December 12, 2006 By Pulp & Paper Canada
Under a banner that read EXTRA: Newspapers aren’t dead, Time Magazine (December 11, 2006) reported that despite pre…
Under a banner that read EXTRA: Newspapers aren’t dead, Time Magazine (December 11, 2006) reported that despite predictions of imminent demise, dailies remain profitable, popular and powerful. The author of the article, Jeremy Caplan, goes on to say that “despite concerns about ad and circulation drop-offs, publishers, for now, maintain profit margins that most companies can only dream aboutnearly double that of the average FORTUNE 500 outfit.”
At 19.3%, the operating profit margin for newspapers over the past year remained high relative to that of other consumer industries, according to StarMine, a financial-analysis firm. To no one’s surprise, commercial banks did much better at 32.4% and pharmaceuticals at 24.2 but computer/peripherals did a much lower 9.1% and airlines and cars did not fair very well, at 2.8% and 0.4%, respectively.
“The strong balance sheets and cash flows of companies such as Gannett, Tribune and the Washington Post give them the financial flexibility to reach readers in new ways,” the article quotes Tim Gaumer, director of research for StarMine. “Whether through investments, partnerships or acquisitions, that flexibility improves their future prospects.”
Mark Cuban, an American billionaire entrepreneur and owner of the Dallas Mavericks (among other interests) says that “contrary to popular belief, newspapers aren’t dying. Newpapers are making tons of money.”
This statement is supported by Alexia Quadrani, media analyst for Bear Stearns (a worldwide investment banking, securities trading and brokerage firm), who says that newspapers “are still highly profitable.”
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