Measuring newspaper profits: Developing a standard of comparison

Journalism and Mass Communication Quaterly

Volumn 75, Issue 3, 1998, Pages 500-517

  Martin, Hugh J ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0040687629     PISSN: 10776990     EISSN: None     Source Type: Journal    
DOI: 10.1177/107769909807500306     Document Type: Review

References (98)

1. Joan Konner, "The Last Nickel," Columbia Journalism Review, November/December 1995, 4.
2. Douglas Gomery, "Mass Media Merger Mania," American Journalism Review, December 1995, 46; Konner, "The Last Nickel," 4.
3. Douglas Gomery, "Mass Media Merger Mania," American Journalism Review, December 1995, 46; Konner, "The Last Nickel," 4.
4. Susan Paterno, "Whither Knight-Ridder?," American Journalism Review, January/February 1996, 19-27.
5. Philip Meyer, "Learning to Love Lower Profits," American Journalism Review, December 1995, 40-44. Meyer ("Learning to Love," 43) reported the 1994 profit margins for the ten publicly-owned newspaper companies with the highest revenues ranged from 10% to 23.1%.
6. Philip Meyer, "Learning to Love Lower Profits," American Journalism Review, December 1995, 40-44. Meyer ("Learning to Love," 43) reported the 1994 profit margins for the ten publicly-owned newspaper companies with the highest revenues ranged from 10% to 23.1%.
7. Stephen Lacy and Todd F. Simon, The Economics and Regulation of United States Newspapers (Norwood NJ: Ablex Publishing, 1993), 91-123.
8. Lacy and Simon, United States Newspapers, 266. Lacy and Simon (United States Newspapers, 136-40) also argue that newspapers don't try to maximize profits by matching the marginal cost of production to marginal revenue as predicted by traditional economic models. Instead, individual and organizational goals influence newspaper owners who may try to maximize revenue, or to maximize circulation, or just to produce good journalism.
9. Lacy and Simon, United States Newspapers, 266. Lacy and Simon (United States Newspapers, 136-40) also argue that newspapers don't try to maximize profits by matching the marginal cost of production to marginal revenue as predicted by traditional economic models. Instead, individual and organizational goals influence newspaper owners who may try to maximize revenue, or to maximize circulation, or just to produce good journalism.
10. Walter Nicholson, Microeconomic Theory: Basic Principles and Extensions, 6th ed. (NY: The Dryden Press, 1995), 462-63. Nicholson also explains that perfect competition assumes that all firms in a market have identical cost curves. Firms produce additional goods until the price equals the marginal cost of producing another unit. In equilibrium, this marginal cost also equals the average cost of production.
11. Barry Litman, "Microeconomic Foundations," in Press Concentration and Monopoly: New Perspectives on Newspaper Ownership and Operation, ed. Robert G. Picard et al. (Norwood NJ: Ablex Publishing, 1988), 4-17. Litman ("Microeconomic Foundations," 8-9) also describes monopolistic competition, a market structure closer to perfect competition than to monopoly. In monopolistic competition, firms attempt to differentiate similar products using service, location, or advertising. However, readily available substitutes mean individual firms have only marginal control over prices.
12. Barry Litman, "Microeconomic Foundations," in Press Concentration and Monopoly: New Perspectives on Newspaper Ownership and Operation, ed. Robert G. Picard et al. (Norwood NJ: Ablex Publishing, 1988), 4-17. Litman ("Microeconomic Foundations," 8-9) also describes monopolistic competition, a market structure closer to perfect competition than to monopoly. In monopolistic competition, firms attempt to differentiate similar products using service, location, or advertising. However, readily available substitutes mean individual firms have only marginal control over prices.
13. Litman, "Microeconomic Foundations," 14-17.
14. John Morton, "Chains Swallowing Other Chains," American Journalism Review, July/August 1997, 52.
15. Lacy and Simon, United States Newspapers, 95, 112-15.
16. Kenneth M. Harlan, Accounting Distortions and the Consistency of Firms' Performance Measures, vol. 65 of Research for Business Decisions (Ann Arbor: UMI Research Press, 1983), 1-4; Thomas Reynolds Stauffer, The Measurement of Corporate Rates of Return, Outstanding Dissertations in Economics (NY: Garland Publishing, 1980). Stauffer's (1-5) formula for calculating a simple economic rate of return is the root of a polynomial of degree N:
17. Kenneth M. Harlan, Accounting Distortions and the Consistency of Firms' Performance Measures, vol. 65 of Research for Business Decisions (Ann Arbor: UMI Research Press, 1983), 1-4; Thomas Reynolds Stauffer, The Measurement of Corporate Rates of Return, Outstanding Dissertations in Economics (NY: Garland Publishing, 1980). Stauffer's (1-5) formula for calculating a simple economic rate of return is the root of a polynomial of degree N:
18. i
19. i is the net cash received at the end of the ith period.
