Jim Moroney was a John the Baptist of the newspaper industry five years ago when he suggested that the then-tiny "other" revenue category could grow to cover print losses.
The Dallas Morning News publisher and A.H. Belo Chairman and CEO then practiced what he preached, aggressively buying up digital marketing and advertising companies around town and expanding commercial printing operations.
Those have become standard industry practices since. But Moroney's early start was vindicated today as A.H. Belo reported those activities covered print losses in the second quarter and kept revenues level with the same period a year ago.
Those are the best results of the five publicly traded newspapers reporting second-quarter financial results so far.
Belo also posted a small net profit — $700,000 on revenues of $66.6 million, a margin of 1 percent.
Digital ad and marketing revenues grew 20.9 percent year-to-year and now constitute 31.8 percent of total advertising and marketing revenues (the company does not report print advertising revenue separately, but by my calculations, they were off in the neighborhood of 14 percent).
Moroney described the marketing services and digital ad agency in a conference call with analysts as a maturing system. The company has not made any additional acquisitions so far this year and probably won't, he added, focusing instead on getting the most from what's in place.
Belo executives also offered some examples of what is working especially well in their digital marketing efforts. Elective surgery is a particularly strong category with providers of lasik and bariatric, buying a combination of a branding campaign and a more detailed pitch to targeted customers.
"We have been able to show them an ROI (return on investment)," in improved patient counts, Moroney said, so getting renewal of contracts has been easy. That kind of target marketing also has an appeal to auto dealers, traditionally strong print and TV advertisers, who are now shifting a big chunk of marketing budgets to digital.
When Moroney began pushing the other revenues streams, he said bluntly that digital advertising alone would never grow to support a strong local news effort.
Belo raised money for the digital marketing buildout by selling its papers in Providence and Riverside, California. Reducing legacy costs continues to be an emphasis, and the company's downtown headquarters could be sold — a potential source of a future cash infusion.
I've spoken often with Moroney as the strategy took root. One move among many that impressed me: the Morning News bought Pegasus, a pioneering local digital-only site launched in 2006. Pegasus was eventually folded into its own events vertical, but the DMN hired talented founder Mike Orren as president of its Speakeasy digital ad agency.
Now, more recent buildouts of digital marketing at chains like GateHouse and McClatchy are becoming growth engines as well.
Not all the Belo news was sunny. The company saw circulation revenue fall 1.8 percent year to year. In May, it launched a third try at a paid digital subscription strategy, installing a paywall instead of putting all "premium" content on a subscribers-only site. Early results are encouraging, Moroney said.
Wall Street appeared to like what it heard in the report with Belo shares up 7.5 percent for the day.