The US Newspaper Industry
US Newspaper had been in decline for over two decades. This was a mature industry, and we
could tell from these industry features:
• Excess Capacity
• Lack of Technical Innovation
• Fierce Competition
• Old Physical And Human Resources
• Consolidation among firms
Key Success Factors in US Newspaper Industry
Table1 Selected Financial Data
2014
2013
2012
2011
2010
2009
2008
Revenues of
advertising
662
667
712
1222
1300
1336
1780
Operating Cost
1484
1412
1441
2093
2137
2308
2792
Operating Profit
91.9
156.1
103.7
56.7
23.5
74.1
(40.6)
Net Income
33.3
65.1
135.8
(40.2)
108.7
19.9
(57.8)
ROS
5.8
9.9
6.5
2.4
1.0
3.0
(1.4)
Opportunities were limited The competition in media was gradually fierce with the emerging of
new digital media technology(Internet, broadcast, cable television, magazine, ect. New entrants
needed huge initial investment to enter the industry, plus the technical requirements, economies
of scale, and long investment return cycle which increased the entry barriers. Although these
new competitors along with a highly developed industry infrastructure, powerful distributors
were still more easily to attack the established firms.
Cost advantage As we just said, the newspaper industry was broad and the profit level is high.
However, the initial investment was the necessary financial support to maintain the basic
business activities of the media. The investment return cycle was long, which increased the
investment risk and uncertainty, so a large scale of economies was necessary to guarantee the
daily high circulation and large print business. But these firms started cutting their inputs and
overheads to sustain the gradually thin net margin.
Segment And Customer Selection From 2008 to 2014, the revenues of advertising had been
declined from 1780 to 662, shrunk by about 63%, which indicated that the newspaper advertising
had confront the challenge brought by online advertising largely. The newspaper industry had
formed the media with the same structure and similar business model in different regions. The
competition among them was extremely fierce, and the pattern of excessive competition is
formed.
Source of differentiation advantage The strategy that NYT utilized was to focus on Times, which
won the unique status of the newspaper in terms of its national distribution and unrivalled
reputation for journalism. This was contributed to its excellent columnists and high quality of
content.
