Rick Edmonds

Researcher and writer for Poynter Institute on business and journalism issues. Co author, State of the News Media 2006. ExSP Times and Phil Inquirer


Gannett

Gannett earnings strong, but publishing revenues continue a steep slide

FILE - This July 14, 2010 file photo shows the Gannett headquarters in McLean, Va. Gannett Co. reported Overall company revenue growth of 15 percent. The media company said, Monday, Oct. 20, 2014. (AP Photo/Jacquelyn Martin, File)

FILE – This July 14, 2010 file photo shows the Gannett headquarters in McLean, Va. Gannett Co. reported Overall company revenue growth of 15 percent. The media company said, Monday, Oct. 20, 2014. (AP Photo/Jacquelyn Martin, File)

Embedded in otherwise excellent third quarter financial results reported today by Gannett are some sobering numbers on the continuing decline of revenues for its newspaper division.

U.S publishing ad revenues year-to-date are down 6.3 percent. At Gannett, that difference is more than made up by booming broadcast operations and freestanding digital ventures like CareerBuilder.  So revenues for the entire company are up a healthy 13.4 percent.

But I also consider USA Today and Gannett’s 81 community newspapers a reasonable proxy for the entire newspaper industry, which has stopped reporting its financial results quarterly.  If the rest of the year is roughly in line, newspapers are on track again in 2014 to lose $1 billion-plus in advertising.

That’s against a 2013 base of $17.30 billion industrywide in daily print advertising or $23.57 billion including all form of advertising, according to estimates by the Newspaper Association of America.

Gannett’s advertising decline to date (-6.3 percent) roughly matches the industry rate in 2013 (-6.5 percent).  So 2014 is proving no better than 2013.  Recent waves of staff cuts as companies budget for 2015 suggest that revenue growth is not expected next year either.

At Gannett (and probably most U.S. papers) circulation revenues were up slightly for the quarter and holding even for the year. The papers are now cycling past one-time revenue gains of roughly 5 percent in both 2012 and 2013 from introduction of paywalls and price increases for print and print + digital subscriptions.

Digital advertising is increasing, mostly at USA Today, but not nearly enough to offset the print losses.  And the continued growth of digital marketing services, sold to local businesses, is another plus.

In an earnings conference call, CEO Gracia Martore said another bright spot for the company has been the introduction of a section of USA Today news at its 35 largest papers.  Surveys show a positive reader response, she said, in some cities justifying another round of subscription price increases.

There is an echo of that strategy throughout the industry.  This weekend both The New York Times and Washington Post introduced print supplements which regional papers can include in their Sunday editions.  The Post had earlier made a free subscription to its digital report available to digital subscribers of partnering regional papers.

This arrangement allows papers to focus on their local news report, while offering subscribers, especially the older demographic that prefers print, a fuller report of national and international news, as was standard in better financial times.

Gannett’s broadcast revenues are up 97.2 percent year-to-date in large part because the operation is much larger after acquisition of Belo’s 20 stations. Retransmission fees paid by cable systems to local stations continue strong, up 61 percent for the quarter.

And political advertising is booming beyond expectations.  At the company’s Denver station — where Colorado has both a competitive governor’s and U.S. Senate race — this year’s revenues are even outpacing those of 2012, a presidential year, said Martore.

The different trajectories of broadcast and print have prompted Gannett to plan splitting those operations into two companies, a spinoff Martore said should be completed by mid-2015.

News Corp., Media General, Tribune and the Washington Post (now Graham Holdings) have already completed such a split and Scripps and Journal Communications plan one as part of a merger.

Other public newspaper companies, New York Times, McClatchy and Lee, do not own TV stations. So, soon there will be no combined print and broadcast operations among public companies, and some larger private companies like Hearst have separated TV and newspaper divisions as well.

In theory the print-only companies will benefit from management focused exclusively on their digital transformation, audience and advertising issues.  And they won’t be competing internally with fast-growing broadcast for capital.

All that, however, leaves the big question lingering — can the companies slow the print advertising losses, generate enough digital ad growth, increase circulation revenue and bring in enough income from new ventures to make up the difference. Read more

Tools:
1 Comment

As newspaper renewal scam widens, NYT offers affected subscribers a refund

Sunday subscribers to the New York Times found something unusual tucked among the sections October 12 — a legalistic form offering a refund if they had paid an inflated renewal price to an unauthorized third-party.

That marked two bits of news in the developing story of a scam that has now been noted by dozens of newspapers over the last month. It was the first indication that the New York Times was among the targets. And it appears to be the first time a publication has offered refunds rather than just a warning.

Caroline Little, president of the Newspaper Association of America, said that the organization is investigating but “hasn’t gotten to the point yet” of recommending a remedy.

This kind of solicitation, long a staple in magazine subscription sales, comes in the form of an apparent billing notice from Customer Billing Service or various other trade names. It states the payment can be used either for a renewal or a new subscription. And in the case of the Times and other newspapers, the requested amount has been well above the highest rate the company itself charges.

The Times solicitations date back at least to 2011, spokeswoman Linda Zebian said, but the company found out about the practice only after a lawsuit by a subscriber this summer. “We realized we could have done more,” she said. “It’s concerning and it’s dishonest.” Hence the decision to offer reimbursement in exchange for a waiver of any additional claims.

