Four major newspaper firms have now declared bankruptcy. The rest of the industry is on the ropes — sources of credit or equity funding have virtually dried up; there is basically no market into which to sell publishing assets to raise cash; the ability to maintain quality and to innovate is seriously hampered by continual cost-cutting necessary to maintain positive cash flow and meet debt service obligations. Many individual newspapers, especially in metropolitan areas, are reportedly operating in the red. Further bankruptcy filings seem inevitable.
We’ve seen this before in other legacy industries, most notably U.S. railroads. In 1920, trains carried a total of 1.2 billion passengers, the peak year for rail travel in this country. Despite a few upticks during the late 1930s and World War II, it was all downhill after that as personal automobiles, buses and airplanes siphoned off traffic, and as government policy failed to encourage rail travel as it did in Europe. For five decades, railroad companies struggled against the tide but failed to adapt. By 1970, much of the industry was bankrupt. Today, the government-owned Amtrak system carries a grand total of 29 million passengers a year, about 2.4 percent of the 1920 level.
The discerning reader will notice some parallels with long-term trends in the daily newspaper industry:
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