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Journalism & Publishing

Industry Overview

Publishing is changing awfully fast for a well-established industry that began several thousand years ago, five hundred years ago, or in the 1880s, depending on whether you date it from the first use of papyrus and stone tablets, the standardization of movable type, or the invention of the Linotype machine.

Pop Journalism
As circulation numbers become increasingly important in today's tight market, even the most prestigious news publications are being accused of pandering to popular taste. Breaking from the legendary editorial tradition of choosing worthwhile topics in spite of general appeal, online journals and print publications alike are deferring to the numbers in setting layout, content, and tone standards. USA Today was a pioneer in the easy-to-swallow strategy: Peppered with brightly colored photos and accessible information in graph form and sold in coinboxes designed to look like television sets, the daily newspaper achieved immediate success (and disdain) as a prototype of the TV/newspaper/comic book hybrid.

Weblogs and Journalism
The promise of one-to-many connections is being fulfilled these days by the weblog phenomenon. Weblogs-"blogs," for short-are a kind of online diary, in which the author, or "blogger," writes regular postings about whatever interests him or her, often including hyperlinks to other Web pages containing information about the topic at hand. Now Web pundits are making the claim that blogs are going to change the face of journalism; again, we'll have to wait and see on that claim. But there's no doubt blogs get the news in front of reader in a hurry, or that they are proliferating-and that even journalists and newspapers are getting in on the act.

Consolidation
At the same time as the Web is making it easier for unique journalistic voices to be heard, the companies at the top of the heap in the industry are getting ever-larger. In recent years, AOL swallowed Time Warner, Tribune acquired Time Mirror, Gannett acquired Central Newspapers, and McGraw-Hill acquired Tribune Education. Often this M&A; activity is accompanied by a lowering of costs (read: layoffs)-so be aware that in publishing, as in most any other industry these days, there are very few jobs whose future is 100 percent secure.

Newspapers
Newspapers remain the biggest segment of the publishing world, accounting for nearly 40 percent of the industry's revenue. The big players here are Gannett, Knight-Ridder, Times Mirror, Dow Jones, The New York Times, and The Washington Post. Most of these also own substantial interests in broadcasting, cable, and new media. Traditional newspapers, like all traditional publications, are entering a new era: Most conventional newspapers boast online content on their own websites or those of partners. Insiders even foresee personalized news services in which customers will subscribe to writings by particular journalists.

Magazines
This is a multibillion-dollar industry that expands each year, with top publishers such as AOL Time Warner (Time, People, Sports Illustrated, Fortune), McGraw-Hill (Business Week) and the Washington Post (Newsweek) leading in the Fortune rankings. TV Guide still outstrips them all in sales, and television news programs' increasing influence on the magazine format of glitzier features suggests the possibility of more links between the two media (to the chagrin of serious readers). Niche publications focusing on health, nutrition, travel, golf, and such are a growing presence, too-they've been thriving for the past 20 years and are slated for even more impressive growth.

Books
In the past, book publishers acted as gatekeepers, offering authors the only viable means of producing books and persuading stores to sell them. But the proliferation of the Web and the publishing alternatives it offers are challenging this staid Goliath. As technology forges ahead, this segment lags behind-reluctance to embrace new media is common among traditional publishers-and cynics allege that the death of print is approaching. But having recovered from similar catastrophes, such as the introduction of radio, television, and CD-ROM, the book publishing industry is realistically predicted to weather the storm.

In spite of the current identity crisis, this segment is a multibillion-dollar business of pulp titles and blockbusters that accounts for about a fifth of the publishing industry pie. The big players are New York's clashing titans-Bertelsmann (Random House) versus Viacom (Simon & Schuster) versus AOL Time Warner (Warner Books)-whose diversified interests put them on the path towards world domination.

Online Information
This is an ever-expanding universe. A quick browse on the Web will produce a spectrum of publications, including encyclopedias, daily journals, interactive newspapers, and even novels. The rapid dissemination rate and global capabilities of this far-reaching medium exceed traditional methods and offer information that can be easily updated. Revenue is generated by advertisements, subscriptions, and e-commerce partnerships, but long-term profitability is yet to be determined. The biggest players are well-established publications that support an online presence, such as the Wall Street Journal Interactive Edition, and focused content-based sites like CNet.

Publishing has been marked recently by massive mergers, consolidations, decreased circulation, and lower advertising revenues. As a result, the job market is stagnant with employment expected to grow more slowly than other occupations through the year 2010 according to the Bureau of Labor Statistics.

Publishing is still one of the bright and shining career options for humanities majors and people who love to read, think, and discuss their ideas, but it will continue to be one of the more difficult professions to break into. An internship or apprenticeship is often the best idea for recent grads-you'll gain valuable experience and make industry connections. Seasoned reporters concede that whatever one's education, on-the-job experience is where most skills are cultivated. Once you enter the field, there are myriad possibilities due to the diverse interests of corporate employers.

The diversification of the media giants has had interesting repercussions on the job market. As recently as 15 years ago, if you began life as a print reporter, you did not generally end up in television or book publishing. If you covered hard news stories, you did not moonlight in PR and other promotional copy. The mix is much more fluid now. And although a few old-school journalists decry these developments, they make your job prospects more interesting than they once would have been.

