1978 Called. It Wants Its Newspaper Back

There’s another problem, however: The new business model, such as it is, doesn’t work. Online advertising is clearly key to the future of newspapers, but the math is flawed. The standard price point for an online ad is just $20 for every thousand people who see it, compared with thousands of dollars for a traditional print ad. A particularly popular article on the Philly.com website might generate 30,000 page views. That equates to just $600 in revenue generated by an ad associated with that abnormally successful content. It’s hard to see how this new revenue model could ever sustain hundreds of well-paid journalists. Some industry optimists claim online ad prices will eventually increase, but there’s no evidence of that. What’s more, after years of steady growth, online advertising actually dropped by three percent last year. As a result, rapidly declining print ads still comprise more than 90 percent of the newspaper industry’s revenue.

Whatever form the New New Journalism takes, it will have to locate funding. And many analysts think the solution might lie in the “philanthropy model.” In this twist, because big news-gathering organizations can’t be supported without lots of money, and because the revenue generated by print advertising can’t be replaced through the Internet, the future for newspapers could lie in transforming themselves into nonprofit organizations, dependent on donations for survival. This will bring its own problems, as nonprofit boards tend to turn political over time. But Philadelphia may start trending in this direction before long.

“A lot of people are keeping a close eye on the papers,” says Judee von Seldeneck, of the global recruiting firm Diversified Search Ray & Berndtson. “And there is a sense that people may need to step forward.”

Though von Seldeneck doesn’t express any interest in turning the Inquirer into a nonprofit, she does allow that future investors in PMH will likely see the papers less as a moneymaking vehicle and more as philanthropy. Anne Gordon, a partner at Dubilier & Co., agrees. “I think you’ll see some people stepping up to buy some of this debt that’s giving them so little room to operate,” says Gordon, the former managing editor at the Inquirer. “Because whatever the company negotiates with the banks will probably only buy it some time.”

Some of the names said to be interested in securing the future of Philadelphia’s newspapers include von Seldeneck, Marsha Perelman, who married into the wealthy Perelman clan, Pew Foundation president Rebecca Rimel, and longtime Tierney friend and real estate developer Brian O’Neill, who says he’d consider making an investment. The effort, if it comes to pass, sounds reminiscent of the successful bid the city’s monied few made to raise $68 million and keep Thomas Eakins’s Gross Clinic painting in town. Of course, an influx of cash might steady the paper’s financial fortunes while raising other questions: What role in decision-making might the new investors want? And what conflicts of interest might reporters face while covering a city in which a number of wealthy citizens help pay them?