Technology And The Death Of Print Media
It was a great, historic run, but after about 560 years, it's just about over. Mercifully.
The print industry will soon be more dead than Rasputin. It's inevitable, and your very reading of this article reinforces the point. While it's not exactly news that electronic devices are rapidly supplanting physical books and newspapers, what about the ancillary results? Which affected sectors of the economy are adapting and which are being left up a tree (if you'll pardon the expression)?
TUTORIAL: Mergers and Acquisitions
The Evolution of News
For a while, at least until Albrecht Pfister came around, Gutenberg had a monopoly on the mass dissemination of information. Within the recent memory of most of us, that industry remained in the hands of only a few players. Whoever had the wherewithal to own the means of production – the presses and the newsprint – largely controlled what we read. (Also, check out A History Of U.S. Monopolies.)
For centuries, journalists provided humanity's most valuable service. If you're skeptical, all you have to do is ask one. Today, society seems to have come to the realization that anyone with an inquisitive mind, an internet connection and perhaps a camera, can do a journalist's job as well as any journalist can, only without that pesky overhead. Denied their position of authority, newspapers have had to scramble.
As for the print media companies that own the newspapers, they're either diversifying or dying. This is the industry that gave us something called the afternoon newspaper, developed because nothing keeps a sports fan up-to-date quite like reading baseball box scores that are 24 hours old.
Denver's late Rocky Mountain News is just one of a spate of recent examples. The paper died in 2009, six weeks shy of its sesquicentennial. Daily circulation had dwindled to barely a quarter million in a metropolitan area with a population 10 times that size. A month later, the newly unemployed staffers faced the inevitable too late and attempted to create an online-only paper. They solicited pledges, not unlike a public television station, and drew a grand total of 3,000 subscribers. Three months after that, that venture's final chapter was written, and not on newsprint.
Given the choice between carrying a static piece of paper that can be cumbersome to navigate, one that becomes a relic the second it's published, and a dynamic device that conveys information instantly, is it even a question as to which one will dominate the market?
The suits in charge of Scripps saw the writing on the wall and had already split the company into two publicly traded companies in 2008. EW Scripps primary business is television stations (with a handful of legacy newspapers). The other is Scripps Network Interactive parent company of broadcast and online entities such as the Food Network, Travel Channel and Great American Country, among others. One barely registers on the New York Stock Exchange. The other is approximately 15 times its size in terms of market cap, is extremely profitable and turns a healthy dividend. Care to guess which is which? (For more information, read Market Capitalization Defined.)
If you think times are bad for newspapers, be grateful you aren't one of their suppliers. In 2007, Abitibi and Bowater, formerly two undisputed giants of newsprint, merged into AbitibiBowater Inc., also know as Resolute Forest Products. When the companies joined forces, they had a combined market value of $2.4 billion. Since then, Resolute has lost around 40% of its market capitalization and shows no signs of rebounding.
Obsolescence = Opportunity
For a major player that began its life looking forward and has yet to stop, examine Amazon. Its Kindle may be less publicized than Apple's iPad, but it's no less revolutionary a device. Predicated on the idea that the convenience of being able to carry your entire library under your arm outweighs the smell of pulp (to say nothing of the discomfort of the occasional paper cut), the Kindle has redefined how the world reads. Last year, Amazon sold more electronic books than physical ones for the first time. It's safe to say that trend won't be reverting anytime soon.
The Bottom Line
The print industry is obsolete to the point where even calling it the "print" industry will soon seem quaint and obsolete itself. It's important to remember that the "print" aspect of it, the application of ink to paper, is secondary at best. Printing is just a vehicle for the conveyance of information, which for several centuries was the most efficient way of doing so, and now it isn't, any more than ponies are the most efficient way of getting mail from Missouri to San Francisco. (For related reading, see Measuring Company Efficiency.)