The Industrial Context of Newspaper Firms

Abstract

The newspaper industry has a long history of living in’ splendid isolation’. The dominance of newspapers in both the information (news) market and advertising market lasted for decades and was only seriously threatened when television arrived at the scene in the 1950s. People continued to read newspapers however, and the arrival of television had a predominantly enlarging effect on the total size of advertising spending. Later, most newspaper markets became near monopoly markets that gave the firms competing in these markets a fairly protected position. Growth was sustainable and cost levels could still be improved. More recently however, from approximately the beginning of the 1980s, things have started to change at an ever increasing pace. The changes have mainly taken place outside the newspaper firms and to a lesser degree within newspaper firms. Changes in the industrial context are, for example, the emergence of substitute markets such as direct marketing, or the increasing concentration and professionalisation of media buying companies. The latest challenge is the explosion of the Internet; a threat -and a potential opportunity-to everyone in the information industry who is making a living of selling information and advertising space or time. The quotes at the beginning of this chapter reflect the opinion of newspaper management that newspaper firms have not been paying much attention to their outside environment. Instead, the industry has been rather inwardly focused, relying on its indisputable strong competitive position. The context has changed, however, and has had its impact on the competitive position of today’s newspapers. In this chapter the industrial context will be analysed, and the most important changes that effect the strategic choices and competetive position of newspapers will be discussed.

’A recognition that there is a shift in the fundamentals of the business is probably the biggest single change.’(INT51.091195)

’The newspaper industry is in a phase of self examination in which it has never been before: it is starting to recognise treats’ (INT49.081195)