Is a 50% profit margin high enoughPaul, · Categories: General, News of News
Charles R. Eisendrath (via Phil Meyer) writes about “Telling Rotary About the News Business.” Among the many revealing points:
* Business practices: How many of you business people, I ask, make a profit of five percent on sales? Lots. How about ten percent? One or two. Twenty percent? Nobody, and some giggles of disbelief. Well then, how about 50 percent? At that point, somebody asks whether the speaker is putting them on. So I tell them what everyone in journalism knows:
Fifty percent is what prosperous television stations make. Some newspapers also earn profits in that range but in recent years they’ve averaged 20-25 percent. That’s still double what they earned for several decades ending in the mid-1980s, when the steadily increasing profits engineered by corporate owners replaced steady community coverage as the must-do goal of all but the very best, exceptional few.
On Main Street, these figures are incendiary and there’s gasoline close to this fire—right down the road in Detroit. A five percent profit is what auto companies (U.S. or foreign) make in banner years; usually it has been half that. Their margins are slim because of what it takes to make the product reliable.