Wave of Media Consolidation in Response to Internet

WAVE OF MEDIA CONSOLIDATION IN RESPONSE TO INTERNET
[SOURCE: Associated Press]
The wave of consolidation sweeping over the newspaper business is an unprecedented response to the Internet and other changes in media, a top newspaper industry analyst said Thursday. Lauren Rich Fine, an analyst with Merrill Lynch who has been studying the industry for 18 years, said newspapers are looking to find ways to remain relevant and still earn healthy profits as advertisers follow readers online and to cable television. "I've never seen these kinds of changes before," she said. Fine said that before the Web and cable television, most media coexisted without eating into each other's ad dollars. But now advertisers are drawn to the Internet's ability to reach both wide audiences and also target specific groups of people. What's more, the Web is also threatening newspapers' bread and butter, classified ads. Newspapers on average have a profit margin of about 21.5 percent. That is expected to drop to about 16.5 percent by 2011, she said. "Newspapers won't be as profitable, but they can still be profitable. They will no longer be a growth market," Fine said. In order for the papers to cut costs, she said analysts expect more of the consolidation like the recent sale of Knight Ridder's 32 newspapers to McClatchy Co., which in turn put 12 papers up for sale.
http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_con...

See also --
* Online Ads Drive Gains at Newspapers
Overall newspaper advertising revenues rose 1.8% in the first quarter of the year, an industry group reported Friday, with most of the growth coming from online ads.
http://online.wsj.com/article/SB114927103917369985.html?mod=todays_us_pa...