Newspapers and News Organizations
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Industry Overview
The US newspaper publishing industry includes about 2,000 companies with combined annual revenue of $50 billion. Large companies include Gannett, McClatchy, Advance Publications, Tribune Company, The Washington Post, and The New York Times. The industry is highly concentrated: the top 50 companies control almost 80 percent of the market. Many of the larger companies also own and operate TV stations.
A few newspapers, including the The Wall Street Journal, USA Today, The Los Angeles Times, The Washington Post, and The New York Times, have daily circulation greater than 1 million, but most have circulation under 50,000. The combined daily circulation of US newspapers is just under 55 million.
Competitive Landscape
The health of the economy drives both advertising and readership. The profitability of individual companies depends on marketing expertise, as most costs are fixed. Large companies benefit from economies of scale in sharing resources and by providing a range of outlets for advertisers. Small publishers can compete successfully by serving smaller markets. The industry is fairly labor-intensive: average annual revenue per employee is about $120,000.
Products, Operations & Technology
Products include daily, weekly, monthly, and Sunday newspapers; Internet news services; and distribution services. Large circulation newspapers are usually produced daily; community newspapers are usually produced weekly. Almost 70 percent of industry revenue comes from sales of advertising space ("advertising revenue"), and only about 20 percent from subscription and single-copy sales ("circulation revenue"). Some papers are controlled-circulation papers – they're free to a targeted audience and receive revenue only from advertising.
Local news is usually gathered through a network of reporters and correspondents, and through regular public sources such as police, fire, court, and legislative proceedings. Regional, national, and international news are acquired through correspondents (if the newspaper is large) and through subscriptions to news services such as Associated Press (AP); Reuters; United Press International (UPI); and Dow Jones. Editors review stories from reporters, contributors, and news services and decide which to put in the newspaper.
Advertising is usually sold through a dedicated sales staff. Total US newspaper advertising is about 45 percent local retail, 35 percent classified ads, and 15 percent national. Classified ads are often separated into cars, apartments, real estate, recruitment, and personal. "Run-of-paper" advertising is printed in the body of the newspaper and produces most ad revenue. "Preprint" advertising is supplied by advertisers and inserted into the newspaper. Run-of-paper advertising is measured as "advertising inches" or "advertising linage" - six-column inches.
Production has two phases: composition and printing. Papers are generally composed on sophisticated computer systems, which allows the final composition to be electronically transmitted (sometimes via satellite) to a number of printing plants. Printing is done in large plants (close to a million square feet) on expensive offset presses. The size and type of press determines the number of pages printed at one time and if color can be used. While large newspapers have their own printing plants, many smaller papers have their printing done by independent contractors. The chief raw material is newsprint (for magazines it's called "body paper"), which is bought from newsprint companies under long-term contracts but at market prices.
The physical distribution of newspapers has two components: transportation to agents and distribution by agents. Most papers use independent transportation and distribution companies under contracts of varying duration.
The industry uses computer technology throughout its business, in content creation, page design, pre-print preparation, advertising content, printing, and distribution. Many newspapers publish to the Web, but their business models vary. Some require paid access; some allow access only to hardcopy subscribers; others offer the current issue free, but charge for access to archives.