Interesting analysis of the US newspaper industry's cost base by Moody's Investors Service (though most of the rest of the report is unsurprising).
Written by Moody's vice president and senior analyst John Puchalla, the report contends that publishers spend far too much on producing and delivering a printed paper rather than on creating its content and selling it.
Here are the figures behind what Puchalla calls a "structural disconnect": only 14% of cash operating costs, on average, are devoted to content creation, while about 70% of costs are spent on printing, distribution and corporate functions.
The remaining 16% of costs are related to advertising sales, a first-class example of devoting too few resources to the principal revenue driver.
Puchalla sees this as a legacy of the industry's vertical integration and the result, of course, is that the high fixed costs - combined with high debt among many newspaper companies - is squeezing cash flow as revenue declines.