Experts are sounding the alarm that a possible recession could threaten the embattled newspaper industry, whose two highest cost centers — labor and paper distribution — soared in the wake of the pandemic.A recession would create "almost a perfect storm for local news," says Tim Franklin, senior associate dean at Northwestern University's Medill School of Journalism.
"In recessions, advertising revenue always comes under pressure, and often in recessions, you see that affected first," Franklin adds. "But there definitely is a concern about whether consumers will cut back their [subscription] spending."The economic outlook for newspapers is giving pause to private equity investors typically eager to eat big chains.
Alden Global Capital has abandoned its bid for Lee Enterprises, at least for now, in part due to rising interest rates and a tougher market to finance deals, sources told Axios.part of its stake in Lee in April, shortly after a Delaware judge upheld Lee's rejection of Alden's two board director nominees in February.Alden's $24 bid, which was once challenged by Lee's management as too low, now looks attractive compared to Lee's current share price of $18.
"But at the same time, Alden, by its nature, is very focused on short-term profits and short-term cash flow," he says. "And so, between rising inflation and potentially a downturn in the market, it could scare them off from an acquisition right now."While newspapers continue to see digital subscription increases, pandemic-driven losses and leftover debt from recent mergers continue to drive cost-cutting measures.
USA Today owner Gannett last month introduced an array of cost-cutting measures, just two months after it laid off 400 people. Its CEO
No I firmly believe it’s the local news media that creating the financial Storm we’re going through right Now!
As the chart illustrates, the arrival of the internet killed off more newspapers than any recession.
It’s not the crash we want, it’s the crash we need.
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