Expansion Strategies of Newspaper Firms: Diversification and Innovation

Abstract

Today’s newspaper companies often do not fully deserve that name, as increasingly newspaper firms are diversified companies with activities in (multiple) other businesses in addition to their traditional newspaper business. Of the four large firms that publish newspapers in the Netherlands, none is fully depending on newspaper revenues. In the U.S.A. a similar situation exists, whereby a majority of the large newspaper firms are in effect diversified media companies. Tribune Company for instance is involved in newspaper publishing, which is still its core business generating some 58 percent of total revenues, but is also diversified into radio and television broadcasting, has businesses in educational publishing, direct marketing services, and is the owner of the Chicago Cubs. Gannett on the other hand is mainly involved in newspaper publishing, but is increasingly becoming a player in broadcasting. The Dutch publisher PCM Uitgevers, currently the largest newspaper publisher in the Netherlands, is also managing a diversified portfolio of businesses and has a large educational publishing subsidiary. Table 5.1 gives an impression of the extent to which (a sample of) publicly traded media companies involved in newspaper publishing were diversified in 1995 (for a complete overview see appendix F). As is clear, the majority of (public traded) newspaper companies in the U.S.A. and the Netherlands are diversified to some extent. Almost none of the companies is a single product firm in that it only publishes newspapers. The average U.S. newspaper publisher is involved in slightly over two lines of businesses, while Dutch publishers have spread their sources of income over 3.75 lines of business.