Here is an excellent article in the Times today on the end of the Knight Ridder Group. The deep warning is that using only a financial perspective will not save old media from the slide. You cannot cut your way home.
The dismantling of Knight Ridder is a study of the hurdles facing publicly traded newspaper companies in a time of seismic change in the industry. The migration of readers and advertisers to the Internet, as well as rising costs and falling revenue, are threatening the financial well-being — even the very existence — of some of the industry’s most storied brand names.
A review of the dynamics behind the Knight Ridder sale and the aftermath of its breakup also offers a cautionary tale: that deep cuts in expenses to satisfy Wall Street will not necessarily save a newspaper company, and may not even bring financial gains to shareholders or buyers.
“Financial restructuring is not the answer to what ails the newspaper industry,” said Peter P. Appert, a newspaper industry analyst at Goldman Sachs, which advised Knight Ridder during the sale. “It’s not a panacea that’s going to create value from a shareholder point of view.”
The Economist is even more clear about the risk and the way forward.
But in the rich world newspapers are now an endangered species. The business of selling words to readers and selling readers to advertisers, which has sustained their role in society, is falling apart (see article).
Of all the “old” media, newspapers have the most to lose from the internet. Circulation has been falling in America, western Europe, Latin America, Australia and New Zealand for decades (elsewhere, sales are rising). But in the past few years the web has hastened the decline. In his book “The Vanishing Newspaper”, Philip Meyer calculates that the first quarter of 2043 will be the moment when newsprint dies in America as the last exhausted reader tosses aside the last crumpled edition. That sort of extrapolation would have produced a harrumph from a Beaverbrook or a Hearst, but even the most cynical news baron could not dismiss the way that ever more young people are getting their news online. Britons aged between 15 and 24 say they spend almost 30% less time reading national newspapers once they start using the web.
So what is the way? What is the perspective? What does Public Radio have to acknowlwdge in this context?
I think that the choice is about power in the engine room. The risk is always that the folks who are embedded in the traditional mindset will have the power to kill off the new. Clayton Christenson suggests that this fight between mindsets is at the core of an organization's dilemma when faced with a really new and disruptive alternative. In this context he is clear. Firms need to provide experimental groups within the company a freer rein.
“With
a few exceptions, the only instances in which mainstream firms have
successfully established a timely position in a disruptive technology
were those in which the firms’ managers set up an autonomous
organization charged with building a new and independent business
around the disruptive technology.”
This autonomous organization will then be able to choose the
customers it answers to, choose how much profit it needs to make, and
how to run its business.
Furthermore, the firm must quickly develop the new technology to
compete with smaller, more mobile firms while maintaining its core
business.
Finally, even if engineers successfully develop a working product, they must find an appropriate market to target, a difficult task given the unpredictable nature of markets. In short, there are many variables involved in solving the Innovator’s Dilemma with few lifelines along the way.
"Discovering markets for emerging technologies inherently involves failure, and most individual decision makers find it very difficult to risk backing a project that might fail because the market is not there." -Clayton Christensen, The Innovator's Dilemma.
