Newspapers dead? Not exactly

Published 10/23/06

I’ve been meaning to say this for quite a while.

Do you know what the two most profitable industries in the United States are, with “profit” defined as the profit margin — that is, how much more a company makes than it spends?

1. Pharmaceuticals.
2. Newspapers.

Yep, you got that right. With an average profit margin of 20 percent, newspapers as an industry — which includes the dead trees themselves, plus Web sites and other related products put out by the companies — outperform every industry except pharmaceuticals.

Of course, that doesn’t mean that print isn’t on the way out, or that investors aren’t uncertain (this is a measure of profit, not stock price). But it does mean that the people who crow about the imminent demise of newspaper publishers are ranting from someplace other than Factsville.

Just thought I’d mention that.

The Fray

4 responses (add yours)

Wombat says:

Do you have a link to back up your claim that newspapers have the second highest profit margin out of all industries?

I’m not saying that the claim isn’t true, but it doesn’t sound right. If it is right, why have newspapers (being the ones who bring us news, after all) not reporting this fact. Everyone and their grandma knows that pharmaceuticals make big dough. Same for oil companies. If this claim is right, could the newspapers be keeping their profit margins under wraps so that we keep talking about Big Oil and not Big Media.

But I doubt that they are doing as well as you say. Link?

October 29th, 2006 at 12:31 PM

Andrew says:

There are a few. From the Providence Journal:

Over the last 25 years, the average profit margin for corporate America has been 8.3 percent. But last year the 13 largest newspaper chains turned an average profit margin of 20 percent. The most profitable, such as McClatchy and Gannett, turned a profit margin of 30 percent; Knight-Ridder, 19 percent.

By contrast, last year ExxonMobil — whose record profits have drawn angry calls for a windfall-profits tax on the oil industry — turned only a 10-percent profit margin.

(Republished at Common Dreams: http://www.commondreams.org/views06/0322-28.htm.

And there’s this from the Sacramento Bee:

He said newspaper profit margins are averaging about 18 percent this year, down from around 20 percent last year but still nearly twice that of the average Fortune 500 company.

(At http://www.shns.com/shns/g_index2.cfm?action=detail&pk=NEWSPAPER-CHAIN-09-28-06)

I’m sorry I don’t have a convenient chart to point you to, but I’ll look for that bookmark.

October 29th, 2006 at 12:48 PM

Andrew says:

Oh, and this from Market Watch (http://tinyurl.com/wcjzf) that says something different but still makes the same point:

SANTA MONICA, Calif. (MarketWatch) — Newspapers, despite all the commentary and seeming evidence to the contrary, are good buys. They are the biggest purveyors and producers of content, and their profit margins are big. Yes, you read right; it’s this last piece of information that is often lost in their business-model critiques.
Newspapers have profit margins that average between 20% and 30%. A report by the Newspaper Association of America points out that those numbers are “a bit less than Microsoft and Dell but higher even than pharmaceuticals.”

(Incidentally, all these references are from 2006.)

October 29th, 2006 at 12:53 PM

Time says it too: Newspapers are far from dead says:

[...] Not too long ago, I opined that despite (or because of) the Internet, newspapers are far from dead. In fact, I wrote, they’re one of the most profitable industries in the world. [...]

December 11th, 2006 at 4:34 PM