A wave of oursourcing is beginning in the newspaper industry according to a survey of 15 private company executives by Deutsche Bank analyst
Paul Ginocchio. (His report is not online.)
As advertising revenues continue their swoon, outsourcing is emerging as one more way to shrink cost structure.
Anxious newsroom types might pause for a moment in sympathy for colleagues elsewhere in the building who are performing backroom functions like payroll or fielding circulation complaints. A bunch of those jobs are going away soon.
Ginocchio's annual survey provides a check on whether public company financial results and presentations to analysts are representative of the whole industry. In fact, there are more similarities than differences. During the Global Media Conference in New York earlier this month, McClatchy CEO Gary Pruitt said bluntly that only news and advertising sales remain as essential internal functions of newspapers. The next week McClatchy's flagship Sacramento Bee announced that
some ad production will be moving to India.
The executives in Ginocchio's survey, who control 235 daily papers with roughly 16 % of industry circulation, were surprisingly lukewarm on the much touted partnership many companies have struck with Yahoo. Only about a third were confident it will provide a big revenue boost; the rest were "wait-and-see" or outright skeptical (though onlne partnerships generally were rated with outsourcing as top prospective headlines for 2008).
The group was not especially bullish in their financial outlook. On average they expect advertising revenue to continue to fall, though not as fast as in 2007, and only 40 % thought profits would improve even with the continued emphasis on cost-cutting.
A wave of oursourcing is beginning in the newspaper industry...