20. The American Economic Review 75 (March 1985): 37-67; Franklin M. Fisher and John J. McGowan, "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," The American Economic Review 73 (March 1983): 82-97; Franklin M. Fisher, "The Misuse of Accounting Rates of Return: Reply," The American Economic Review 74 (June 1984): 509-517.
21. The American Economic Review 75 (March 1985): 37-67; Franklin M. Fisher and John J. McGowan, "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," The American Economic Review 73 (March 1983): 82-97; Franklin M. Fisher, "The Misuse of Accounting Rates of Return: Reply," The American Economic Review 74 (June 1984): 509-517.
22. The American Economic Review 75 (March 1985): 37-67; Franklin M. Fisher and John J. McGowan, "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," The American Economic Review 73 (March 1983): 82-97; Franklin M. Fisher, "The Misuse of Accounting Rates of Return: Reply," The American Economic Review 74 (June 1984): 509-517.
23. Arguments defending accounting measures in economic studies are made by William F. Long and David J. Ravenscraft, "The Misuse of Accounting Rates of Return: Comment," The American Economic Review 74 (June 1984): 494-500;
24. Stephen Martin, "The Misuse of Accounting Rates of Return: Comment," The American Economic Review 74 (June 1984): 501-506;
25. Richard Schmalensee, "Inter-Industry Studies of Structure and Performance," in Handbook of Industrial Organization, vol. 2, ed. Richard Schmalensee and Robert D. Willig (NY: Elsevier Science Publishers, 1989), 960-69.
26. A summary of the debate by authors who argue for research with accounting data is in F.M. Scherer and David Ross, Industrial Market Structure and Economic Performance, 3d ed. (Boston: Houghton Mifflin, 1990), 415-22.
27. David Parker and Richard Stead, Profit and Enterprise: The Political Economy of Profit (NY: St. Martin's Press, 1991), 5. Uncertainty is not the same as risk. Uncertainty exists because entrepreneurs do not have perfect information about market conditions. Parker and Stead (Profit and Enterprise, 6-7) explain the neoclassic model assumes entrepreneurs do have perfect information and therefore can calculate the risk, or probability of a given outcome, associated with their decisions.
28. David Parker and Richard Stead, Profit and Enterprise: The Political Economy of Profit (NY: St. Martin's Press, 1991), 5. Uncertainty is not the same as risk. Uncertainty exists because entrepreneurs do not have perfect information about market conditions. Parker and Stead (Profit and Enterprise, 6-7) explain the neoclassic model assumes entrepreneurs do have perfect information and therefore can calculate the risk, or probability of a given outcome, associated with their decisions.
29. Parker and Stead, Profit and Enterprise, 14.
30. Lacy and Simon, United States Newspapers, 59.
31. Stephen Lacy, "Ideas for Prospering in a Changing Market," Newspaper Research Journal 13 (summer 1992): 88.
32. Barry R. Litman, "Appendix B: The Industrial Organization Model," in The Motion Picture Mega-Industry (Boston: Allyn & Bacon, 1998), 293.
33. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
34. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
35. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
36. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
37. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
38. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
39. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
40. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
41. For example, two economic studies that used accounting measures to examine differences in profitability are Michael E. Porter, "The Structure Within Industries and Companies' Performance," The Review of Economics and Statistics 61 (May 1979): 222; and Richard Schmalensee, "Do Markets Differ Much?" The American Economic Review 75 (June 1985): 345. These studies influenced business strategy researchers, who continue to use accounting measures. See, for example, Charles W.L. Hill, Michael A. Hitt, and Robert E. Hoskisson, "Cooperative versus Competitive Structures in Related and Unrelated Diversified Firms," Organization Science 3 (November 1992): 512; Michael Lubatkin and Sayan Chatterjee, "Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does it Apply?" Academy of Management Journal 37 (February 1994): 123; Constantinos C. Markides and Peter J. Williamson, "Related Diversification, Core Competencies and Corporate Performance," Strategic Management Journal 15 (summer 1994): 161; Constantinos C. Markides and Peter J. Williamson, "Corporate Diversification and Organizational Structure: A Resource-Based View," Academy of Management Journal 39 (April 1996): 354-55; James Robins and Margarethe F. Wiersema, "A Resource-Based Approach to the Multibusiness Firm: Empirical Analysis of Portfolio Interrelationships and Corporate Financial Performance," Strategic Management Journal 16 (May 1995): 286-87; N. Venkatraman and John E. Prescott, "Environment-Strategy Coalignment: An Empirical Test of its Performance Implications," Strategic Management Journal 11 (January 1990): 8. An economics handbook that describes accounting measures as useful for determining profitability is Schmalensee, "Inter-Industry Studies," 960-66.
42. David Pearce Demers, The Menace of the Corporate Newspaper: Fact or Fiction? (Ames IA: Iowa State University Press, 1996), 283-84.
43. William B. Blankenburg and Robert L. Friend, "Effects of Cost and Revenue Strategies on Newspaper Circulation," The Journal of Media Economics 7 (2, 1994): 12, 5.
44. William B. Blankenburg, "Hard Times and the News Hole," Journalism & Mass Communication Quarterly 72 (autumn 1995): 634-41. Profit rates at the newspapers ranged from 13.4% to 19.5% during the study period (Blankenburg, "Hard Times," 637).
45. William B. Blankenburg and Gary W. Ozanich, "The Effects of Public Ownership on the Financial Performance of Newspaper Corporations," Journalism Quarterly 70 (spring 1993): 68-75. Blankenburg and Ozanich ("Public Ownership," 73) also measured (1) cash flow, or earnings plus depreciation expense; (2) cash flow as a percentage of revenue, which was used to make comparisons across companies; and (3) retained income, which measured how much a company invested in itself. A Value Line calculation of earnings predictability for a five-year period also was included in the study.
46. Stephen Lacy, Mary Alice Shaver, and Charles St. Cyr, "The Effects of Public Ownership and Newspaper Competition on the Financial Performance of Newspaper Corporations: A Replication and Extension," Journalism & Mass Communication Quarterly 73 (summer 1996): 332-41. Lacy, Shaver, and St. Cyr ("Newspaper Competition," 336-37) also included the percentage of revenue spent on expenses by a company's newspaper division as a performance measure. Yet another study tested the argument that group ownership results in emphasis on profit at the expense of quality. The study of publicly and privately-owned newspapers found no systematic effect on quality regardless of the type of ownership. The study concluded the willingness of owners to make financial resources available to newspapers is more important than the type of ownership. See Stephen Lacy and Frederick Fico, "Newspaper Quality & Ownership: Rating the Groups," Newspaper Research Journal 11 (spring 1990): 42-56.
47. Stephen Lacy, Mary Alice Shaver, and Charles St. Cyr, "The Effects of Public Ownership and Newspaper Competition on the Financial Performance of Newspaper Corporations: A Replication and Extension," Journalism & Mass Communication Quarterly 73 (summer 1996): 332-41. Lacy, Shaver, and St. Cyr ("Newspaper Competition," 336-37) also included the percentage of revenue spent on expenses by a company's newspaper division as a performance measure. Yet another study tested the argument that group ownership results in emphasis on profit at the expense of quality. The study of publicly and privately-owned newspapers found no systematic effect on quality regardless of the type of ownership. The study concluded the willingness of owners to make financial resources available to newspapers is more important than the type of ownership. See Stephen Lacy and Frederick Fico, "Newspaper Quality & Ownership: Rating the Groups," Newspaper Research Journal 11 (spring 1990): 42-56.
48. Stephen Lacy, Mary Alice Shaver, and Charles St. Cyr, "The Effects of Public Ownership and Newspaper Competition on the Financial Performance of Newspaper Corporations: A Replication and Extension," Journalism & Mass Communication Quarterly 73 (summer 1996): 332-41. Lacy, Shaver, and St. Cyr ("Newspaper Competition," 336-37) also included the percentage of revenue spent on expenses by a company's newspaper division as a performance measure. Yet another study tested the argument that group ownership results in emphasis on profit at the expense of quality. The study of publicly and privately-owned newspapers found no systematic effect on quality regardless of the type of ownership. The study concluded the willingness of owners to make financial resources available to newspapers is more important than the type of ownership. See Stephen Lacy and Frederick Fico, "Newspaper Quality & Ownership: Rating the Groups," Newspaper Research Journal 11 (spring 1990): 42-56.
49. Blankenburg and Ozanich, "Public Ownership," 72; Lacy, Shaver, and St. Cyr, "Newspaper Competition," 335.
50. Blankenburg and Ozanich, "Public Ownership," 72; Lacy, Shaver, and St. Cyr, "Newspaper Competition," 335.
51. Robert G. Picard and Tony Rimmer, "Weathering a Recession: Effects of Size and Diversification on Newspaper Companies" (paper presented to the Media Management and Economics Division at the annual meeting of AEJMC, Anaheim, CA, August 1996), 14-15.
