They still make money

Make no mistake, most American newspapers are profitable. Even as the Los Angeles Times announced another round of news room layoffs (85 people or 8 percent of its staff), its carpetbagging parent—the (Chicago) Tribune Company—still makes more money than it spends each year. Because the conglomerate also owns television stations and entertainment properties (like the Chicago Cubs), losses in its newspapers can be offset, hence the company's continuing profit. But in 2004 newspapers earned more than 20 cents on the dollar, according to analyst John Morton, a much better showing than for most companies in the Standard and Poors 500 index. (A great explanation of newspaper profitability and its challenges can be found here.) The issue is future growth. Already, growth in profits has slowed to 3 percent a year, down from 5 percent in recent years. What troubles executives is the decline in readership, which causes advertiser flight to alternative sources. The internet is stealing ad revenue and the future looks bleak for newspapers.

To keep abreast of the Times' travails, check out L.A. Observed, the best site for news about Los Angeles media.