By B.J. Rains
The Minneapolis Star-Tribune is having big financial problems and has hired private equity powerhouse Blackstone Group to try and help them fix their problems.
Its becoming a big problem across the country. Newspapers have been struggling to stay afloat, struggling to gain enough advertising revenue to keep them on the positive side. As the article says, it "reflects just how rapidly the newspaper business -- and the credit markets -- have deteriorated in the past year. Across the country, in big cities and small, newspapers are struggling with declining readership and steep declines in advertising, especially lucrative real estate and automobile classifieds."
One of the big reasons for the declining readership is the fact that all of the newspapers have now switched to online websites. Most newspapers allow people to read all of their content online for free. Some force you to register and still offer the content for free, while a very small amount of newspapers charge you to read content.
But the majority of newspapers allow you to read the content online for free. Why would someone who is struggling to pay his bills or doesn't have a lot of extra money pay to receive the paper each morning when he can just go online and read the stories for free? Its common sense. The internet is costing newspapers a lot of money in subscriptions because more and more people are just canceling their subscriptions and reading the content for free online.
In one of my previous blogs, I mentioned how newspapers are trying to increase ad revenue online, and that will help greatly for some newspapers. But the fact that papers are offering their content online for free is causing them to lose lots of money. Papers don't want to switch to subscription based content online, however, because they don't want to be the first and only paper that does it. People will just go to another newspaper that offers free content and get their info there. Unless they all do it at once, I don't see it happening anytime soon.
Either way, financial trouble is a growing problem that newspapers are having to deal with. Hopefully for the Star Tribune, they will be able to turn it around fast and avoid any longterm problems.