Mr. Tirpak outlined the following parallels:
- Both had long been considered to be sure-fire businesses with dependable income.
- Both took advantage of the seemingly dependable income to load up on debt.
- Both face disruption from a disruptive technology (the Internet, and distributed generation and efficiency) with the potential to undermine their businesses.
What Happened to the Newspapers
Newspapers have not gone away, but as readers and advertising increasingly migrated to the Internet, circulation numbers dropped. When a company is loaded with debt, a small drop in revenues is magnified into a proportionately larger drop in profits. To stay solvent, newspapers had to raise prices.
Rising prices drove more readers away, starting the cycle all over again, and eventually leading to bankruptcy for many of the papers. As you can see from the chart below, many of those papers that survived without bankruptcy lost most of their stock market capitalization as more and more of
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