SIC 2711
NEWSPAPERS: PUBLISHING, OR PUBLISHING AND PRINTING



This category includes establishments primarily engaged in publishing newspapers or in publishing and printing newspapers. These establishments carry on the various operations necessary for issuing newspapers, including the gathering of news and the preparation of editorials and advertisements but may or may not perform their own printing. Commercial printing is frequently carried on by establishments engaged in publishing and printing newspapers, but even though the commercial printing may be of major importance, such establishments are included in this industry. Establishments not engaged in publishing newspapers but that print newspapers for publishers are classified in SIC 2759: Commercial Printing, Not Elsewhere Classified. News syndicates are classified in SIC 7383: News Syndicates.

NAICS Code(s)

511110 (Newspaper Publishers)

Industry Snapshot

Since the 1960s, newspaper management has under-gone a transformation from essentially family-run companies to the concerns of multimedia corporations. According to Ellis Cose, author of The Press, 1963 brought the first sign that the newspaper industry was in for a change. That year, the Chandler family, owner of The Times Mirror Company, whose chief holding was the Los Angeles Times , listed the company on the New York Stock Exchange. Soon other newspapers went public, making their actions accountable to shareholders and not just the families that ran them. This trend led to the growth of newspaper chains and the proliferation of a corporate culture, which stressed profits and growth over conventions of journalism. By 1989 five companies—Washington Post Company; Times Mirror Company; The New York Times Company; Gannett Co., Inc.; and Knight-Ridder, Inc.—were responsible for one-fourth of the newspapers read each day in the United States. Almost 10 years later, the top 10 newspaper companies owned more than 270 newspapers, accounting for 45 percent of total daily circulation. In keeping with the transformations of the industry, corporations that controlled newspapers began to branch out into other related ventures such as book publishing and marketing, and as a result their newspapers became part of entire communications systems, rather than self-contained enterprises.

The newspaper industry has been feeling pressure since the late 1980s. Many papers with long histories have been forced to shut down, and many others have reported financial losses. To counteract this crisis, publishers reduced editorial and production staffs through layoffs and hiring freezes, raised newspaper prices and advertising rates, experimented with new layouts, and increased automated processes. The terrorist attacks against the United States on September 11, 2001 served to exacerbate an already worsening economic climate during the early 2000s. This situation had negative implications for newspaper advertising levels. The industry's advertising revenues fell from $48.7 billion in 2000 to an estimated $44.3 billion in 2001, a 9.9 percent decrease.

Circulation figures have declined steadily since 1987 at a rate averaging 1 percent a year. In 2001, total daily circulation was projected to reach 55.6 million, the lowest level since the mid-1950s. In the six months preceding September 30, 2002, Advertising Age reported that 48 of the leading 100 U.S. daily newspapers saw their circulation levels decline, while 46 achieved gains. Overall newspaper readership—the percentage of adults who read newspapers—also has been declining, falling from 77.6 percent of adults in 1970 to 61.5 percent in 2002, according to the Newspaper Association of America. However, 2002 levels were higher than 1998 (58.6 percent). This increase probably could be attributed to a heightened interest in news following the events of September 11 and rising tensions in the Middle East.

Organization and Structure

A variety of publications could be called newspapers. The most common format is the gatefold, which is divided into individual sections. Pagination in a gatefold restarts in every section. The other major format, the tabloid, is read like a book or a magazine. Tabloids usually have fewer articles than gatefolds and are paginated without interruption from beginning to end. Traditionally, the content of tabloids has been considered less serious and less comprehensive than that of gatefolds.

Frequency of publication is another variable among newspapers. The papers with the greatest circulation are dailies; most of these issue a denser, more expensive Sunday edition. There are far more weeklies in operation, though their circulation is smaller. The two most common types of weeklies are the community newspaper and the alternative newspaper. The community newspaper highlights local current events such as education, sports, and politics. The alternative newspaper provides coverage of news items and arts-related activities that are often overlooked by the mainstream press. Since advertising provides the bulk of revenue for weeklies, these newspapers are often free.

Advertising. Most newspapers rely on circulation and advertising to finance their operations. Measured in linage, advertising amounts to about 80 percent of an average newspaper's income. Placement of advertisements is a significant factor; the section and page of an ad, as well as its size, will determine its price. Department stores traditionally have been a major source of advertising dollars, filling pages with pictures of their merchandise. Classified advertising is also a reliable and profitable endeavor for newspapers, adding up to 37 percent of total advertising income. This type of advertising is sold by the word.

