Moody’s: Newspapers should get out of printing and delivering

5 06 2009

Editor & Publisher reports that on Thursday, Moody’s Investors Service said newspapers’ credit ratings will continue to fall as long as they spend “far too much on producing and delivering a printed paper than on creating its content and selling the product.”

Moody’s calls it a “structural disconnect” with just 14% of cash operating costs, on average, devoted to content creation, while about 70% of costs are devoted to printing, distribution and corporate functions. The remaining 16% of costs are related to advertising sales — another example of devoting too few resources to the principal revenue driver.

Low credit ratings impact even the digital arms of newspapers, Moody’s noted.

“If newspapers can’t monetize the content in new digital channels at the same level as with print, or cut structural costs enough to keep up with the changing competitive environment, the prospect of additional recapitalizations or shutdowns will grow, adding further pressure to ratings,” he added.

So, newspapers need to get out of printing and delivery, meaning digital is all that’s left. And they need to find a way to pay for digital. This explains the industry’s sudden rush to paid content, including secret meetings.  Anti-trust alert!




Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: