Inheritance laws push some local owners to sell, as the Twigg-Smith family did locally by selling the Advertiser to Gannett Co. Inc. in 1993. There are willing corporate buyers because newspapers are still very profitable, despite lower circulation numbers. Operating profits for newspaper companies run about 20 percent, double the average of other U.S. industries. A newspaper, like any other business, needs profits to survive and fulfill its First Amendment mission. Unlike family operations, however, public companies have to report those profits quarterly to shareholders.
Newspapers are a cyclical business.
The price of newsprint, a major cost, fluctuates wildly. Advertising volume goes up and down dramatically with the economic cycle. But stockholders, especially institutions, don't like cycles. They want increases every quarter of every year. So a public company tries to level out cyclical peaks and valleys.