One recent and controversial development in newspapers is the "advertorial," or paid announcement on the opinion page or in another section where the advertiser expects to gain from its context. Other advertisements of this type consist of multi-page inserts or theme magazines distributed with papers. Paid announcements are labeled as such to avoid confusion; however, many editors feel the ads jeopardize the integrity of the newspaper.

Circulation. Newspapers are sold in vending machines and privately owned newsstands or by subscription, which allows customers to pay a reduced rate per issue and have the paper delivered to their homes or businesses. Newspapers profit from subscribers because they mean guaranteed, consistent sales. In determining a price for newspapers, publishers have to weigh the potential earnings from sales against what readers are willing to pay. If the price is too low, circulation might be healthy, but profits could decline. If the price is too high, circulation could drop.

Averaging 50 to 60 percent of total costs, personnel represented the largest expenditure for newspapers. Departments include management, editorial, advertising, circulation, and production. Within the editorial department, the staff is divided according to paper sections, which may include: local and national news, sports, entertainment and the arts, business, opinion, and others, depending on the paper's size and focus.

Newsprint was the second-highest expenditure, averaging one-quarter of total costs. The United States consumes more than one-third of the world's newsprint, most of that going for the nation's newspapers. A dip in newsprint costs can save a newspaper during hard times, and since a failed newspaper means loss of business for the newsprint manufacturer, most offer substantial discounts from list prices. However, publishers such as the New York Times Company and the Tribune Company also own paper mills and consequently suffer when newsprint sells at a low cost. Equipment, such as printing presses and cameras, represents the third largest expense for newspapers.

Background and Development

Newspapers served to inform the public of events and circumstances pertaining to society, government, and commerce. The providers of information were expected to be reliable and current, without neglecting their other function of entertaining the literate population. The Acta Diurna of the Roman Empire and the Chinese gazettes of the first century A.D. are the distant ancestors of today's newspapers. The first modern newspapers appeared in Europe in the sixteenth century.

Newspaper reporters had a responsibility to act as watchdogs against injustice, corruption, and impropriety; the right to expose these qualities in public figures is protected in the First Amendment to the Constitution of the United States. The first great moment in American journalism came in 1735 with a court case deciding the issue of freedom of the press. Editor John Peter Zenger was brought to trial on charges of seditious libel for printing articles that were critical of colonial governor Sir William Cosby. In his successful defense of Zenger, Alexander Hamilton invoked the Magna Carta and stressed that opposition to the establishment was a basic civil liberty, thus creating the foundation on which the American press was built.

An overriding objective for American newspapers was to reach as many readers as possible. One early manifestation of this aim can be seen in the New York Tribune, founded by Horace Greeley in 1841. Priced at one penny, the paper was written by Greeley and other advocates of social change in a style that was described as simple but not condescending. It boasted a tremendous readership throughout the country, which led to enthusiastic support from its advertisers. The populist instincts that Greeley embodied eventually evolved into "Yellow Journalism," a term which originally referred to the practices of many of the New York daily newspapers during the late 1800s. Joseph Pulitzer, editor of the New York World, and William Randolph Hearst, editor of the New York Journal, strove to increase circulation through a variety of aggressive tactics, such as reporting sensational stories, setting headlines in extremely large type, making extensive use of pictures, and issuing Sunday supplements with color comics.

Telegraph lines, which by the turn of the century reached points all over the United States and crossed the Atlantic Ocean, were essential to the dissemination of news, and they facilitated the rise of cooperative news gathering. The Associated Press, originally formed by the morning newspapers of New York City, allowed member newspapers to run each other's stories. England's Reuters news service and other similar European agencies established reciprocal agreements with the Associated Press, fostering the potential for newspapers to run stories from around the world. The United Press and the International News Service were established to compete with the Associated Press during the 1920s. In 1958, these two services merged to form United Press International.

In the early twentieth century, newspapers began to contend with the rise of new media that were capable of quickly bringing more information into American homes. The formation of the Radio Corporation of America (RCA) in 1919 represented the first of these challenges. In 1929, advertising revenues at newspapers were still far ahead of those of radio, but the newer medium was quickly growing. The depression, which left the newspaper industry with barely more than half of its advertising income, had little effect on radio advertising, which doubled in the years from 1929 to 1933. A second news forum arose in the 1930s—the newsreel, which was shown between features at movie theaters.