Zebian said that the company’s best guess is that about 1,000 subscribers may be affected. If that many were to file a claim for a refund averaging $400, the Times would be out $400,000 — not a material hit financially.

The Times action is sure to be noted through the rest of the industry, but others may or may not follow the industry leader’s example.

Implications could be even bigger for the magazine industry, which relies heavily on third parties for subscription sales and has been accepting orders from the rogue solicitors for more than a decade. (I left calls but was unable to get an immediate response from the MPA magazine trade group or Time Inc.)

So how can an unauthorized service place thousands of subscriptions without objection? People who accept the offer do get their subscriptions fulfilled. Magazines and newspapers, in turn, both accept group orders from a variety of sources.

The Times’ “letter to subscribers” Sunday from chief consumer officer Yasmin Namini, explains the process this way:

When The Times has received payments on your behalf from these companies, these payments have been applied to your subscription account and used to pay for your subscription. However these companies also took part of the amount you sent and kept it for themselves. The Times will pay subscribers who qualify….an amount equal to the amount that the solicitation companies kept for themselves. For example, if a qualified subscriber sent the solicitation company $999.95, and the company sent The Times $609.60, the subscriber would be entitled to a payment of $390.35 under the restitution program.

The company, based in Oregon, has operated under more than 40 different names, according to a thorough report in The Arizona Republic. Not only has it wiggled away from consumer complaints, it has aggressively claimed a legal right to sell and place subscriptions, whether authorized by publishers or not.

As an avid magazine reader, I have received a steady stream of these renewal notices and have bitten more than once. I realized something was amiss when I started receiving two copies a week of Time and later Entertainment Weekly — one in my name and one in my wife’s.

I don’t recall the magazine solicitations to be at inflated rates — but given the labyrinth of varying offers for different terms, it is hard to tell.

The dimensions of the scam and its damage to the print industry are hard to gauge yet. My guess is that it won’t prove as big as the newspaper circulation scandal of a decade ago when four big publishers inflated their paid circulation by hundreds of thousands of copies — and charged advertisers accordingly.

Still, as a matter of customer relations, it can hardly be a plus that so many publications were duped for so long — or simply accepted the money, no questions asked. Read more

Tools:
0 Comments
WantedNewOwners-100

Papers for sale, who’s buying?

After Digital First Media’s announcement two weeks ago that it was formally putting its 76 daily newspapers up for sale, the logical next question in each of those newsrooms is “so who will I be working for? And will they cut more jobs here?”

The normal time frame from offering to completed transactions is six to nine months — pushing a likely resolution to the angst well into 2015. But there are at least three deep-pocketed prospects, who have already assembled chains of dozens of papers, bought more the last two years, and can be assumed to still be on the prowl:

*Top of the list is New Media Investment Group, a public company formed earlier this year which subsumed GateHouse Media. It owns the former Dow Jones local group and struck a deal last month to buy the Providence Journal. Recapitalized as GateHouse Media emerged from bankruptcy, New Media just announced that it is issuing $90 million more in stock, presumably to buy more papers.

*Halifax Media Group, formed in 2010 to buy the Daytona Beach News Journal, later acquired the New York Times Regional Group in late 2011. This summer it bought the Telegram and Gazette of Worcester, its first foray outside the South. The company’s main financial backer is Warren Stephens of Little Rock, a Forbes 400 billionaire.

*B.H. Media Group, a part of Warren Buffett’s Berkshire Hathaway, was formed in 2011 to buy his hometown Omaha World-Herald. It soon acquired all of Media General’s dailies except the Tampa Tribune. Since then it has bought the Tulsa World, the News & Record of Greensboro, Roanoke Times and Press of Atlantic City.

All three groups specialize in mid-sized and smaller dailies (and own a number of weeklies as well). They tend to have consolidated editing centers as well as business arms offering digital marketing services. They run lean to very lean and might make further newsroom cuts, though most Digital First papers are hardly lavishly staffed to begin with.

The largest Digital First papers — The Denver Post and San Jose Mercury News — are bigger than any that the three companies own. So those titles might have more luck finding a buyer from a civic-minded rich person or a group of well-off locals.

For smaller Digital First properties, the prospects list include smaller, less known investor backed companies like Versa Capital Partners’ Civitas Media, along with family firms like Ogden Newspapers or Forum Communications, based in Fargo and focused on the Upper Midwest.

If this sounds like a very different group of acquirers from the industry leaders a decade or 15 year ago, it indeed is. Leading newspaper broker Dirks, Van Essen & Murray conveniently assembled in its summer newsletter a then-and-now picture of buyers and sellers comparing the year 2000 to the last 30 months.

2000 was a busy acquisitions year and Gannett, Tribune, Lee Enterprises, Media General and MediaNews all completed big transactions. The large public and private companies were buyers of nearly 60 percent of the properties sold.

None of those has bought a paper this decade.

Instead, in the current generation of transactions, private equity groups (27.7 percent) are the biggest players among buyers, followed by family-owned groups (19.1 percent), BH Media alone (17 percent) investor groups (13.5 percent) and local interests (12.1 percent).