52. Picard and Rimmer, "Weathering a Recession," 8, 27.
53. Marty Tharp and Linda R. Stanley, "A Time Series Analysis of Newspaper Profitability by Circulation Size," The Journal of Media Economics 5 (spring 1992): 3-12.
54. Litman, "Appendix B," 293; Lacy, "Ideas for Prospering," 88; Parker and Stead, Profit and Enterprise, 14.
55. Litman, "Appendix B," 293; Lacy, "Ideas for Prospering," 88; Parker and Stead, Profit and Enterprise, 14.
56. Litman, "Appendix B," 293; Lacy, "Ideas for Prospering," 88; Parker and Stead, Profit and Enterprise, 14.
57. Lacy and Simon, United States Newspapers,59; Nicholson, Microeconomic Theory, 462; Litman, "Appendix B," 293-94.
58. Lacy and Simon, United States Newspapers,59; Nicholson, Microeconomic Theory, 462; Litman, "Appendix B," 293-94.
59. Lacy and Simon, United States Newspapers,59; Nicholson, Microeconomic Theory, 462; Litman, "Appendix B," 293-94.
60. Douglas Sease and John Prestbo, "Bonds: The Secure in Securities," ch. 4 in Barron's Guide to Making Investment Decisions (Englewood Cliffs NJ: Prentice Hall, 1994).
61. Lacy and Simon, United States Newspapers, 5; Ken Auletta, "The Impossible Business," The New Yorker, 6 October 1997, 54; Charles P. Daly, Patrick Henry, and Ellen Ryder, "Overview of Magazine Publishing," ch. 1 in The Magazine Publishing Industry (Boston: Allyn & Bacon, 1997); Albert N. Greco, The Book Publishing Industry (Boston: Allyn and Bacon, 1997), 1.
62. Lacy and Simon, United States Newspapers, 5; Ken Auletta, "The Impossible Business," The New Yorker, 6 October 1997, 54; Charles P. Daly, Patrick Henry, and Ellen Ryder, "Overview of Magazine Publishing," ch. 1 in The Magazine Publishing Industry (Boston: Allyn & Bacon, 1997); Albert N. Greco, The Book Publishing Industry (Boston: Allyn and Bacon, 1997), 1.
63. Lacy and Simon, United States Newspapers, 5; Ken Auletta, "The Impossible Business," The New Yorker, 6 October 1997, 54; Charles P. Daly, Patrick Henry, and Ellen Ryder, "Overview of Magazine Publishing," ch. 1 in The Magazine Publishing Industry (Boston: Allyn & Bacon, 1997); Albert N. Greco, The Book Publishing Industry (Boston: Allyn and Bacon, 1997), 1.
64. Lacy and Simon, United States Newspapers, 5; Ken Auletta, "The Impossible Business," The New Yorker, 6 October 1997, 54; Charles P. Daly, Patrick Henry, and Ellen Ryder, "Overview of Magazine Publishing," ch. 1 in The Magazine Publishing Industry (Boston: Allyn & Bacon, 1997); Albert N. Greco, The Book Publishing Industry (Boston: Allyn and Bacon, 1997), 1.
65. Benjamin M. Compaine, The Book Industry in Transition: An Economic Study of Book Distribution and Marketing (White Plains, NY: Knowledge Industry Publications, 1978), 15-19; James N. Dertouzos and William B. Trautman, "Economic Effects of Media Concentration: Estimates From a Model of the Newspaper Firm," The Journal of Industrial Economics 39 (September 1990): 12-13; Greco, Book Publishing, 160; Lacy and Simon, United States Newspapers, 70-72.
66. Benjamin M. Compaine, The Book Industry in Transition: An Economic Study of Book Distribution and Marketing (White Plains, NY: Knowledge Industry Publications, 1978), 15-19; James N. Dertouzos and William B. Trautman, "Economic Effects of Media Concentration: Estimates From a Model of the Newspaper Firm," The Journal of Industrial Economics 39 (September 1990): 12-13; Greco, Book Publishing, 160; Lacy and Simon, United States Newspapers, 70-72.
67. Benjamin M. Compaine, The Book Industry in Transition: An Economic Study of Book Distribution and Marketing (White Plains, NY: Knowledge Industry Publications, 1978), 15-19; James N. Dertouzos and William B. Trautman, "Economic Effects of Media Concentration: Estimates From a Model of the Newspaper Firm," The Journal of Industrial Economics 39 (September 1990): 12-13; Greco, Book Publishing, 160; Lacy and Simon, United States Newspapers, 70-72.
