The rapid consolidation in the newspaper business, including the sell-off and break-up of Knight Ridder, is a response to the Internet and other big changes in media. That's according to one top
analyst. The Associated Press reports that Lauren Fine of Merrill Lynch told a business group in Akron, Ohio--a community where the daily newspaper is on the block--that papers are trying to find
ways to turn a buck as their advertisers follow their readers online and to cable television. Before those two arrived, Fine says most media coexisted without taking away ad money from each other.
But now advertisers like the Web's ability to reach wide audiences and target specific groups of people--and it is even cutting into the industry's bread and butter: classified ads. The average
paper has a profit margin of about 21.5 percent, Fine says, but that will drop to about 16.5 percent over the next five years. "Newspapers won't be as profitable, but they can still be
profitable. They will no longer be a growth market," she says.
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