Mid-term review
                  
JOUR 350

The News and Media Business

The 1800s: In the Beginning
•	Newspapers cheap and numerous
•	Many founded by printers
•	who were also the editor, reporter, etc.
•	Began as political publications
•	Often as newsletter for a political party
•	eg. Vancouver Sun  founded as a Liberal Party paper
•	Survived on contributions, subscription fees
•	Start-up costs were minimal back then
•	eg. New York Herald founded in 1835 for $500

The mid-1800s: From Politics to Profit
•	Operating costs began to escalate
•	as technology improved
•	eg. steam presses, linotypes, telegraph
•	Larger staffs of journalists, printers needed
•	est. cost to start daily $5-10,000 in 1840
•	by 1850 more like $100,000
•	newsgathering costs soared during Civil War
•	with increased news service expenses
•	by 1870 cost to start daily close to $1 m
•	Newspapers began to sell more advertising

The late 1800s: The Chains Move In
•	Newspapers proved highly profitable
•	Many founding printers retired, sold papers
•	Many papers bought by newspaper chains
•	eg. Hearst, Pulitizer, E.W. Scripps chains in U.S.
•	Southam chain founded in Canada 1897
•	by Hamilton Spectator publisher William Southam
•	U.S. chains owned 7.5% of dailies by 1920
•	would rise to 70% by 1980
The 1920s: Competition from radio
•	Newspaper “Golden Age” begins slow decline
•	readership, circulation begin to drop
•	Many papers fold, merge, or are sold
•	Number of newspapers read per household begins to drop
•	from 1.32 in 1930 to .79 in 1980
•	Average edition size starts to increase
•	from typical 8-12 pages in 1900
•	to average 66 pages in 1980 

The 1930s: Joint Operating Agreements
•	Newspapers in U.S. begin to partner up
•	Sharing printing plants, splitting revenue
•	by late 1950s about 20 in U.S.
•	First Canadian JOA 1950 in Victoria
•	between Times and Colonist
•	Pacific Press formed in 1957
•	by Vancouver Sun and Province
•	U.S. JOAs ruled illegal in 1965 court case
•	Newspaper Preservation Act provided exemption

The post-war years: F.P. Publications
•	Calgary Albertan publisher Max Bell
•	bought Edmonton Bulletin in 1948
•	added Lethbridge Herald, Victoria Times and Colonist
•	F.P. Publications chain formed 1958
•	merger with Victor Sifton’s Winnipeg Free Press
•	Canada’s largest newspaper chain by 1965
•	added Ottawa Journal, Vancouver Sun, Toronto Globe and Mail, Montreal Star

The Davey Senate committee, 1969-70
•	Formed to study mass media in Canada
•	due to concern over concentration of ownership
•	Held hearings in Ottawa
•	Forced media companies to open books
•	found profit levels “astonishing” – double others
•	Issued three-volume report recommending:
•	a Press Ownership Review Board
•	subsidies for alternative media “Volkswagen Press”
•	Neither recommendation ever adopted

The 1970s: Competition from TV
•	Expanded evening newscasts on TV
•	made afternoon newspapers less popular
•	“Death in the Afternoon” syndrome hits
•	many afternoon newspapers fold, move to morning publication
•	F.P. Publications founders die
•	takeover battle for company ensues in 1979
•	Lord Thomson of Fleet out-bids Conrad Black
•	merges two Victoria papers into one Times-Colonist

August 27, 1980: Black Wednesday
•	Thomson folds Ottawa Journal
•	Southam folds Winnipeg Tribune
•	Thomson sells Vancouver Sun to Southam
•	Trudeau calls Royal Commission on Newspapers
•	headed by former Free Press editor Tom Kent
•	Held hearings across Canada
•	found two chains owned 58% of dailies
•	up from three chains and 45% in 1970

The Kent Commission Report
•	Issued mid-1981 with 8 volumes of research 
•	Called for limits on ownership
•	And a ban on cross-media ownership
•	Proposed a Canada Newspaper Act
•	Vigorously opposed by publishers
•	Never enacted as government changed 
•	OIC prohibiting cross-media ownership
•	Rescinded by Mulroney government 1985
•	Canada had highest concentration in world

Social, technological changes
•	Urban flight began in 1960s due to crime, riots
•	Families flee cities for suburbs in Baby Boom
•	Metro dailies decline in reads, ads
•	Satellite city, suburban papers spring up
•	Satellite technology allowed national papers
•	eg. New York Times, Globe and Mail in 1980s
•	new “umbrella” model of competition emerged
•	several levels: national, metro, local

The 1980s: Marketing the newspaper
•	Newspapers attempt to compete with TV
•	with more reader-friendly content
•	a/k/a “disco” journalism
•	Hire consultants to survey readers
•	To find out what they want
•	USA Today founded 1982 as national daily
•	revolutionized design with colour, graphics
•	and content with “News McNuggets”
•	circulation rose in U.S. from 60.7 million in 1975 
•	to 62.8 million in 1990 

Death of a Theory: Natural Monopoly
•	Explanation for disappearance of newspapers 
•	due to high start-up costs, economies of scale
•	and the “circulation spiral”
•	But colorful tabloids began to start up
•	in competition to monopoly broadsheets
•	eg. Toronto Sun chain, Vancouver Province
•	Began new era of market segmentation, product differentiation
•	appealing to different demographic groups

The 1990s: A Black decade
•	Conrad Black bought Daily Telegraph 1985
•	broke union, made lots of money
•	added Chicago Sun-Times, Jerusalem Post
•	Third largest chain in world by 1997
•	Second largest in U.S. by number of titles
•	bought 20% interest in Southam in 1992
•	added another 20% in 1996, took control 
•	founded National Post 1998
•	sold in 2000 to CanWest Global and Aspers

From demographics to psychographics
•	newspaper ad revenue declined early 1990s
•	department stores began disappearing
•	increased competition from cable TV news
•	Internet threatened ad base of autos, homes, jobs
•	marketing became increasingly sophisticated
•	adding focus groups to survey research
•	constructed audience quality profiles to compete
•	based on reading, spending habits

The managerial revolution
•	senior journalists had managed newspapers
•	trained managers began to replace them
•	using business school techniques
•	eg. cost-cutting, Management by Objectives (MBO)
•	given huge financial incentives, stock options
•	revenues typically about 4-1 advertising over circulation
•	advertisers became favored customers
•	over readers, who became a commodity
•	to be bought and sold

The lowest point: The L.A. Times
•	marketing movement most blatant late ’90s
•	Times-Mirror chain hired Mark Willes as CEO
•	had never worked in newspaper business
•	began assault on “church-state wall”
•	separating news from advertising
•	partnered sections editors with ad sales staff
•	created huge controversy
•	Staples Center scandal erupted 1999
•	caught sharing ad revenue with subject of stories
•	journalists revolted, asserted professionalism

Conrad’s 21st Century Comeuppance 
•	Hollinger went “public” with IPO in 1994
•	Black kept control with >70% of votes
•	but owned <20% of shares
•	Collected huge management fees
•	including “non compete” payments
•	spent company money on jets, condos, etc.
•	Other shareholders complained
•	demanded an investigation
•	report found “corporate kleptocracy”