The changing landscape of newspaper ownership. (graphic by dirksvanessen.com)

The changing landscape of newspaper ownership. (graphic by dirksvanessen.com)


On the seller side, public newspaper companies dominated in 2000 (64.9 percent). Over the last 30 months, that share fell to 27 percent, with “lender-controlled” papers acquired in bankruptcy or other circumstances of financial distress the new leading source of sales at 42.6 percent.
The changing landscape of newspaper ownership. (graphic by dirksvanessen.com)

The changing landscape of newspaper ownership. (graphic by dirksvanessen.com)

President of the firm, Owen Van Essen, told me that the analysis was of the number of dailies changing hands but that he did not think the results would be radically different if the dollar value of the transactions was the measure.

The sampling ended mid-year, but the firm’s methodology would not treat big spinoffs, like Tribune’s and those planned at Gannett and Scripps as sales.

As I wrote earlier in a post on what went wrong at Digital First Media, the high-profile company may have plunged too hard on a bet digital advertising could support the enterprise and still had capital needs north of $100 million to modernize CMS systems and other creaky technology and to fund digital expansion.

But Digital First has developed some strong digital advertising services, notably Ad Taxi, which streamlines buying and targeting and has many clients besides its own chain of holdings.

It is not clear (to me looking in from the outside) whether these could be the core of a reconstituted Digital First once all or most of the newspapers are sold but that would seem to be one possible scenario.

Informal explorations of a possible sale have been in progress for most of this year. It is possible that potential buyers are already focused on particular papers or a regional group that matches their strategy.

The entire group, second only to Gannett in total circulation, looks too big to swallow as a whole — but one of the acquirers or a new investment group might emerge, thus keeping the papers and the shared centralized business services together.

Of course, it is also possible that the papers won’t find buyers, as was the case when Tribune Co. explored sale of its eight titles before deciding instead to spin them off into a new company.

Van Essen said the market for newspaper deals is much improved over the last several years. Though print advertising continues its alarming decline, industry efforts to build new, alternative revenues are beginning to work. “The rate of overall revenue decline has fallen dramatically,” he said, and there is “a fairly high level of confidence of the business,” which, while smaller, remains profitable.

You could look at the prospective Digital First sale as the biggest referendum yet on investor assessment of the transforming industry, but we will likely need to wait many months for the results to be tallied. Read more

Tools:
2 Comments
piano

Slovakian Piano Media acquires Press+ and aims to take paid digital content global

Only close watchers of paid digital content (paywalls) will have heard of Piano Media, a little three-year old Eastern European start-up that has steadily been adding clients. Today, Piano leaps to the front of the paywall vendor line, announcing its acquisition of  Press+, the dominant provider in the United States.

That same little company also hired Kelly Leach, publisher of the Wall Street Journal’s European edition, as its new CEO, and plans aggressive expansion into Latin American and Asian markets where digital pay is just beginning to get serious attention from publishers.

If the transaction, being described as a merger, sounds like a minnow swallowing a whale, it is. Press+, which Poynter uses to solicit donations, is 8.8 times as big in revenues, Piano communications director David Brauchli said in an e-mail exchange. The transaction is being financed by 3TS Capital Partners, a Central European venture capital firm.

Press+ founders Gordon Crovitz and Steven Brill sold their company to RR Donnelley in March 2011, but stayed on as co-CEOs. With this sale they will step back from any operating role and act as advisers, Crovitz told me in a phone interview

“Growing the market outside the U.S.” is the next logical step for the business, he said, and it made more sense to seek a partner with international experience than to try to build that capacity on their own.

Press+ will continue to operate under its own name with the metered system for digital subscriptions and supporting software and analytics its main offering. Piano began with what it has called a cable TV-like model in which Slovakia’s leading media outlets (and later Slovenia’s) combined for a single digital subscription offering that gave access to all the publications.

Piano adapted its product line to individual publications in Germany and earlier this year Newsweek with “Piano Solo.” The original whole country model, “Piano National” could have appeal in Latin American, Asian or even African markets

I spoke to Leach by phone from London and asked why she would leave a high-profile Dow Jones executive position for Piano. “I really believe in the paid digital model, and I did when not very many others did…It’s an area I’m passionate about. We have seen this wave working its way around the world and at the same time we are realizing that digital ads alone won’t carry the day.”

Leach worked with Crovitz in the early 2000s, when he was Wall Street Journal publisher, and the Journal was among the first to introduce digital subscriptions. (Closing the Dow-Jones loop, she was recruited for the job by David Brauchli’s brother, Marcus, a former editor of the Journal and later the Washington Post).

Tomas Bella, founder and current CEO, will remain an investor but step aside from an operating position, the company said.

Besides having complementary strengths, both Press+ and Piano charge clients a percentage of digital subscription revenue. Some competing vendors like Syncronex. Media Pass and Tiny Pass instead offer a fixed licensing fee with add-on features.

Both Leach and Crovitz said their strongest selling point is that their 600-plus clients provides the broadest experience base and best analytics, allowing companies to grow revenues to a much higher level than they would with a less expensive system.

I also spoke with Matt Lindsay, president of Mather Economics, which advises publishers on digital and other pricing issues. He had not heard of the pending transaction but said it made sense.

