Newspapers search for business model

David Westphal


KAI RYSSDAL: Make of this what you will but Variety reports today that Rupert Murdoch's not satisfied with just the Wall Street Journal. Seems the chairman of News Corp has his eye on the Los Angeles Times or perhaps the New York paper of the same name.

I don't know if anybody's clued him in, but newspapers and the companies that own them haven't been doing so well lately. A slide that's only been exacerbated by the recession. As more readers and now advertising drops away from the daily metro paper, people are searching aggressively for new business models.

I asked former McClatchy newspaper editor David Westphal whether there isn't advertising in online news, too.

DAVID WESTPHAL: There is advertising. It's just that it's one dollar for every ten that has been on the print side of things. And so, when you talk about moving online, in the present day, anyway, you're talking about a tremendous scaling back of operations. And that is underway now, but it's only begun for a lot of people. And for many newspaper companies, they're so over-leveraged, so in debt, that it doesn't work.

RYSSDAL: Well, that's a great point. And we should point out the Tribune Company, which owns the Los Angeles Times here in town, is in bankruptcy, in large part because of its debt. How much of a problem is it that the corporations that run some of these newspaper enterprises are so overburdened with debt?

WESTPHAL: Right now, it's the thing that's killing major metro newspapers. There are 1,400 daily newspapers in the United States. I would guess the large majority of them are actually doing all right. They're being hurt by the recession, they're being hurt by the Internet, but they're still making pretty decent profits. But the major metros, and especially the ones that borrowed billions of dollars to expand, are the ones that are in real trouble now.

RYSSDAL: Let me quote Paul Steiger to you. He used to be the executive editor at The Wall Street Journal. He now runs Pro Publica, the nonprofit news gathering operation online. He said, you know, there's nothing wrong with journalism that can't be fixed with a new business model. Oversimplification, right? But what are you going to do?

WESTPHAL: That's clearly the case. I think it's a very frustrating situation now for someone like me who's been in journalism for most of four decades, to be in a situation where you can't see the next business model. And I think that is the limbo that we're in. A lot of people make the good point that the public's demand for news and information has really gone up -- not down or stayed the same; it's gone up. The problem is that there is not, as you say, a business model around the next bend that we can look at and say with confidence, "Oh, I can see where the money's going to come from."

RYSSDAL: As you talk to people in the newspaper business, what other models are they playing around with out there?

WESTPHAL: Well, there's an interesting one. I've been doing some reporting on this lately. And that is the start-ups that are online only, and that are very small -- in some cases one-person operations, in some cases two or three -- that are, however, more just focused on city government, city politics, development in kind of the core city. They don't try to do everything. They try to do kind of the fundamental civic pieces that are important to a metropolitan area's operation. And we're seeing those develop rather quickly, actually.

RYSSDAL: Sure. And then what do newspapers do, though, given the rise of those smaller online enterprises.

WESTPHAL: I think they're going to come back to meet these small operations. In fact, there are some experiments underway right now, supported by the Knight Foundation, where a metro daily is going to cooperate with one of these new start-ups.

RYSSDAL: What about different revenue models? There's been talk recently about endowment-supported newspapers. There's talk of micro-financing, in some degree. Do you buy any of those?

WESTPHAL: Well, I'm at a point where I'd like to see any idea float around because I think it's impossible to know . . . I do think philanthropy might well be involved. And if we think about a metropolitan area that has multiple news sources, not just one big one, a philanthropist might very well endow an investigative reporting operation, or endow a science reporting operation. But, again, I think it's smart at this point to put everything on the table.

RYSSDAL: David Westphal ran the McClatchey bureau in Washington, D.C., for many years. He's currently the executive in residence at the Annenberg School of Journalism at the University of Southern California, just down the road. David, thanks for coming in.

WESTPHAL: My pleasure. Thanks.


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