The 1950s brought another challenge for print journalism. Television captured the imagination and leisure time of many Americans. As it quickly became the medium of choice, television siphoned advertising dollars from newspapers. Network television news became more readily identified with major events, such as the assassination of President John F. Kennedy. The 24-hour Cable News Network (CNN) debuted in 1980, and its phenomenal growth contributed to the sense that newspapers were becoming an outmoded form of transmitting breaking stories. The late 1980s and 1990s saw an even greater expansion of cable television, and American viewing habits changed accordingly. By 1995, the average adult spent approximately 1,560 hours per year watching television—30 hours per week. During the same time period, newspapers across the country were battling circulation losses, and the number of daily newspapers dropped from 1,745 in 1980 to 1,489 in 1998.

The economic recession at the end of the 1980s brought heavy losses in advertising and circulation revenues. The effects were even felt by new publications. The St. Louis Sun, a tabloid created with money from junk bonds by Ralph Ingersoll II, debuted in September 1989 and closed the following August. Another new publication, The National, a nationwide sports daily, ran only 18 months before folding in June 1991. By 1991, papers with long histories, many of which had survived the depression, were beginning to shut down as well. These included The State-Times of Baton Rouge, Louisiana, and the Dallas Times Herald. The latter closing left 900 people unemployed and made that city the largest in the country with only one daily paper. In 1991, United Press International filed for bankruptcy for the second time in six years.

One solution to these dire conditions was the Joint Operating Agreement (JOA). Under the Newspaper Preservation Act of 1970, newspapers were largely exempt from antitrust suits. In a JOA, two or more newspapers are allowed to share the costs associated with operations while maintaining separate editorial departments. However, the papers must prove that one would not survive without the JOA. One of the most substantial and controversial agreements, between Knight-Ridder's Detroit Free Press and Gannett's Detroit News, was finalized in November 1989 after a lengthy court battle. While similar agreements have saved newspapers in other cities, both of these papers continued to lose money and circulation.

At the time, 1990 and 1991 were the two worst years ever for the newspaper industry. For the first time since the depression, there were back-to-back losses in annual advertising revenues as national, retail, and classified linage all shrunk. Following this difficult period, newspapers enjoyed increasing advertising revenues, which began to rise again in 1992, with a 3.9 percent gain, followed by 5.2 percent gain in 1993. Advertising revenues reached $39 billion in 1996, a 7.7 percent gain from 1995, and a $5 billion increase from 1994. The industry's advertising revenues rose from $41.3 billion in 1997 to $43.9 billion in 1998, a 6.3 percent increase.

During the 1990s, consolidation occurred within the industry, with numerous mergers and acquisitions taking place every year. In 1998, more than 160 daily newspapers changed hands, compared to 73 dailies in 1994. Mergers and acquisitions are fueled by considerations of economies of scale and by the desire for strategic clustering in specific geographic areas.

Current Conditions

The terrorist attacks against the United States that occurred on 11 September 2001, made an already weak domestic economy even worse. In 2001, a period of decreasing advertising revenues, unemployment, and reduced travel activity had a negative impact on the newspaper industry, which depends heavily on advertising revenues—especially employment-related classified ads. After increasing through the 1990s and 2000, classified advertising fell 8.63 percent in the first quarter of 2001. In the next three quarters, classified expenditures decreased 15.52 percent, 17.10 percent, and 18.49 percent, respectively. By the first quarter of 2002, declines amounted to a projected 13.63 percent. However, conditions were improving by the third quarter of 2002, when classified expenditures were down 2.93 percent. Total advertising revenues, which increased 5.18 percent from $46.3 billion in 1999 to $48.7 billion in 2000, fell 9.93 percent in 2001, settling at $44.3 billion. In addition to the economy's negative impact on advertising, a decline in tourism also hurt circulation levels at newspapers in popular vacation states like Florida.

One major concern of the newspaper industry has been readership. Through academic studies and marketing surveys, publishers attempted to identify who was reading the newspaper with regards to such factors as age, sex, and financial status; frequency and duration of an average read; the instances where one newspaper was shared by two or more readers; and the sections of the newspaper that were read or ignored. In most cases these inquiries yielded discouraging results. A study by journalism professor Gerald Stone determined that between 1967 and 1989, the number of people aged 18 to 29 who read a daily paper declined 35 percent. According to Stone, this drop was due to parents passing on to their children their own disinclination for newspaper reading, resulting in an ever-deepening alienation from the publications. The trend was linked to a pervasive apathy towards current events. A study by the Times Mirror Center for the People XXX and Press found that merely 42 percent of those under age 30 showed an interest in the fall of the Berlin Wall, an event given a great deal of attention by newspapers.

