of nations realized the importance of access to information sources which they also consider to be critical issue for developmental activities. The government has also realized the importance of media and information sharing network infrastructure for the development and growth of the economy. These capabilities helped the governments to administrate their nations and face the global economic challenges (Hollifield, Vlad, & Becker, n.d.). Technological forces The technological forces are the results of the social and cultural activities which ignited the usage of technology for the development of news sources and its flow from one end to another. The technological forces played as the secondary contributor to the lowering of newspaper culture across the world. The literacy rate has direct relationship with the increased number of readers of newspaper and other news resources. Simultaneously the literacy has also initiated the technological advancement which improved the medium of news gathering and their dissemination within the society. The evolution of paper pulp has begun the revolution of newspaper which later on transformed to typed news materials and presently the news have variable number of sources apart from print media (Currie, No date). The news organizations have formed more formal structure with corporate approaches but their lack of long term vision proved to be responsible for their losses. The newspaper publishing industry has found the technology as their supportive agent as well as major reason for their losses. Due to improved technology of printing and presenting the newspaper publishing industry received support in designing and planning their product while these technologies also proved to bring the substitutes of the newspapers as a source of news information. Competitive forces – Porter’s model Rivalry among existing Firms The Newspaper industry has become more competitive in past years due to excessive number of brands in newspaper industry. In case of the given company The Chronicle Gazette the competition level among newspaper publishing companies are not as significant as almost entire industry is facing a turbulent time which has made them to think about their survival in the industry. Though in terms of capturing market share the company might face competition from other recognized newspaper publishing brands of New York. The New York Times is one of the biggest brands of newspaper in New York and the company is also facing adverse condition due to financial scarcity. Threat of new entrant The newspaper publishing industry of New York and maximum number of nations is under the shadow of threats which have even raised question on the survival of the industry in some of the places. In the present case the company does not has the threat of new entrants in newspaper publishing industry. But the company might have to face competition from other business types which has core business of selling information and news. Threat of substitute product This is the major concern for the company as it has the maximum threat from emergence of substitute products in form of internet and electronic sources of news and information sharing and their dissemination. The emergence of internet and web based technology has shown a gradual process of their attack on the newspaper publishing industry. The companies involved into the publishing of newspaper have adopted the technology to excel their business and resist the change which is taking place within the business environment. The New York Times as an initiative to utilize the internet technology launched its online media portal named nytimes.com. The nytimes.com has been appreciated by the readers and helped the company to raise their number of readers (Gilbert, 28/1/2002). Bargaining power of suppliers’ The newspaper publishing industry has faced significant financial crunches due to which they remain burdened with debts. This provided their suppliers to dominate them due to which the industry faces immense forces from the bargaining capabilities of their suppliers’. Mainly the news providing agencies have utilized the opportunity and gained the bargaining power for providing news for higher amounts. The internet served as catalyst into the phase which ignited the process (Lush, 27/11/2009). Bargaining power of Consumers’ The consumers of newspaper publishing companies have changed their mode of gaining news and information has changed drastically due to which the industry is facing strong threats from its customer group. The industry will have to fight with the internet and electronic media simultaneously to survive in the market. External factor Evaluation (EFE) matrix Socio-cultural, demographic, and environmental factors Maximum impact due to changing trend of news and information sharing. People initially showed less attention towards news and information but strategic approach of newspaper companies gained significant customer groups. Usage of internet and high education shifted the population to fast news receiving and transferring. Digital entertainment and communication also influenced the traditional newspaper publishing industry. Limited customer group of the newspaper companies failed to expand rather it reduced with time. Economic factors The economic transitions impacted newspaper industry negatively. The uncertain slowdown of world economy has also impacted the newspaper industry which affected it maximum. The privatization of newspaper agencies provided it with some support but the industry failed to resist the changes taking place in the economic condition of the market. Political, governmental, and legal forces The political and governmental bodies have supported the industry during initial days. Served as major medium of communication between the society and the system. Realizing its importance the government freed and allowed the privatization of news agencies which helped in economic growth of the nation. The news and information industry of media has been considered as major contributor to the economic development of the nation. The External environmental analysis through EFE Matrix Opportunities Weight (per cent) Rating Weighted Score Internet technology usage by newspaper companies 10 4 0.40 Increased literacy rate 8 3 0.24 Developing economies provides more business opportunities 6 3 0.18 Privatization of news industries 8 4 0.32 Support from the government 8 3 0.24 Innovative marketing approach 8 4 0.32 Threats Low interest of people for news reading 12 5 0.60 Abundance of news sources through digital and internet technology 10 4 0.40 Reducing customer group 10 2 0.20 Uncertain economic environment 10 2 0.20 Scarcity of the resources 10 2 0.20 TOTAL WEIGHTED SCORE 100 3.40 The rating has been given on the basis of four point scale where, 1- poor, 2- satisfactory, 