Gannett layoffs are a leading indicator of a permanently shrinking newspaper business

poynter reporting:
The 700 layoffs Gannett announced at its community newspapers Tuesday can rightly be read as a vote of no confidence in the future of print by America’s largest newspaper company.
Given the company’s long history of playing to Wall Street, it is no big surprise, though. Gannett probably would say it is just being realistic in recognizing that these 81 newspapers have permanently become much smaller businesses. The market liked the hard-headed cost control move, with Gannett shares up about 4 percent from late Monday to Tuesday’s closing bell.
Here is my take on the factors that went into the decision, drawn from several sources, including the company’s first quarter conference call with analysts.
Revenues were down for the community newspapers in the first quarter — about 7 percent overall and nearly 10 percent in print — from the same period in  2010. The company has said that the ad losses are continuing in the second quarter. So, in a year when most media, except perhaps Yellow Pages and direct mail, are recovering some of the ad base lost in the recession, newspapers are still in economic decline.
Particularly because newsprint prices costs are up sharply this year (20 to 30 percent), Gannett could not easily reduce expenses in tandem with the disappointing ad results in the first half of this year. As a result, publishing operating margins fells four times as fast as revenues — 25.8 percent. Given Gannett’s long record of high operating margins, several analysts in the first quarter earnings conference call asked what was going wrong.
http://www.poynter.org/latest-news/business-news/the-biz-blog/136091/gannett-layoffs-are-a-leading-indicator-of-a-permanently-shrinking-newspaper-business