“There’s still some growth left” in basic paywall adoption in the U.S. and Europe, Lindsay said, “but we are starting to reach the saturation point.” However there is a next generation of paywall issues including new product development, refining trial offers and linking digital and print subscription plans.

Crovitz said that the combined Piano/Press+ company will be positioned for that business and may have offerings for “the dozen or so big companies (including the New York Times) who cobbled together their own system” without a vendor template.

But the bigger and immediate opportunity will probably be the rest of the world, following the U.S. and Canada and now Europe in pursuing revenue from digital users.

“Asia is really ripe for this,” Leach said, “and they may not have made the same mistakes. For instance, in Japan, only a small fraction of content even appears online….So they haven’t trained the customer (as most U.S. publishers did) that online content is free and ad-supported.”

Piano Media and its venture capital backers are both based in Vienna. Leach said she expects to divide her time between there, New York, London, and Bratslava when not courting new clients.

The news marks the very fast development of digital paywalls from untested theory to standard strategy. It is only five years since Brill and Crovitz launched Press+ and three-and-a-half years since the New York Times and other U.S. publishers began charging for full digital access. At the time, the consensus view was that publications would be placing their digital audience numbers and digital ad revenue at risk if access was no longer free.

Now roughly 600 U.S. and Canadian papers have such systems. Holdouts like Digital First, Advance, and Deseret are at least considering some variation. In our interview, Crovitz said that one of his company’s biggest achievements has been showing that paid digital can work for newspaper organizations of all sizes, not just the big guys like the Times, Journal and Financial Times

Brill and Crovitz, the New York Times and Piano also figured out early that there was lots more to successful execution than simply deciding whether to charge or not. Some flexibility in pricing and trial offers was essential, they could see, and digital pay could be closely tied both to management of print circulation and a next generation of specialty products.

The name Piano, according to a 2011 Nieman Lab piece by analyst Ken Doctor, was an allusion to integrating all these complexities — using ten fingers and both hands to produce a harmonious result.

In my view, legacy newspapers and magazines remained siloed by traditional print functions and provincial thinking until very recently. Now the notion has finally taken root that business model problems arrived earlier here than in other countries but that the search for potential solutions and associated business opportunities is global.

And if you accept that the industry has entered this new phase, little Piano swallowing U.S. leader Press+ is not as odd as it first sounds. Read more

Tools:
1 Comment
Katharine Weymouth

Katharine Weymouth’s resignation completes the close of the Graham era at the Washington Post

Katharine Weymouth (Photo by Marvin Joseph/The Washington Post)

Katharine Weymouth (Photo by Marvin Joseph/The Washington Post)

In a word, unsurprising. Katharine Weymouth’s announced resignation today as Washington Post publisher simply completes the ownership change initiated a year and a month ago when Amazon’s Jeff Bezos bought the paper.

Neither Bezos nor Weymouth were commenting (even to the Post) about the circumstances and timing of the change, though the New York Times reported it was initiated by Bezos. My guess would have been that she had agreed to stay on for a transitional year as part of the sale, but perhaps she was trying out for a longer tenure with the new owner.

It is hard to call Weymouth’s six-plus years as publisher a success, but I wouldn’t say she failed in the job either.  She took control at the worst possible time in 2008 as the deep recession accelerated the precipitous decline of print advertising, especially at metro papers. She oversaw rapid-fire experiments with new revenue sources and a series of strategies for digital growth.  None of her initiatives turned the enterprise around — but then, who in a similar situation did?

This has been the era of “Riptide” (as a Harvard study project by three former media executives was titled).  A strong legacy brand may have been as much a liability as an asset in competition with digital disruptors. Staying afloat was an accomplishment.

Weymouth’s legacy will be twofold.  In December 2012, she took a clear-eyed look at her tenure and at the Post’s prospects and persuaded her uncle, CEO Donald Graham, that it was time for a new owner, a new vision and new capital to support a transition that will take years more.

Around that same time, she hired Martin Baron away from the Boston Globe as editor.  Knowing Baron well, I am not unbiased, but he is certainly one of the best editors of his generation, if not the best.

I heard of Weymouth (without knowing much of anything about her) more than a decade ago.  Someone told me that none of Graham’s four children was interested in succeeding him in the family business, but a niece was and was moving through business jobs at the paper in preparation.

Graham had done a similar apprenticeship (as have various Sulzbergers at the New York Times).  But a tour of departments with increasing responsibilities doesn’t exactly get an heir apparent ready the way it once did.

My own limited impressions of Weymouth were formed in several visits to Poynter in St. Petersburg (where her father is an accomplished architect) and several appearances at the annual conference of the Newspaper Association of  America, where she seemed to enjoy asking the questions as a moderator more than answering them.

A sharp intelligence was evident, but she was not much on the vision thing in public forums and revealed little about what she saw as the Post’s biggest business challenges or how she planned to deal with them.  Easy for me to say, but I am not sure, in retrospect, what the benefits of greater candor would have been.

Most accounts of Weymouth’s time (including the Post’s own this morning) will rate as her greatest blunder a plan to put advertisers together with Post editors and reporters in “salons.” at her home. I think that’s a bad rap.

