Well, Here’s A Novel Newspaper Study That Flies In The Face Of All Those Newsroom Firings -- The Better Your News Reporting Excellence The Better Your Bottom Line!

In other words, the better and more complete the editorial product, the more reason a newspaper gives a community to read its editorial offering, the healthier that newspaper’s financials. That rather flies in the face of all those newspapers that have been firing reporters over the years to protect their 20% plus margins. And those same newspapers wonder continually why the more they fire reporters the more circulation does down, advertisers look elsewhere …

Considering that job outplacement firm Challenger, Gray and Christmas said that last year the US media sector planned 17,809 job losses, it is pretty well documented that publishers have been busy decimating newsrooms. Most publishers have never really bought the argument that newsrooms are the newspaper’s prime profit center rather than it biggest cost center.

Yet according to Esther Thorson, a co-author of the new research, “The most important finding is that newspapers are under spending in the newsroom and overspending in circulation and advertising. If you invest more in the newsroom, do you make more money? The answer is yes. 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.”

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Thorson is no lightweight. She is professor and associate dean for graduate studies and research and director of research for the Reynolds Insistitute at the University of Missouri-Colombia School of journalism. She has published more than 100 scholarly reports on news, advertising, media economics, and has edited six books, and she has received many prestigious awards.

The study analyzed 10 years of financial data provided by The Inland Press Association on 900 of its small to medium sized members with circulations of 85,000 or less. The researchers developed a mathematical tool that broke down revenues and expenditures from the news, advertising and circulation departments and predicts profitability.

A big problem, Thorson said in a radio interview with American Public Media, is that “ Newspapers do not understand the financial workings of their own systems and in order to maintain profit level – which they’ve insisted on doing -- particularly in newsrooms they are cutting more and more deeply.”

She told the interviewer, “What happens when you reduce newsroom personnel is you reduce diversity of content. So things like culture reviews disappear, close investigation of how local government is operating disappears. The other thing that disappears is just pure amount of content.

“You know, newspapers are becoming smaller, they’re becoming thinner and the actual pages are being shrunk. And so as a result of underinvestment, it loses circulation. And we’ve seen this for the last 40 years circulation has been dropping. It’s currently plummeting.”

And the real problem, she says, is that American newspaper management is so set in its ways that it is doubtful publishers will make many changes to reverse course. “It was just too easy for too long to make revenue and profits. And so management does not have the tradition of investing in research or even understanding research that’s done on it to incorporate it into its management system. So I don’t suspect they’ll pay attention to this, either!”

Respected 90-year-old retired CBS TV Anchor Walter Cronkite recently told Columbia University journalism students that he feared that newsroom cutbacks were not just a financial issue, but they attacked the very core of American democracy. "In this information age and the very complicated world in which we live today, the need for high-quality reporting is greater than ever. It's not just the journalist's job at risk here. It's American democracy. It is freedom."

Thorson adopted a similar theme. “Newspapers are the backbones of American democracy, right? I’m worried about the newspapers in all the little cities across the United States. They are our one depth instrument for allowing citizens to understand what’s going on in their own communities. We’re losing those just as fast as we’re losing content and quality in any of our news sources.”

Her co-author, Murati Mantrala, a marketing professor in the College of Business, summed up the results. “Looking at the data, investing in news quality does pay off. It improves circulation and advertising revenues, which are the bulk of a newspaper’s revenues. Better news quality drives circulation and circulation drives advertising revenues.”

If publishers don’t believe in scholarly research then perhaps they will trust one of their own. Noel Hamiel, longtime publisher of the Daily Republic in Mitchell, South Dakota, told MediaLife recently, “People who say they don’t have the time to read the paper really mean they aren’t going to take the time to read boring stories. Newspapers have to invest in content.

“Newspapers have to be better written than ever before. It’s not enough to throw local news out there. You have to have quality as well as quantity,” he advised.

Perhaps small market publishers can teach their big market brethren a thing or two!

Well, Here’s A Novel Newspaper Study That Flies In The Face Of All Those Newsroom Firings -- The Better Your News Reporting Excellence The Better Your Bottom Line!

It sounds like just plain common sense, but now there’s a study by the respected University of Missouri Journalism School that lays it out in simple language – the best way for newspapers to improve their bottom lines is to invest in news reporting excellence.