Tuesday, May 18, 2010

Bankruptcy may spur growth, profits

Billionaire investor Warren Buffett told his annual meeting that it "blows your mind" how quickly the newspaper industry is losing the fight for readers and advertisers.

Despite dire warning from Berkshire Hathaway, many in the industry say that bankruptcy, and the attendant release of enormous debt structures, will enable many newspapers to preserve, and even grow advertising revenue.

In this article from Reuters, experts like Alan Mutter suggest that reinvestment will allow titans like MediaNews to reverse declining fortunes.

"These companies are trying to come up with new products beyond yesterday's news in tomorrow's paper," said newspaper consultant Alan Mutter. "They get that the business is declining and wasting."

He pointed to MediaNews Group, which recently introduced a glossy lifestyle magazine to supplement its 54 dailies and their circulation of more than 2 million.

"The fact is, that's something they could not have done before bankruptcy," said Mutter.