A mashup of an events strategy with her grandmother’s legacy as a dinner party hostess, the effort launched with bad optics and was withdrawn.  But the Post quickly got back in the events business (where sponsorships are an easy sell compared to conventional advertising). Weymouth’s version doesn’t strike me as all that different from Atlantic Media owner David Bradley’s widely praised development of a-list events as an important revenue stream.

Amanda Bennett, a seasoned top editor as well as Don Graham’s wife, was ready with an effusive tribute to Weymouth, posted as a comment minutes after Poynter Online’s news story about the change.  Bennett’s focus is on Weymouth’s “courage” in fighting the good fight, then knowing when to take the painful step of ending family control.

The morning line on Weymouth’s successor, Frederick Ryan, seems to include musings about whether his early career as a Reagan aide augurs a Post move to the right editorially.  I doubt it. Bezos is no ideologue and, especially on foreign affairs, Fred Hiatt’s editorial page is fairly conservative already.

To my mind, the more relevant factoid is that Ryan comes from Albritton Communications,  a longtime Post competitor.  Way back in the day Washington Star provided decades of second-paper competition to the Post before it was sold by Albritton and subsequently shuttered in 1981.

Fred Ryan, Jr., (Photo by John Shinkle/POLITICO

Fred Ryan, Jr., (Photo by John Shinkle/POLITICO

More recently, without a legacy newspaper culture to work through, Albritton successfully launched Politico (of which Ryan was the founding president and chief executive) in 2007 — the very model of a smooth pivot to digital at a time when the Post was still stopping and starting, trying to find its way as a print + digital business.

Related:
Katharine Weymouth at Poynter in 2010: ‘You just keep plugging away’ Read more

Tools:
0 Comments
Jay Nixon

Was Ferguson a ‘news desert’ until two weeks ago?

Missouri Gov. Jay Nixon speaks during a news conference  in Ferguson, Mo. Violent protests in Ferguson erupted in the wake of the fatal shooting of  Michael Brown by a police officer on Aug. 9. (AP Photo/Jeff Roberson)

Missouri Gov. Jay Nixon speaks during a news conference in Ferguson, Mo. Violent protests in Ferguson erupted in the wake of the fatal shooting of Michael Brown by a police officer on Aug. 9. (AP Photo/Jeff Roberson)

Coming late to the Ferguson story, I have a modest thought to add to the ongoing discussion of why the police shooting and the bumbling local response to protests happened there.

My hunch is that like many aging and changing suburban communities, Ferguson had received only the most episodic of news coverage until all hell broke loose.  Political theory and high profile reports from the Knight Foundation and FCC suggest that when a town is a news desert, low civic engagement is almost certain to follow.

So if that’s the theory, isn’t Ferguson the practice?  A community, as the phrase goes, that doesn’t know how to talk to itself.

Many reports have noted that with a nearly 70 percent African-American population (flipping the racial composition of 20 years ago), the town’s 53-person police force has only three black officers.  Others have observed that the mayor, the school board and other elements of the governing power structure in Ferguson remain virtually all white.

We will soon find out whether patronage and racism have kept the police force as it is.  But as for white dominance in elections, that seems as if it could only be explained by the black majority being uninvolved and unorganized politically.  Rev. Al Sharpton observed as much Sunday, calling for a registration drive and improvement of a dismal 12 percent turnout rate in the last election.

What kind of news coverage had Ferguson been receiving?

Margie Freivogel, editor of St. Louis Public Radio (formerly the St. Louis Beacon) pointed me to a pair of weeklies based in larger towns nearby.   But their Ferguson stories appear fragmentary and not aggressive at all.  (The August 14 edition of the Florissant Valley Independent led with “leaders’ reactions” to the shooting and protests with no additional reporting).

Freivogel, who was a long time Post-Dispatch staffer from 1971 to the mid-2000s, added “the P-D never intensely covered Ferguson or north county. But it was certainly covered more heavily than now.”

Adam Goodman, deputy managing editor of the Post-Dispatch, confirmed that in an e-mail:

The Post-Dispatch used to have a North County bureau, which I believe we closed in 2007.  Ferguson was one of many north St. Louis County communities covered by two reporters in that office. We used to zone a North County page twice a week. Our sister Suburban Journals publications ended their weekly North County edition in 2011.

But, Goodman said, the Post-Dispatch has still made it out to Ferguson to cover important stories like the dismissal of a popular black school superintendent or continuing foreclosure issues.

My own reporting and Steve Waldman’s FCC study both found that metros, which have been forced to make the deepest cute news staff in the last decade, typically denuded their suburban coverage and pulled back to the city limits.

I visited this phenomenon five years ago in a story “Alhambra, Calif.: The  Little Town News Forgot.”  Four times the population of Ferguson, Alhambra is a suburban community of small bungalows, just north of prosperous South Pasadena.  It once had its own daily newspaper and subsequently was covered by a small Los Angeles Times bureau and the Pasadena Star-News until the early 2000s.  Then coverage dropped from several stories a week in the Times to five or six a year.