USA Today was the industry's most revolutionary gesture toward appealing to a mass readership. Pioneered by Gannett's Allen Neuharth in 1982, USA Today modified the approach of other newspapers aiming at the entire nation—the New York Times, The Wall Street Journal, and the Christian Science Monitor. The paper was printed in regional plants via satellite transmissions from its editorial centers. Aware that advertisers and readers tended to regard the average daily newspaper as visually bland and difficult to navigate, designers of USA Today incorporated such features as an easily read index on the front page, bold graphics featuring statistical information related to the day's events, and a large color weather map. The newspaper was even sold in vending machines designed to resemble television sets. Neuharth limited the number of sections in his paper to four: a news section emphasizing the positive side of current events; a "Money" section devoted to business coverage with a strong consumer orientation; an extensive sports section providing many pictures and ample statistical data; and a "Life" section encompassing health, education, and entertainment. In September 2002, the paper's U.S. circulation of 2.2 million put it ahead of The Wall Street Journal (1.8 million) as the leading national newspaper. Gannett claimed that USA Today was available in 60 countries in 2003.

Readership continued to be the primary problem facing the industry in the early 2000s. According to a 1996 American Opinion Research poll, only half of those in the industry said that it would be "healthy" in 10 years. As noted earlier, newspaper readership has declined from a high in the early 1970s, when approximately three of every four adults read a newspaper, to less than six of every 10 adults in 1998. Daily circulation, likewise, continues to decline. For the six-month period ending 30 September 2002, daily circulation at three of the nation's top 10 metropolitan newspapers declined. With the exception of the New York Post, which achieved a remarkable 10.5 percent increase, the remainder experienced no growth or growth of roughly 1 percent or less.

Despite these figures—and the fact that little or no real growth was expected in 2002—newspapers were concentrating heavily on both readership and circulation in the early 2000s. As Editor & Publisher explained in its 11 November 2002 issue: "Having finally convinced advertisers and analysts to accept readership as the medium's most important audience measurement, the nation's biggest newspapers are, ironically, as focused on circulation as they were back in the sales wars of the penny press." Challenged by limited marketing resources, many papers ramped up their subscriber retention efforts. For example, a growing number of papers were offering longer-term subscriptions at a discounted rate.

Industry Leaders

Gannett Co., Inc. A diversified news and information company headquartered in Arlington, Virginia, Gannett Co., Inc., ranked first in daily circulation in 2003 with 94 daily newspapers with a combined circulation of more than 7.7 million. Founded by Frank Gannett in 1906, the company began acquiring newspapers throughout New York State. It owned 22 dailies by 1947, the year Gannett died. Allen Neuharth joined the company in 1963, and he is credited with making it a major force in the industry. After going public in 1967, Gannett absorbed small newspapers all over the country, bringing to them exacting management requirements and transforming them into profitable enterprises. Additionally, Gannett augmented its holdings with radio and television stations and entered the field of billboard advertising. The birth of USA Today in 1982 was facilitated by the fact that Gannett's reporters, editors, and technology were established in every region of the nation. In 2001, Gannett had revenues of $6.3 billion, up 2.0 percent from 2000, and net income of $831 million, a 51.6 percent decrease. It also employed a total of 51,500 people. In 2003 the company owned some 22 television stations, reaching almost 18 percent of the United States.

Tribune Co. In 2000, the Tribune Co. of Chicago acquired The Times Mirror Company of Los Angeles, becoming the second largest U.S. newspaper publisher after Gannett. The Times Mirror Co. published five metropolitan and two suburban daily newspapers. Its holdings were concentrated on large city dailies, including the Los Angeles Times, The Baltimore Sun, and Long Island's Newsday. The Tribune Co. published the Chicago Tribune and has stakes in various television networks including the WB Television Network. The company also owns the Chicago Cubs professional baseball team. In 2002, the Tribune Co. had revenues of $5.4 billion, up 2.5 percent from 2001, and net income of $443 million. It employed a total of 25,600 people.

