Last night, the Star Tribune of Minneapolis, Minn. reported on its Web site that it was filing for bankruptcy:
The filing, which was made with the U.S. Bankruptcy Court in the southern district of New York, had been expected for months. It follows several missed payments to the paper’s lenders, and it comes less than two years after a private equity group, New York-based Avista Capital Partners, bought the paper for $530 million.
In its filing, the newspaper listed assets of $493.2 million and liabilities of $661.1 million.
Like most newspapers, the Star Tribune has experienced a sharp decline in print advertising. Its earnings before interest, taxes and debt payments were about $26 million in 2008, down from about $59 million in 2007 and $115 million in 2004.
I’ve written several times previously about the immense economic challenges facing traditional media, especially newspapers. The Star Tribune case is of particular interest to me as a life-long Minnesota resident. McClatchy bought the paper for $1.2 billion in 1998 and sold it two years ago for $530 million. So the current economic climate has something to do with the bankruptcy filing, but the economic decline for mainstream media isn’t of recent origin. Other newspaper companies, include Chicago’s Tribune Company, also have filed for bankruptcy.
I think there will always be a Star Tribune in some form, but clearly we’ll be seeing major changes as it tries to find a way to operate profitably.
All the more reason for anyone involved in communications to devote time to learning about social media. A couple of decades ago you could reach a mass “audience” through just a few big media hits, whether via PR or advertising. No more. The so-called “audience” has dispersed to millions of alternatives, mainly on the Web, and its members don’t just want to passively consume. We want to interact.
Newspapers are going to need to take this into account as they go through their Chapter 11 experiences. Many if not most have offered interaction and the ability to comment on their Web sites for quite some time, so simple interactivity isn’t going to be enough. To survive and thrive, I think they’re going to need to find ways to make their communities contributors instead of just commenters on what the “professionals” produce.
What do you think? Can newspapers survive? How do they need to change?