In the U.S. media sector, the newspaper industry has consistently earned a higher return on assets than the broadcast network TV industry despite the fact that newspapers have been the most rapidly declining part of the media sector.

The U.S. newspaper industry comprises some 1,400 daily newspapers of which just 217 have a circulation in excess of 50,000 copies. USA Today and Wall Street Journal are truly national newspapers; most others sell just within their local area. Only larger cities—New York, Los Angeles, Washington are served by multiple daily newspapers. During the past 10 years, daily circulation has dropped from 60 million to 55 million. As a percentage of GDP, newspaper advertising expenditure has fallen from 4.9% to 4.1% over the same period. Ownership is concentrated in 12 major companies. These include: Gannett, Knight Rider, Scripps, New York Times, McClatchy, Washington Post, Tribune, and Pulitzer. Among the challenges faced by the industry in recent years have been competition from internet-based news and information sources, the decline in classified advertising (due mainly to eBay and other internet based channels), and the entry of free newspapers (mainly published by the Swedish group, Metro).

The U.S. broadcast TV industry comprises four major networks: ABC (owned by Disney), NBC (owned by GE), CBS (owned by Viacom), and Fox (owned by News Corporation). In 1995, two new networks, UPN and WB, began broadcasting. The networks purchase shows from production companies (e.g. Sony, MGM). Several of the media companies that own TV networks, also own production companies (e.g. Disney Studios by Disney, Paramount by Viacom, 20thCentury Fox by News International). The TV networks distribute their programming through local TV stations (“affiliates”)—some of which are owned by the networks. The audience for the TV networks has declined in recent years due to increasing competition from the cable networks and satellite channels. The same alternative sources of TV programming also compete for advertising revenues—as do other media channels (notably the internet). Technologies that allow TV viewers to skip adverting have made broadcast TV less attractive to advertisers.

On the basis of the facts above, together with any general knowledge you have of the two industries; explain why the network TV industry has delivered lower returns than the newspaper industry in recent years? Are there any actions that the major networks could take to make their industry more attractive?