MoyerWallace Communications

This week’s post will detail our second strategic option. Next week’s post will layout our third option and conclude with our recommendation. Following these posts, it is our hope that readers will have gained better insights into the issues facing the publishing industry along with a few strategies to combat the decline of circulation and advertising revenues. As with most problems in life, there usually is no magic silver bullet; however, by developing a framework to work off of, it makes problems more manageable and success more probable.

2) Restructure newspaper publishers to become a 501(c) (3) non-profit organization.

Unlike most businesses, serious, objective, and un-biased journalism has seldom been about the pure pursuit of profit. Society needs journalistic integrity to ensure that its citizens are fairly represented and their rights are being upheld; however, journalists and the people responsible for reporting and delivering the content should be rewarded for their efforts. The Associated Press, for example, is a non-profit entity. Its editorial content is used in over 1,700 newspapers. Most recently, the AP had $710 million in revenue while earning $23.5 million in net income. In general, most news-gathering institutions are hybrids of one form or another – they’re either for-profit, but underwritten by generous owners or charitable businesses or they are not-for-profit and entrepreneurial.

Through this option, ————– will be able to capitalize on its tax-exempt status to realize annual savings of $70M+. Shifting the operational mindset and capital structure of —————- will allow it to function on its own merits; therefore, bypassing the need for advertising revenue in order to support the operational, marketing, editorial, and production functions. This option will give ————- independence and it will allow ————– to re-connect to the community and once again allow it to be the community resource for local readers; essentially, ——————- will be the community watchdog upholding first amendment rights. One tactic would be to develop partnerships with local higher education institutions, such as Drexel University. In addition to developing these partnerships, ———————– should capitalize on its non-profit status to create Innovation Centers so that new ideas and perspectives on media and journalism can be introduced.

There are some risks or limitations with pursuing this option. The largest limitation is that no earnings may inure to any private shareholder or individual. Secondly, 501(c) (3) status prohibits attempts at influencing legislation; it prevents newspapers from making political endorsements. A paper may not participate in any campaign activity for or against a political candidate. This would effectively eliminate the majority of the Editorial section. Third, the current economic crisis has hit existing charitable endowments hard. Fourth, just as with any for-profit institution there is the potential for biased news reporting depending on where and who gathers the charitable endowments. Lastly, there is the potential of being unable to capture and retain higher salaried journalists.

Tags: custom publishing research and development, Drexel University, newspaper publishing, publishing

This entry was posted on Wednesday, March 3rd, 2010 at 22:27 and is filed under Case Analysis: Newspaper's Business Model. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.