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 People have tried to sound the death knell for newspapers for decades now, first with the advent of radio and then with the introduction of television. But newspapers always seemed to survive. Why? Because of something called classified advertising, those job, car and house listings in agate type. Newspapers had a monopoly on them, and classified ad lineage was a leading economic indicator. When it dropped, the economy was slumping. When it rose, it was rebounding. That monopoly always made newspapers a good bet -- a cash flow generator that would always be there, even if a little soft. But that monopoly is now gone.
And now newspapers really face a threat to their survival, as the Internet is increasingly becoming the vehicle of choice for classified advertising. Talk of newspaper bankruptcies has increased. Witness the case of Journal Register Co., a Yardley, Pa.-based publisher of 22 dailies that claims to reach 510,000 readers. JRC is believed to have missed a debt payment on July 23 on its already twice-amended $200 million revolver with J.P. Morgan Chase Bank NA. The bank hiked JRC's maximum total leverage ratio permitted on the loan and slashed its credit limit to $150 million under the second amendment on April 29. JRC acknowledged its concerns of default and its potentially disastrous effects in a recent Securities and Exchange Commission filing but had yet to file required documents since the July 23 default deadline. The newspaper chain hasn't responded to calls during the past week. But JRC isn't an isolated incident. Other newspaper companies are reporting problems, too. And that's scary when it comes to the health of the Fourth Estate. Newspapers, after all, have always been the best bulwark against political corruption and all sorts of local hanky-panky that would otherwise go unnoticed. Technology has spawned bloggers on everything imaginable, but don't depend on them for the dogged investigative reporting that only newspapers have supplied. Or for a localism that only newspapers (and maybe some community cable channels) seem to care about anymore. Time will tell if the fallout continues, and if newspapers will remake themselves, especially for a younger generation raised on the Internet. Don't count them out. But know this, too: The Internet has attacked newspapers where radio and television never could: on the classified ad front. - Terry Brennan See related story from The Daily Deal Categories Deal Video
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