Showing posts from July, 2009

Racing's Pricing Problems

Merely shrinking thoroughbred racing, as I proposed in my last post, would not, in itself, be enough to sustain the health of the industry, especially when racing is faced with a malevolent mix of (1) tough competition from casinos for the gambling dollar, (2) shorter attention spans in Generations X, Y, Z and whatever else followed us baby boomers, (3) decreasing discretionary income for most Americans, and (4) the continuing blots on our image from drugs, breakdowns and the neglect of horses (a special thanks to Ernie Paragallo for keeping that one in the news).
But there are some things we could fix, especially in the area of pricing. A more coordinated industry, and one that has racing as its primary focus (as contrasted, say, to Churchill Downs Inc.'s apparent focus on online bet-taking) could take some important steps that would attract more fans to live racing, increase handle, both on-track and off, and provide a fair division of revenue as between the track owners and the …


New York Times Co., Gannett Co., Media General , and McClatchy Co. have all reported profits in the second quarter and the results have led to share prices doubling and tripling.

The developments must come as a surprise to those who saw the poor performance of recent quarters and convinced themselves that the newspaper industry is dead and gone.

Admittedly, the positive results in the past 3 months were achieved through restructuring, reducing news staffs to their 1970s levels, heavy cost cutting everywhere, and postponing reinvestments. But it shows there is still life in the industry and that the industry can be expected to recover in the coming year if economic conditions continue their current rate of improvement. As I have said many times, a industry with $50 billion in revenue is not going to ignore that revenue, close the doors, and disappear overnight.

Many have viewed the poor company performance in the past 2 years and then mistaken the steep concurrent drop in advertising as e…


Google, MSN, and Yahoo and other aggregators are cited by newspaper executives are harming newspapers. But what have they actually done? It is important to have a realistic understanding of their effects if one is to fashion strategies for the future of newspapers and news organizations.

Aggregators carry news stories from major news services and thus make international and national public affairs, entertainment and sports news widely available. The headline news on the aggregators’ home pages is becoming the primary news provider for those less interested in news and the online sections are well-used by news consumers who want more news or more timely news than appears in their daily newspaper.

Aggregators and others sites carrying content from news services are now contributing about 20 percent of the revenue of Associated Press, for example, taking some financial pressure off newspapers to fund the cooperative on their own. Other news services are also gaining income from online oper…

Time for Some Serious Downsizing?

It's almost time for the Saratoga meet, the highlight of everyone's racing year on the East Coast. The last two races for our (Castle Village Farm) horses were a third in a stakes race and a win in an allowance. And we're in the process of buying the best horse we've ever had (a two-year-old by Smoke Glacken, in case you were wondering). So what could be the matter?
Well, for a start, the state of the racing industry. The latest figures from Equibase show a disturbing acceleration in the decline of the industry. For the first half of 2009, total US handle was down 10.5% (to $6.5 billion) as compared to 2008, and purses were down 6.0% (to $507 million), even though the total number of racing days declined by only 2%. And the rate of decline was much worse for the month of June, with handle dropping 16.9% from the same month in 2008 and purses declining by 10.3%, to $101 million. Both these decreases were far larger, in percentage terms, than the drop in the number of …


Self deception is more damaging than lies told to us by others because it more strongly affects our perceptions and decisions. One of the biggest self deceptions in the newspaper industry today is that the Internet is striping newspapers of advertising dollars and is a primary cause of its economic woes.

There is no question that Internet is increasingly attracting advertising revenues. They reached $23.4 billion in the U.S. in 2008. Looking at the numbers more closely, however, one sees a different story. About half those expenditures are search and lead generation fees that don’t compete with traditional newspaper advertising. Search payments alone are the single largest category of Internet income and represent 40% of total online fees.

Internet classified advertising—the direct competitor to newspaper classifieds—has never exceeded 20 percent of online advertising revenues and it is declining as a percentage of the total. Online classified advertising was $3.2 billion in 2008, about…