68. Benjamin M. Compaine, The Book Industry in Transition: An Economic Study of Book Distribution and Marketing (White Plains, NY: Knowledge Industry Publications, 1978), 15-19; James N. Dertouzos and William B. Trautman, "Economic Effects of Media Concentration: Estimates From a Model of the Newspaper Firm," The Journal of Industrial Economics 39 (September 1990): 12-13; Greco, Book Publishing, 160; Lacy and Simon, United States Newspapers, 70-72.
69. Daly, Henry, and Ryder, Magazine Publishing, 113-15.
70. Greco, Book Publishing, 27-30; Daly, Henry, and Ryder, Magazine Publishing, 10-12, 29.
71. Greco, Book Publishing, 27-30; Daly, Henry, and Ryder, Magazine Publishing, 10-12, 29.
72. Lacy and Simon, United States Newspapers, 95; Litman, "Microeconomic Foundations," 14-17.
73. Lacy and Simon, United States Newspapers, 95; Litman, "Microeconomic Foundations," 14-17.
74. Blankenburg and Ozanich, "Public Ownership," 72; Lacy, Shaver, and St. Cyr, "Newspaper Competition," 335.
75. Blankenburg and Ozanich, "Public Ownership," 72; Lacy, Shaver, and St. Cyr, "Newspaper Competition," 335.
76. Litman, "Appendix B," 293.
77. Blankenburg and Ozanich, "Public Ownership," 73; Blankenburg, "Hard Times," 636;
78. Blankenburg and Ozanich, "Public Ownership," 73; Blankenburg, "Hard Times," 636;
79. Lacy, Shaver, and St. Cyr, "Newspaper Competition," 336;
80. Picard and Rimmer, "Weathering a Recession," 15;
81. Tharp and Stanley, "Time Series Analysis," 5.
82. Richard B. Loth, How to Profit From Reading Annual Reports (Chicago: Dearborn Financial Publishing, 1993), 40. This ratio is different than the return-on-sales ratio used by Picard and Rimmer ("Weathering a Recession," 15). Picard and Rimmer's ratio eliminates interest expenses, a legitimate cost of business, from the calculation. Picard and Rimmer also eliminate income from sources other than sales, which may at times be warranted. However, it is not always clear that other sources of income do not represent a legitimate return on a firm's investments.
83. This method of calculation follows the format used in SEC filings. Alternate calculations were made by also adding non-operating income to and subtracting non-operating expenses from the revenue figure in the denominator. This resulted in a lower percentage of profits in years when there was net income from the non-operating category, and a higher percentage of profits in years when there was a net loss. However, changes in profit rates resulting from the alternate calculations were usually less than a percentage point. The alternate calculations did not substantially alter any results reported in this study.
84. These statements routinely report figures for the most recent three years. Some companies also file summary income statements covering periods as long as eleven years. Figures from both kinds of statements were used to calculate percentages for pre-tax profits. Some companies made adjustments in the data used for long-term summaries. However, these adjustments did not substantially affect overall percentages for profits. In addition, normal business adjustments are to be expected in a long-term study, and are unlikely to significantly affect the results.
85. Security Price Index Record (NY: Standard & Poor's, 1996);
86. Moody's Bond record, vol. 53 (NY: Moody's Investors Service, 1986);
87. Moody's Bond Record, vol. 59 (NY: Moody's Investors Service, 1992);
88. Moody's Bond Record, vol. 63 (NY: Moody's Investors Service, 1996).
89. Security Price Index.
90. Moody's, vol. 63.
91. All SEC and bond data was entered in Microsoft Excel for Windows 5.0, and results were calculated using standard functions in the program.
92. Differences in variability are also reflected in the range of standard deviations for publishing and newspaper profits. The largest standard deviation for publishing was 11.13% in 1989, and the smallest was 4.80% in 1990. The largest standard deviation for newspapers was 9.55% in 1991, and the smallest was 3.97% in 1994.
93. Litman, "Appendix B," 294.
94. Litman, "Appendix B," 294.
95. John Morton, "A Shadow Over the Newspaper Business," American Journalism Review, March 1995, 56.
96. Picard and Rimmer, "Weathering a Recession," 27-28;
97. Lacy, Shaver, and St. Cyr, "Newspaper Competition," 338-39.
98. Jon G. Udell, "Recent and Future Economic Status of U.S. Newspapers," Journalism Quarterly 67 (summer 1990): 331-39.