As the global economic climate cools down, so has investment banking. In 2001 and 2002, I-banking heavyweights Credit Suisse First Boston, Merrill Lynch, JPMorgan Chase, and Goldman Sachs all laid off a significant chunk of their employees. But the bulge-bracket firms were not the only ones to feel the pinch of thinner profits-or to react by cutting costs via layoffs. In 2001 alone, approximately 30,000 Wall Street workers were laid off. Also, I-banking bonuses, which can comprise half or more of some employees' total annual compensation, fell by some 30 percent in 2001. I-banks have also pulled back on college and MBA recruiting-but, because it's cheaper to employ a recent grad than someone with more experience, there are still jobs to be had for the cream of the crop from the best schools. More than ever, though, those who do I-banking internships will have the best shot at full-time openings.

Deregulation and Financial-Services Consolidation
Investment banking has witnessed a rash of cross-industry mergers and acquisitions in recent times, largely due to the late-1999 repeal of the Depression-era Glass-Steagall Act. The repeal, which marked the deregulation of the financial services industry, now allows commercial banks, investment banks, insurers, and securities brokerages to offer one another's services. As I-banks add retail brokerage and lending to their offerings and commercial banks try to build up their investment banking services, the industry is undergoing some serious global consolidation, allowing clients to invest, save, and protect their money all under one roof. Coupled with a slowing economy, these mergers have also triggered layoffs, as I-banks make an effort to cut spending and reduce overlap. Among the recent M&A; activity: Donaldson, Lufkin & Jenrette was acquired by Credit Suisse First Boston; J.P. Morgan and Hambrecht & Quist were swallowed by Chase; Robertson Stephens was acquired (and then dumped) by FleetBoston; and Alex. Brown was acquired by Deutsche Bank.

PR Nightmare-Or Something Worse?
The swing in the markets from up, up, up to down, down, down focused a lot of scrutiny on firms on the Street. The biggest issue so far has been whether banks overrated the investment potential of client companies' stocks intentionally, deceiving investors in the pursuit of favorable relationships and ongoing banking revenue opportunities with those companies. The outcome: a regulatory settlement released Dec. 20, 2002, directs the nation's largest securities firms to pony up $450 million over five years to buy stock reports from independent-research firms, ones not involved in I-banking. This means investors will be able to view at least one research report that was developed outside of the brokerage firm with which they have dealings. As well, I-banking firms have been mandated to put stock ratings from various sources on brokerage statements sent to investors after they buy a stock. Citigroup/Salomon Smith Barney, Credit Suisse First Boston, Goldman Sachs, and Morgan Stanley will also have to pay fines of $50 million on up. And a restitution fund will be put into place for investors burned in such dealings.

Of course, a lot of the details still need to be worked out, such as when this regulatory settlement is to take effect and what makes a research firm truly "independent." These types of issues and other potential quagmires put into question how effective this settlement will be. According to the New York Attorney General Eliot Spitzer, all changes will take place before the end of 2003.

The Bulge Bracket
There's no clear and uniformly accepted definition of this group, but it basically includes the biggest of the full-service investment banks. This is the group that matters most in investment banking, and their names confer distinction, whether you're a start-up with an IPO to sell, a Fortune 500 company planning an acquisition, or a job seeker sending out rÈsumÈs. Merrill Lynch, Morgan Stanley, Goldman Sachs, Citigroup/Salomon Smith Barney, Lehman Brothers, Credit Suisse First Boston, and JPMorgan Chase hold top spots in this bracket, at least for the moment. A whole host of others fall into the second tier of major players, including Bear Stearns and UBS Warburg, the investment-banking division of the giant Swiss bank, UBS.

Boutiques and Regional Firms
Obviously, the investment banking world extends beyond New York and the bulge bracket, but the list of small firms is getting smaller as the market consolidates. The strongest boutique firms-Hambrecht & Quist, Montgomery Securities, and Alex. Brown-have all been acquired by commercial banks. But that's not to say independent firms are nearing extinction. The equity markets are strong, and that means big business for niche firms focusing on technology, biotechnology, and other high-growth industries. In New York, Allen & Co. and Lazard FrËres still do big business in specialized fields. Volpe Brown Whelan and Thomas Weisel are Silicon Valley firms capitalizing on their technology connections and expertise.

Investment banking is one of the best ways a young person can learn about finance and make a lot of money right out of school. Even if you ultimately decide to reclaim your personal life by pursuing other options, the skills you learn on Wall Street will be valuable in most business careers.

But before you can cash in on those potential returns, you'll have to put up with some very substantial hardships, including high pressure, long days and nights of hard work, a few difficult personalities, and the expectation-no, the requirement-that all personal plans are subject to the demands of work.

In addition, you'll find that life on the Street is very much at the mercy of the markets. Bull markets bring more work to do than is humanly possible, but you'll be rewarded with a paycheck that can sometimes double year-to-year. Bear markets can leave you sitting at your desk with a pile of deals on hold, hoping that the rumored layoffs and smaller-than-usual bonuses don't come to pass. Despite this inherent uncertainty, the field remains a popular destination for undergraduates and MBAs. And, because of the current difficult economic environment, count on competition for open spots in investment banking to be especially stiff.

Still, firms are always looking for new (read: cheaper) bodies; even though they certainly aren't hiring to the extent they did a couple of years back, banks are still bringing on best-and-brightest hires for analyst and associate programs by way of summer internships for the most part. As one recruiter puts it, "We'll never not hire new talent, even during a merger, even during a downturn."

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