Margins since 1989 show dwindling operating profits for media companies

INMA CEO Earl Wilkinson previews the group’s “Outlook 2012″ report with a look back at news media operating profitability* for 1986-2011. At almost 15 percent, the margins are high compared to other industries, he says, and high globally.
*EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization — an accounting measure that excludes factors like long-term debt and capital expenditures, which likely would weigh down the gross margins for many of these public media companies.

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  • John Reinan

    Yes, I was thinking the same thing — 14% is a margin most businesses would be delighted with. The problem is that Wall Street got used to 30%.

  • http://www.poynter.org Poynter

    I see what you’re saying now. Yeah, fine data, misleading visualization. –Julie

  • Steve Cavendish

    Yeah, that’s what I was saying about the bars/stripes that turn the corner. I think somebody started with an actual correct chart and then bent it at an angle, creating the effect (and in the process interfering with its accuracy). It’s a good case of making something visually interesting and distorting the data at the same time.

  • Steve Cavendish

    Yeah, that’s what I was saying about the bars/stripes that turn the corner. I think somebody started with an actual correct chart and then bent it at an angle, creating the effect (and in the process interfering with its accuracy). It’s a good case of making something visually interesting and distorting the data at the same time.

  • Anonymous

    EBIDTA of 14% is still pretty good cash flow.  As the note to the chart says, it’s the long-term debt that is the killer for many of these companies, who took on massive debt to finance huge acquisitions right when the Internet threatened to change their entire business (e.g., Lee Enterprises’ purchase of the Pulitzer chain in 2005). As newspaper and magazine companies (the above chart covers more with “news media”) move to digital distribution, their expensive capital expenditures like printing presses and distribution systems will be lower.  But, they have to have the on-hand cash to make the transition to digital distribution, and the editorial staff to develop the content that people will buy.

  • http://www.poynter.org Poynter

    Steve, good point. Also, it looks like the scale is a bit funky. Shouldn’t the bar for 14.9% be about half the length of the bar for 28.5%? It isn’t, it’s about a quarter of the length. –Julie

  • Steve Cavendish

    [graphics nerd]

    OK, I’m sure I’m not the only person to think this, but that’s a fairly misleading chart.

    It appears that the zero base is around the corner and skewed off in the distance rather than at the edge where the year labels sit. The effect of this is to exaggerate the difference between those years in the late 90s and today when, in reality, it’s only about double the margin.

    Is it too much to ask that if we’re headed off of the cliff of profitability that we at least get an accurate rendering of it? The numbers suck enough without having to make them look worse.

    [/graphics nerd]