But a solid profit is not the same thing as a 20 percent profit. And after a long round of stringent belt-tightening, many of the nation's newspapers are engaged in yet another round, this time justified by higher newsprint prices that surged after being artificially low during the advertising drought. The bitter medicine of newsroom cost cutting, hold-downs and hiring freezes is nothing new to newspapers. But this time the situation is different, even compared to 1987. This time, the patient might die.
Newspapers are a cyclical business, and newsroom cost cutting usually occurs when business is bad.
Newspapers have been able to get away with squeezing the news product because there was no real competition in that particular area. In recent years, direct mailers have been the most ferocious rival, and they have been joined in their assault on newspaper advertising by the U.S. Postal Service. The result has been a price war on preprinted advertising circulars that has hit newspaper advertising revenues hard. Locally owned businesses are increasingly rare, and that also penalizes newspapers. Some big retailers tend to look strictly at price and have no personal stake in supporting the local paper.