3- good, and 4- very good. From the above analysis the obtained score is 3.40 which are slightly more than that of the average score of 3.27. This signifies that the company has adopted adequate measures to save itself. Another interpretation is that the company can expect a favorable business environment in future. Internal Assessment Organizational processes and structure The organizational processes of the company are modernized and use technological equipments and devices for designing and printing their newspapers. The overall stricture of the organization is simpler than being a complex structure. Due to this simple structure the organization has better structure and work flow. HR capabilities The human resources of the company are substantially productive and efficient towards their organization. The HR department motivates their employees to perform better and maximize their opportunities for growth. The HR system of the organization works in a coordinated way which results into systematic collection and storage of news and information and their effective transmission within the society. Financial position The financial position of the company has been found to be declining in the recent past years. Many reasons contributed to the declining financial position of the company. The economic slowdown has majorly contributed to weakening of the financial position of the company. Marketing/sales capabilities The company has applied substantial efforts in gaining maximum customers attraction through including various types of news obtained from various backgrounds. The prime intention of the company remains to capture maximum customer group. The company has adopted numerous innovative approaches to grab maximum market share through designing their newspapers and providing a wide range of news items for all types of customer groups. Operational capabilities The company has a strong operational capability as it is recognized brand in the New York with a huge number of subscriptions which was around 225,000 customers. The number decreased drastically due to collapsing of the newspaper publishing industry across the nation and many regions of world. Strengths and weaknesses The major strength of the company lies in its market recognition and huge customer base. It should be advised to the company to protect their well established customer base. Some other strengths of the company is the long historical presence in the filed of newspaper publishing industry and the awards and recognitions which the company has received in past years. This has proved to be strength of the company to develop its goodwill in the market. In terms of weakness the major weakness for the company is their weak financial strength and declining number of subscription form the market. Some other weakness for the company is inability to identify the changes which are taking place in the external environment and adopting according to that. Strategic approaches by publishing industry The newspaper publishing industry has adopted internet technological support to bring its news online for the customers who prefer to read online. The New York Times have launched their online news portal as nytimes.com which received around sixteen million users across the world. The Washington Posts have also approached towards internet technology to offer political news and also covers the local market news. Knight Rider introduced its powerful, interface named REALCities.com which offered services of guiding and connecting around forty markets for business and trade affair information (Gilbert, 28/1/2002). Strategic approaches by The Chronicle Gazette Short term steps To have strategic approach the company can take following steps for the short term period, The company can invite reliable and trusted investors to raise its funds and implement the internet usage to offer their news online with simultaneous offering of newspapers. Identify the types of news which are most liked by present readers and promote the news to those customers more effectively. Provide maximum space for the advertisement which would add to the revenue of the organization. Long term steps For the long term strategies the company could adopt following steps, It needs to identify the future of the newspaper readings which is more inclined towards the online availability of the news and information. The core concept should remain the fastest and reliable source of news and information so that they can offer news and increase their market reach. Adaptability to change should also be taken care of by the company so that they can survive in extreme adverse condition of the business. Reference Menezes, E. (Published on 3/9/2009). JOURNALISM IN THE AMERICAS: Global Newspaper Circulation Increases in Spite of Crisis, Industry Group Says. Retrieved on January 31, 2010 from: http://knightcenter.utexas.edu/blog/?q=en/node/4156 Bachmann, I. (Published on 9/3/2009). JOURNALISM IN THE AMERICAS: Newspaper Industry's Newest Cuts: 1,600 Jobs; Office Space. Retrieved on January 31, 2010 from: http://knightcenter.utexas.edu/blog/?q=en/node/3264 Picard, R. (2006). Joan Shorenstein Center on the Press, Politics and Public Policy Research Paper Series Journalism, Value Creation and the Future of News Organizations. Retrieved on January 31, 2010 from: http://www.hks.harvard.edu/presspol/publications/papers/research_papers/r27_picard.pdf Picard, R. (No date). Capital Crisis in the Profitable Newspaper Industry. Retrieved on January 31, 2010 from: http://www.nieman.harvard.edu/reportsitem.aspx?id=100278 Mahmud, S. (Published on 7/5/2009). Is the newspaper industry at death's door? Retrieved on January 31, 2010 from: http://www.asiamedia.ucla.edu/article.asp?parentid=108173 Currie, J. (No date). An Electronic Penny Press?: Forecasts for the Future of Online Publications. Retrieved on January 31, 2010 from: http://iml.jou.ufl.edu/projects/students/Currie/THEPAPER.HTM Nebraska Newspaper Project. (No date). Nebraska Newspaper Project: Publishing History of Newspapers in Nebraska. Retrieved on January 31, 2010 from: http://nebnewspapers.unl.edu/history.html Hollifield, C., Vlad, T., & Becker, L. (No date). Market, Organizational, and Strategic Factors Affecting Media Entrepreneurs in Emerging Economies. Retrieved on January 31, 2010 from: http://www.grady.uga.edu/coxcenter/activities/activities03-04/docs/Jonkoping%20Paper/Jonkoping%20paper.pdf Gilbert, C. (Published on 1/28/2002). Interview with prof. Clark Gilbert -Read All About It! Newspapers Lose Web War. Retrieved on January 31, 2010 from: http://hbswk.hbs.edu/archive/2738.html Lush, J. (Published on 27/11/2009). Internet a threat to press freedom accuses Kennedy. Retrieved on February 1, 2010 from: http://www.editorsweblog.org/newsrooms_and_journalism/2009/11/internet_a_threat_to_press_freedom_accus.php Read More