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Bankruptcies, Closures Plague Newspaper Industry

In March, the Chicago Sun Times newspaper filed for Chapter 11 bankruptcy protection. It was the latest in a series of newspaper bankruptcies and closures across the United States. The recent troubles come as new and emerging digital technologies are putting the future of news print, once revered and unassailable, in question.

In December, the city of Chicago was in the grip of two of the biggest news stories in its history.

The U.S. senator from Illinois, Barack Obama, was on his way to the White House after an historic election.

Then there was the news that Governor of Illinois Rod Blagojevich was under investigation for allegedly trying to sell Mr. Obama's vacated Senate seat.

It was an exciting time for Chicago Tribune Editor Gerry Kern. "We were the ones that broke that story, resulting from years of investigative work," he recalls.

But the Blagojevich arrest on December 8 was almost eclipsed by another story that struck at the heart of The Chicago Tribune and its three million readers.

"In that edition that next morning, you had the story of The Chicago Tribune Company bankruptcy, Chapter 11, and this electrifying investigative story," he said. "And it really said two things: one the business model isn't working and needs to be fixed, and secondly it needs to be fixed so that this kind of reporting could go forward."

In the months following the Tribune Company's bankruptcy, newspapers in Seattle and Denver stopped the presses for good, either to go exclusively online or simply to go away.

In March, the other major newspaper in Chicago, the Sun-Times, with one million readers daily, announced it was seeking bankruptcy protection.

Daily newspaper circulation in the U.S. is down more than eight percent this decade, according to the Audit Bureau of Circulation. New consumers, meanwhile, are flocking to the Internet. In just one year in mid-decade, the number of visitors to newspaper Web sites increased nine percent, according to the Newspaper Association of America.

Mike Smith, executive director of the Media Management Center at Northwestern University's Medill School of Journalism near Chicago says it is a trend that is likely to continue - coupled with a recession he says only made ownership troubles in the industry worse.

"There was a buying frenzy several years ago and some companies overpaid for newspaper properties," Smith said. "Not expecting this economic crisis to have the impact that it did, so you have companies like the Tribune Company that's based here in Chicago underneath this heavy debt that they have to pay off."

But The Chicago Tribune is still printing newspapers, and according to Smith the newspaper itself is still making money for the Tribune Company. "It's generating revenue, but the issue is that it's not generating enough in this economy to pay down the debt," he added.

Newspaper advertising revenue dropped last year about 17 percent, according to the Newspaper Association of America, as more media operations focus their efforts on online content.

Owen Youngman is a Professor at the Medill School of Journalism. He used to work at The Chicago Tribune and was responsible for taking the paper online in the 1990s. "The challenge for the news industry as it struggles to find a model to be paid is how to take both the unique content that they have and the unique assets in the way that it can be packaged to be paid," he asserts.

Tribune Editor Gerry Kern says his company has found the answer. The Tribune along with the company's other TV, radio, and Internet news operations are breaking news stories on a new website launched in September called Chicago Breaking The site gets 35 million visitors a year and traffic reached a peak during the Blagojevich scandal.

"It's met a really important need," Kern said. "And that's: 'Tell me what's going on right now.' I think more of those kinds of channels and those products is what we'll develop in the future."

By retooling the newspaper to deliver more content on the web, and through mobile devices, Kern thinks the Tribune is well positioned to emerge from bankruptcy and the recession. He's not so sure about other newspapers.

"I think if you've put all our eggs in one basket," he said. "You're probably in trouble."