Tribune Company (NASDAQOTH:TRBAA) has announced that it may consider selling its newspaper business. That comes shortly after The New York Times Company (NYSE:NYT) announced it was selling its Boston Globe business. Is this a coincidence, a mad rush for the exits, or a strategic effort to hinder a competitor?
Internet Killed the Newspaper Stars
It is fairly clear that the advent of the Internet has changed a lot of industries. One of the hardest hit sectors has been newspapers. With so much free written content online, people simply aren’t willing to pay for curated content that comes out a day after the news actually took place. While newspapers offer websites that are timelier, few have found a way to maintain their historic levels of profitability with an online advertising or subscription model. The newspaper companies have been in decline for a long time.
Paring Down at the Times
This is part of what led The New York Times Company (NYSE:NYT) to refocus its business around its core, and most important, paper. The company’s namesake paper is respected the world over. In fact, as part of this effort, the company is renaming its international division to align it with The New York Times name. Part of the process is selling what many consider an important newspaper business, The Boston Globe.
That the company is considering this move is significant. It shows just how hard it is right now in the newspaper sector. Indeed, maybe a paper in every city is just too much for the market to support and a shakeout is needed. So, when the Tribune Company came out and said it was considering a sale of its papers, it wasn’t much of a surprise. However, there could be other motives for this effort.
Fighting the Competition
Companies work against each other in different ways. Sometimes they go head to head in the belief that they will prevail and other times they play strategic games even though they know they are unlikely to win in the end. For example, Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) have numerous overlapping products. The logic behind some of the offerings, however, isn’t necessarily to “win.”
Take Microsoft Corporation (NASDAQ:MSFT)’s Office suite of productivity software. The company has a dominant position in this space. These products are a huge money maker for the company. Google Inc (NASDAQ:GOOG), meanwhile, has a free web-based version of the same products. While this is clearly in-line with Google’s web roots, it certainly isn’t going to unseat Microsoft Corporation (NASDAQ:MSFT) without years and years of effort, and costs.