Meantime Alhambra demographics, like Ferguson’s, changed radically.  From a mostly white community, it  became a center for Hispanic and Asian immigrant groups with some white and a very small African-American population remaining.  Indicators of civic vitality were remarkably low, in part because many in the major ethnic groups could not speak each others’ language.

This prompted USC-Annenberg journalism professor Michael Parks (formerly the editor of the  L.A. Times) to assemble grants and help from colleagues to build a new digital site with the Alhambra community from the ground up. The resulting  Alhambra Source, with a professional editor coordinating a corps of citizen contributors, has had typical growing pains and financial sustainability challenges but is still publishing.

I can see something of the sort in Ferguson’s future once the current crisis settles.  Huffington Post announced yesterday that it will try to crowd-source a locally based reporter and give her continuing support from its own professionals.

My Poynter colleagues Kristen Hare and Jill Geisler have ably chronicled the strong local media response of the last two weeks (Ferguson is just 15 minutes from downtown St. Louis). Freivogel’s public radio news department will no doubt continue its Ferguson blog, and the Post-Dispatch and TV stations now have the issues of Ferguson and similar towns in fragmented St. Louis county in their sites.  National media wonks too have discovered oddities that bear continuing analysis.

To be clear, the erosion of newspaper coverage in Ferguson and a vast swath of  suburban/exurban communities where so many Americans choose to live undercuts democracy.  But the remedy, if one is forthcoming, is not going to be a revival of  newspaper coverage — but rather something else, something new, something digital.

Related:
Trayvon Martin story reveals new tools of media power, justice Read more

Tools:
3 Comments
Newspaper vendor

Death of newspapers announced prematurely (yet again)

I woke up thinking today was much like any other on the news-about-news beat, that is until I learned from David Carr and the New York Times that “Print is Down, and Now Out.”

Really? Let me beg to differ.

For starters, Carr is, as the country song goes, looking for love in all the wrong places if he wants validation from Wall Street. The financial prospects of newspaper organizations are not comparable right now to those of local broadcast or growing digital classified brands.

So investors are performing their role and corporate execs responding logically with the wave of spinoffs completed last week with Gannett’s announcement it will split its community newspaper division and USA Today into a new company early next year. We shouldn’t look to the money guys for a ringing vote of confidence in the public service mission and democratic role of print journalism.

Carr equates the spinoff to being “kicked to the curb.” Kindred spirits like Michael Wolff are also pretty sure life as an independent company is a way station to print’s doom — and sooner rather than later.

Sure, the cushion of fat television profits will be missed.  Maybe that does make the uncertain future of newspaper organizations that much scarier.

Related: Splitsville: Why newspapers and TV are going their separate ways corporately

I am waiting to be fully persuaded that greater management focus and capital allocation will get the industry to turn the corner. But limited experience to date provides some encouragement.

A.H Belo was split from its broadcast division (since sold to Gannett) in February 2008. It (like the New York Times Company) unloaded other assets to concentrate on its core property, the Dallas Morning News, selling papers in Riverside, California, and Providence, Rhode Island.

Last quarter A.H. Belo achieved a landmark of sorts. It was able to offset continuing print ad revenue losses with revenue growth in its digital marketing and contract printing activity.  That is a key first step in any industry turnaround, and credit “orphan” A.H. Belo for being one of the first to get there.

By the way, if Wall Street seems not to be giving the industry much love, it has at least been rewarding the changes at A.H. Belo (and Gannett too) with a lot of likes.  The company’s shares are up 40 percent in the last six months to $11.23, have more than doubled in value over the last two years and show even more dramatic appreciation from a 2009 low of $0.71 a share.

CEO and Dallas Morning News publisher Jim Moroney does not profess to be a miracle worker.  The company has bumbled paywalls, for instance, while well outperforming the pack in the lucrative digital marketing services business. Launched debt-free, it has used the proceeds from the asset sales to put substantial bets on a variety of experiments. The results amount to steady progress.

“We’re not declaring victory,” Moroney told me in a phone interview, “but six years later we are doing just fine, thank you, financially and otherwise.”

A spinoff, he said, “compels the company to be focused on the very different path forward newspapers need to pursue.  Otherwise it can be tempting not to take the hard steps you need to take … When you stand alone you have nothing to camouflage (bad results like those of 2008 and 2009) and make things look better.”

While I don’t think the sky above the newspaper business is falling, Carr’s column raises a bunch of valid and serious concerns. A.H. Belo excepted, the industry has generally not reached a turning point where growing circulation revenues and other ventures cover for print ad losses. The second quarter was especially bad, though it is not clear whether the rest of 2014 will be the same or a little better.

I very much share Carr’s worry that the volume and quality of news — in print or on newspaper websites — could fall at a number of properties to a near vanishing point after more rounds of cuts.

Related: If Gannett is a bellwether, 2014 will be another tough year for newspaper advertising

My mood, like his, was not improved by the announced changes last week at Gannett’s Tennessean in Nashville, a shakeup veiled in a thick shroud of buzzwords and corporate speak.

On the other hand, Executive Editor Stefanie Murray, who is in her early 30s, comes with a mix of print and digital experience. I wondered almost a year ago whether an industry serious about transformation needs to walk the walk by giving top editor jobs to those with a strong digital background. Gannett and Advance have started to do so.

