I have heard Warren Buffett referred to by newspaper publishers as supporting of the print medium. In at least two presentations over the last few years I have heard that Buffett and his business partner, Charlie Munger, read five newspapers a day. This was presented as support for the future of newspapers. Newspaper publishers are unlikely to refer to Buffett again thanks to comments he made a few days ago at the annual shareholders meeting of his Berkshire Hathaway business where he told his shareholders that US newspapers face “unending losses” and that they are no longer “essential”.
What does this mean for us here in Australia? Publishers will tell us it is business as usual. They would want us to ignore what is happening in the US. Some newsagents will believe that. My view is that the crash of US newspapers we are witnessing this year is an early warning of what will happen here in the future. Our excellent home delivery system is delaying the impact because small business newsagents carry the more of the high cost of distribution than delivery contractors in the US. We are also insulated because debt levels of publishers are different here – although Fairfax does appear to be more challenged in this area than News.
Rather than focusing on the gloomy news, we need to embrace the opportunity.
Newsagents need to make business decisions with the full knowledge of what is happening to newspapers in the US. We cannot rely on newspaper generated traffic to our businesses forever, not even for five years. We need to build new traffic urgently. In-store, we need to be flexible in our offer, expand our range and focus on categories which generate their own traffic and do not rely on newspaper traffic to drive sales.
While it is sad to see US newspapers crash, we have a once in a lifetime opportunity to reengineer our businesses before we loose newspaper traffic here. We need to focus on that opportunity and embrace it for our own future.
UPDATE: Fox Business has the full quotes re newspapers.
Can’t imagine the Giant newspaper like New York Times or L.A. Times could be disappearing in the future. What about the Sydney Morning Herald (published since 1831)? Can we survive in Australia? Newsagencies are still reply on paper as one of the most important products in their shops
Mark you are brave to keep writing about newspapers when no one else in the newsagent industry is doing this. Either you are wrong or you are, the lone shag on a rock. My newspaper rep says you are a lunatic. VANA paints you as an heretic.
I think your concerns are valid but I don’t know what to do in my newsagency.
David,
There are many (althoug not enough) that share the Mark’s POV. Most don’t publish it – they simply act on it. It is reflected in their business decisions.
Newsagents need to stop listing to their publishing suppliers – it is in their interest out of the loop and in the dark.
Newsagents also need to stop looking at the decline of newspapers as a “concern”. Look at it as an opportunity. Don’t fight the market forces, go with them.
That second paragraph should read:
Newsagents need to stop listing to their publishing suppliers – it is in their interest to keep retailers out of the loop and in the dark.
David, I’ll leave others to judge whether I am a lunatic. What is happening in the US is real. While the perfect storm engulfing newspapers there will probably not play out here, we do face a storm. We risk not being ready.
Mark is not a lunatic or heretic or whatever else you want to call him. I dont want to sound like i am defending him, i am sure he is big and ugly enough to defend himself.
In any case, i have blogged previously about the decline of advert. revenue and the impact this will have on newspapers. We as retailers must make crucial decisions about our businesses, and relying on newspapers and home delivery, will only lead to a downward spiral in profits from this category. I would urge all newsagents to adopt a open mind to new retail strategies.
On a brighter note re; newspapers, can I just say that the current promotion of AFL cards is one of the better promos adopted by HWT, and they ought to be congratulated for this.
I just wish this promo never ends, as it does drive mums and grandparents into our store.