Study: News quality improves profits
"Newspapers are under-spending in the newsroom and overspending in circulation and advertising," said advertising Professor Esther Thorson of the University of Missouri's journalism school.
"If you invest more in the newsroom, do you make more money? The answer is yes," she said. "If you lower the amount of money spent in the newsroom, then pretty soon the news product becomes so bad that you begin to lose money."
The university's study looked at 10 years of financial data of 900 mid size U.S. newspapers, breaking down revenues and expenditures from news, advertising and circulation departments and predicting profitability.
The study found improving news quality "improves circulation and advertising revenues, which are the bulk of a newspaper's revenues. Better news quality drives circulation, and circulation drives advertising revenues," said marketing Professor Murali Mantrala of the university's business college.
The study will be published in the April issue of The Journal of Marketing.
(The results of the study echo what veteran Sun newsmen have been saying since Quebecor began swinging machetes in the newsroom several years ago.)