Murray (who, coincidentally, wrote the obit for the print Ann Arbor News as a reporter) deserves a little window to carry out her reorganization. For that matter, I can’t see the case for calling the Gannett, Tribune and Scripps spinoffs failed experiments before they have really started. Read more

Tools:
1 Comment
breakup rope  on big dollar background

Splitsville: Why newspapers and TV are going their separate ways corporately

Like the sale of the Washington Post this time last year, the merger of E.W. Scripps and Journal Communications, announced last night, and their reorganization into separate print and broadcast companies came as a jaw-dropping surprise.

But the morning after, the complicated transaction makes perfect sense.

  • Local broadcasting is seeing a wave of consolidations. The business is healthy, and getting bigger provides station groups more leverage negotiating retransmission fees with cable providers. That has become a significant new source of revenue growth as political and automotive advertising remain strong.
  • Financially squeezed newspapers drag down the share price of companies with prospering TV, cable and digital divisions. The spinoff of Tribune Publishing scheduled next week and the division of News Corp a year ago give the remaining parent television and entertainment companies investment wind at their back.
  • At the same time, newspaper groups theoretically do better with management whose exclusive focus is on the particular challenges of that industry. Otherwise, they can end up a neglected problem child, getting less capital allocation and management attention, in a company with several financially stronger divisions.

My colleague Al Tompkins has separately rounded up a list of broadcast mergers and print spinoffs, and he also documents the stock price kick broadcast/digital companies have experienced. (Scripps stock is up smartly today  – more than 10 percent by early afternoon.).

For the newspaper industry, the de-consolidation trend has been building steam for seven years now, since the business took a deep dip during the recession of 2006-2009, Scripps did a version in 2007. leaving legacy broadcast and newspapers in one company while putting Food Network and other cable stations in another.

That same year Belo broke its newspaper and television businesses in two. The A.H. Belo newspaper group has since sold papers in Riverside and Providence leaving just the Dallas Morning News and nearby Denton. The Belo television stations have been bought by Gannett’s broadcast group.

Media General was flirting with insolvency in early 2012 when it sold its newspaper group to Warren Buffett’s BH Media (and the Tampa Tribune to another buyer). Media General has bought additional stations since.

While focus in the Post deal was in Jeff Bezos’s purchase of the venerable newspaper, it also left highly profitable local broadcast and cable divisions in the surviving Graham Holdings.

Finally, last year Rupert Murdoch split his international newspaper and entertainment/cable ventures into two companies. And Tribune, emerging from bankruptcy, decided to remake itself as a television and digital company with the Los Angeles Times, Chicago Tribune and six other dailies spun off into Tribune Publishing.

That leaves Gannett. And the Scripps-Journal transaction will heighten existing Wall Street pressure on the company to sell or spin off its 81 community newspapers and USA Today.

CEO Gracia Martore was asked about that possibility in a second quarter earnings conference call with analysts 10 days ago, though the questioner said “I know you won’t answer this.”

In fact, she did answer, albeit in ambiguous fashion. Both a USA Today reporter and I heard Martore say some newspaper organizations are for sale at the right price. But a Gannett spokesman walked that back the next day with a “clarification” that she was referring to newspapers owned by other companies.

Nonetheless, my fellow industry analyst, Ken Doctor has written that, in corporate-speak, Martore was opening the door to sale or spinoff at least a crack. And that was before the Scripps/Journal deal.

Journal Media Group will begin life, when the transaction is completed early next year, debt-free and with $10 million in cash. The company will be based in Milwaukee, though its CEO will be Tim Stautberg, who has headed Scripps newspaper division. The Journal Sentinel is at least twice as big in circulation as any of Scripps’s 12 papers and will be the flagship of the new company. The Journal Sentinel has strengths as a business too — typically among the top papers in household penetration.

All that augers well for editorial quality and financial prospects for the Journal Sentinel and its new mates. (Disclosure: I know and respect top business and news executives at both companies).

However, while Scripps is the acquiring company, Journal Publications will not give members of the Scripps family a special class of stock and voting control. So it will lack the buffer of family control and tradition that has kept McClatchy and the Sulzbergers’ New York Times Co. independent in these tough times. Journal Media Group could itself become a takeover candidate in the near future.

I am sure Journal Sentinel staff and perhaps readers too are wondering whether the paper will continue its investment in outstanding investigative projects, which have garnered three Pulitzers and many other award over the last six years, Scripps ownership certainly offers brighter prospect for that than a takeover by a turnaround hedge fund.

I sample, rather than read regularly, the work of metro newspaper organizations. But I would put the Journal Sentinel in the top rank, together with Poynter’s Tampa Bay Times, the Boston Globe, Seattle Times, Dallas Morning New and Star-Tribune of Minneapolis.

Curiously, all six of those are essentially single-paper operations — or at least they were until this morning. Joining a chain, and a publicly-traded one, is sure to up the pressure for financial performance on the Journal Sentinel, so I would not be astonished to see newsroom cuts down the road. Read more

Tools:
1 Comment
New York Times Sales

NYT’s new digital apps and subscriptions are off to a bumpy start

On the surface, the New York Times Co. had a very positive headline number as part of its second quarter earnings report today — a 32,000 digital circulation increase, driven by three newly introduced digital services.