Knight-Ridder, Inc. Knight-Ridder, Inc., which is involved in news and information services and graphics and photo services in addition to newspaper publishing, is the third largest newspaper company in terms of circulation, with weekday circulation of 9.0 million in 2002. The company resulted from the 1974 merger of the Knight and Ridder newspaper chains. In addition to owning such respected newspapers as the Philadelphia Inquirer, Miami Herald, and Detroit Free Press, Knight-Ridder became a leader in the related field of information services, acquiring Dialog Information Services in 1988. In late 1996, Knight-Ridder announced a joint venture with Financial Times Information and Dow Jones & Company, Inc. for the co-development of a global electronic news resource for corporate, research, government, and academic customers. Knight-Ridder/Tribune Business News was slated to be distributed independently through the companies' respective electronic information services beginning in mid-1997. The company has been very forward-looking in its use of information technology. Knight-Ridder's revenues for 2002 were $2.8 billion, down 2.0 percent from 2001. The company employed 19,000 people.

The New York Times Company. The New York Times Company, owner of the New York Times, the Boston Globe, The International Herald Tribune, and 16 regional newspapers, is a diversified media company also involved in magazines, television and radio stations, and electronic information and publishing. The New York Times ranks third in circulation behind USA Today and the Wall Street Journal. The Times has been a longtime stronghold of journalistic standards, beginning when Adolph Ochs and his son-in-law Arthur Hays Sulzburger emphasized comprehensive coverage and news writing of the highest order. In 2002 the New York Times Company reported net income of $300.0 million, down 32.6 percent from 2001, on sales of $3.1 billion.

Workforce

The newspaper industry employed 413,900 people in 2001, earning an average hourly wage of $16.22. In light of the changes in newspaper management and production during the late 1980s and early 1990s, individuals working in the industry were obligated to learn new skills and take on new duties. Foremost among these were related to the computer revolution, as word processing programs and developments in page design proliferated in newsrooms. Some of the tasks that previously belonged to production departments, such as typesetting, either were made obsolete or were dramatically altered with technological developments. In addition, some departmental differences began to disappear, meaning that former specialized positions now required proficiency in many areas, as well a general knowledge of all newspaper operations.

Research and Technology

In the early 1990s, some newspapers began migrating to supplying electronic information. They made their databases available to subscribers, creating special editions and enhancing their classified ads. The five newspapers with the highest circulation— Wall Street Journal, USA Today, New York Times, Los Angeles Times, and the Washington Post —were among the first to have online versions. By the end of 1998, more than 900 U.S. newspapers had Web sites, and internationally more than 3,000 newspapers were available online. Competing with newspapers were various Web-based news and information services offered free or on a subscription basis.

Despite being touted as the most important development in the industry since the invention of the printing press, online publications pose some challenges. Creating an online newspaper is both expensive and labor intensive. Since reading an on-screen publication is different than reading a newspaper, design and graphics are even more important—content must be adjusted accordingly. If an online newspaper has no subscription fee, advertising revenue must absorb the costs. Advertisers supporting the online version may pull their dollars from the print.

In a 2002 survey by industry magazine Editor & Publisher, 45 percent of newspaper publishers indicated online revenue increases during 2001, and 62 percent forecasted increases in 2002. However, the publication pointed to the fact that such sites' profits are dependent on relationships with print editions. The survey also revealed a lack of consensus among newspaper publishers over whether or not the industry has devoted enough effort to online initiatives.

Further Reading

Cose, Ellis. The Press. New York: Morrow, 1989.

Fine, Jon. "ABC Figures: Major Newspapers Post Small Gains in Circulation." Advertising Age, 11 November 2002.

Fitzgerald, Mark. "Majors Show Minor Circ Boost in Latest FAS-FAX." Editor & Publisher, 11 November 2002.

"Knight Ridder." Editor & Publisher, 9 October 1999.

Mitchell, Greg. "Outlook 2002." Editor & Publisher, 7 January 2002.

"More Strong Postings." Editor & Publisher, 1 May 1999.

Moses, Lucia. "Help-Wanted Still Hurting." Editor & Publisher, 21 October 2002.

——. "Profits Strong Despite Ad Slowdown." Editor & Publisher, 6 February 1999.

Moses, Lucia; and Chris Nammour. "Circ Gains at Big Papers, but it's Flat Elsewhere." Editor & Publisher, 28 October 2002.

Newspaper Association of America. "Industry Information." Vienna, VA: Newspaper Association of America, 2003. Available from http://www.naa.org .

Seabury, Jane. "Circulation Down at Most Big Papers, Audit Bureau Says." Knight-Ridder/Tribune Business News, 4 May 1999.

Standard & Poor's Industry Surveys: Publishing. New York: Standard & Poor's Corporation, 14 October 1999.

U.S. Department of Labor, Bureau of Labor Statistics. "2001 National Industry-Specific Occupational Employment and Wage Estimates." 6 February 2003. Available from http://www.bls.gov .



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