Newspapers and Railroads – What’s Their IC?

This Boston Globe article states that if the paper were online only, its cost base would be 10% of its present base, which includes the physical cost of printing the newspaper and distributing it across a broad geography every day. Today, newspapers are effectively in the publishing and advertising business. That’s the way they get paid for their news communication business. Their intellectual capital contains several distinct competencies: publishing, advertising and journalism. And the cost base of the physical publishing process is holding them back from remaining relevant as journalists.

This made me think of the railroad industry. A common criticism about the decline of the railroad business in the U.S. has always been that it failed to understand that it was in the transportation business. That’s only if you look at it from an intellectual capital perspective and separate out their core competencies, which included logistics as well as the knowledge to run a railroad.

It seems that the newspaper companies have been focusing on the paper and not the news. It’s not too late but, as I have discussed in the last few weeks from many viewpoints, there is a lot of pressure to figure this out now.