Why the 'Boston Globe' Is on the Death Watch

Sure, it's a bad time for newspapers. A very bad time. But that alone doesn't explain why the Boston Globe is doing so very, very badly. What does?

With a weekday circulation of about 350,000, the Globe is reported to be on track to lose $85 million in 2009. "For a newspaper of their size, that's just an extraordinary amount of money," says analyst Edward Atorino of the Benchmark Co. Obviously The New York Times Co. agrees, or it wouldn't be threatening to shut the Globe down unless it can bring those losses down by $20 million in a hurry.

Hearst Corp. made a similar threat regarding the San Francisco Chronicle, which was widely reported to be losing $1 million a week (although a very well-placed source told me it's actually closer to $1.5 million). In the case of the Chronicle (which Hearst now says it probably won't have to shutter), the unique geography and demographics of San Francisco make profitability elusive: The paper mainly serves the city of San Francisco itself, while a host of competitors cater to the richer outlying communities.

So why is the Globe, which is just a touch smaller than the Chronicle, so similarly strapped? Atorino says it has a lot to do with the city's makeup: a high proportion of Boston's residents are college students, who tend not to read newspapers, and a high proportion of its businesses are financial institutions, which, of course, have gotten hammered over the past two years.

"They've had a combination of economic and social conditions that have made life tough for Boston even when the newspaper business was doing better," he says. "Things started getting bad at the Globe much earlier than at other papers."

How bad? The Times Co. doesn't break out figures for the Globe individually, but at its New England Media Group, of which the Globe is the mainstay, revenues went from $675.3 million in 2005 to $635.3 million in 2006 to $592.2 million in 2007 to $523.6 million in 2008.