US Publishers - About To Fall off a Cliff

It's not often you get to announce to an entire industry that it is about to collapse. That's what my Managing Turnarounds professor, James Shein got to do last week at an American Press International's summit. In a room full of the who's who in the US Newspaper Industry, Shein provided the execs a nine hour overview of the class I'm currently in, with the conclusion: you are all about to fall off a cliff.

Shein related a few excerpts to our class this week. A few shocking statistics included: of the publicly traded newspapers and publishers in the room:

• All but one had a return on assets below their cost of capital (e.g., they generate negative returns to investors on a risk adjusted basis)
• All but one had an Altman Z-Score below 1.8. The Altman Z-Score is a metric that takes a few financial return indicators and predicts the likelihood that a company is in risk of declaring bankruptcy. Over two decades, it has proven to have a high level of efficacy. Score above 3 are good, scores between 1.8 and 3 are "troubled" and scores below 1.8 indicates significant distress (e.g., this is when creditors begin tightening their terms).
  

Again, this included participants from the New York Times, Washington Times, Hearst Newspapers, E.W.Scripps and Gannett. Rest of the story here.