Not so very long ago, starry-eyed entrepreneurs were proclaiming the advent of a new age in which the Internet would change everything. Although the hubris of those days may be gone, the fact remains that the Internet has, in fact, changed just about everything -- at least in the business world. Opportunities for some businesses have been seemingly endless, while others have been forced to downsize or otherwise change their business model to survive.
An example of information technology's potentially disruptive effects can be seen in the recent layoffs at Tribune's (NYSE: TRB) newspaper division. The company's print unit is indeed under pressure, but investors also shouldn't allow themselves to slip too far into the hyperbole of the past. There's still some growth potential in newspapers, and Tribune is following it.
The news from Tribune's print division has been pretty grim lately. By the end of this year, the company will have laid off 900 people at its newspapers, which include TheChicago Tribune, TheLos Angeles Times, and TheBaltimore Sun, in response to declining circulation and slumping advertising revenue. In an age where individuals can use the Internet to instantly zero in on news and information tailored to their interests, it's no surprise that the one-size-fits-all newspaper is having a tough time competing. But it's important to remember that not everyone has easy access to the Internet, and it's in that population that Tribune has found an opportunity.
Amid layoffs, Tribune announced a new initiative for its Spanish-language paper, Hoy, in its New York market. In an effort to reach more readers, the company will begin offering the paper for free rather than charging for it. The change was made after Hoy experienced double-digit readership growth in its Chicago and Los Angeles markets under a free model.
Tribune's drive to capture more Spanish-speaking readers makes a lot of sense. While English language dailies' circulation has fallen in recent years and ad revenue has stalled, the circulation of Spanish papers has tripled from 1990 to 2002, and ad revenues have grown by seven times over the same period, according to Journalism.org. What's more, the advertising in Hoy and other Spanish dailies are often drawn from smaller local businesses, so the Tribune is in no danger of cannibalizing ad business from its larger newspapers by expanding Hoy's circulation.
Of course, Hoy is no panacea for Tribune, as the Spanish-speaking market is still just a niche segment. Nevertheless, Tribune's focus on the segment shows that as the Internet challenges its large papers, the company is finding other avenues for growth.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
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