Newsroom spending raises U.S. newspaper profits

NEWSROOM SPENDING RAISES US NEWSPAPER PROFITS -- STUDY
[SOURCE: Reuters, AUTHOR: Robert MacMillan]
U.S. newspapers that spend more money on their newsrooms will make more money, according to a study released on Wednesday, which questioned the wisdom of the media industry's trend of cutting jobs to save costs. The authors of the University of Missouri-Columbia study, which was based on 10 years of financial data, said news quality affects profit more than spending on circulation, advertising and other parts of the business. "If you invest in the newsroom, do you make more money? The answer is yes," Esther Thorson, an advertising professor and associate dean for graduate studies at the University of Missouri's School of Journalism, said in a statement. "If you lower the amount of money spent in the newsroom, then pretty soon the news product becomes so bad that you begin to lose money," she said. The researchers developed a mathematical model that showed how newspapers could rearrange their spending on distribution and circulation, advertising and newsrooms to achieve a higher profit, Thorson said. U.S. publishers have been eliminating jobs at many newspapers as part of larger efforts to trim expenses amid falling profit margins and, in the case of publicly traded chains, declining stock prices.
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