But in a subsequent conference call with analysts, executives were quick to concede that the launch of NYT Now, NYT Opinion and Times Premier has been anything but smooth.

Several months in, the Times is still trying to get offers, terms and audience targeting right, especially with the NYT Now app aimed at smartphone users, said Denise Warren, who directs digital products for the company. As result, the company fell short of its initial goals for new subscribers and revenues. NYT Opinion is also a smartphone app with a separate subscription tier.

Times Premier offers extra helpings of content, seemingly aimed at upselling to existing subscribers. It includes several features — including Times Insider reports on stories behind the journalism — that have been marketing separately. And a cooking app is coming soon.

CEO Mark Thompson acknowledged these multiple options have “left some customers confused.” NYT Now is meant to reach younger non-subscribers and has, Thompson said, but there also has been some cannibalization of more expensive full digital and print subscriptions.

RELATED: Are you paying too much for the NYT?

Near the end of the call, Thompson declined to directly answer an analyst’s question, “what’s a good time period to (expect you) to get the kinks out?” But he did offer a contrast to the Times’s highly successful rollout of the its digital paywall and subscription plan in spring 2011.

There the object was to convert existing customers who had been reading the Times online free to paying status, he said. Expanding to new offerings and targeting new customers is much tougher, he continued. “We’re on our own, doing things no one else in our industry has tried.”

The rollout difficulties were not the only bad news for the quarter, Thompson and Warren said.

  • Print circulation was off markedly, down 5.5 percent daily and 3.7 percent Sunday compared to the same period a year ago.
  • Digital ad revenues grew but not nearly enough to offset a nearly 7 percent decline in print advertising.  Print ads, which had performed strongly for the Times in the first quarter, also look soft for the balance of the year.
  • Core digital circulation growth slowed, falling below target.
  • The simultaneous introduction of the new products also caused expenses to rise, though the company expects to keep them flat in the third and fourth quarters.

The sum of these problems was a worse-than expected 21 percent dip in profits compared to the second period of 2013. As a result, New York Times Co. stock was down more than 8 percent when the markets closed at 4.

None of this, Thompson said in the earnings press release, causes the Times to question that “long-term digital revenue growth” is essential to the company’s future and that new products along with international expansion is the way to get there.

But that path does involve trading the higher ad and circulation revenues of print for less lucrative digital equivalents. Difficult quarters like this one probably come with the territory. Read more

Tools:
2 Comments
newspapersfeatured

Newspaper industry lost another 1,300 full-time editorial professionals in 2013

The American Society of News Editors annual newsroom census, released today, found a net loss of another 1,300 full-time professionals last year.

That was better than the 2,600 net job loss in 2012 but brings total newsroom employment at newspaper organizations to roughly 36,700, a decline of 3.2 percent from the 38,000 counted in last year’s census.

Newsroom employment has fallen 33 percent from a pre-recession peak of 55,000 in 2006 and is down 35 percent from its all-time high of 56,900 in 1989.

Asked for reaction to the 2013 census total, ASNE president David Boardman, dean of the Temple University School of Media and Communications,  told me by phone, “Well, here we go again….Obviously we should all continue to be concerned about the losses.”

The census has been conducted since 1978 to measure progress in newsroom diversity.  On that front, the news was better, with a small gain of 200 minority employees last year. (See separate story by my colleague Andrew Beaujon).

The simple explanation for the decline is that newspaper revenues were down again in 2013 with continued sharp losses in print advertising only partly offset by gains in digital advertising and circulation revenues.

The overall revenue figure, as measured by the Newspaper Association of America, was down 2.6 percent in 2013, close to an even match with the percentage of news job cuts for the year. It appears 2014 will be another year of revenue declines, so more newsroom attrition is virtually certain.

The losses varied widely by the circulation size of newspapers.  The largest papers, with circulation of more than 500,000, recorded a gain of 5.85 percent year to-year. The smallest papers, under 10,000 circulation, were up 2.78 percent.

Losses were heavily concentrated at metros and other papers in the 100,000-500,000 circulation range where year-to-year declines were roughly 16 percent.

(These figures are broadly accurate in tracking where change is occurring but less exact than those for the census as a whole because of shifts in how circulation is now being measured and movement of some papers from one band to another).

This year 965 of 1373 daily newspapers surveyed completed the census.   Projections are used for the non-participants to arrive at a total industry estimate.

ASNE also makes some changes year to year in how it does the count.  For instance the 2013 census, for the first time, included results from 17 corporate news production hubs, which have absorbed desk work that used to be done at individual newspapers.

For a third year, the census was funded by the Robert R. McCormick Foundation and done by the Donald W. Reynolds Institute at the University of Missouri.  The Reynolds unit that did the work is being dissolved, so ASNE will need to find a new partner to do the surveys and statistical analysis.

It is important to ask each year how many lost positions may be made up by growth in the digital news sector, “and the tricky part is to try to get a handle on those numbers,” Boardman said.

A Pew Research Center study in March estimated a total of 5,000 full-time journalists working for such sites.

But ASNE’s own effort to enlist digital sites as participants in the survey and as members has been only a limited success to date.  Organizations with a traditional news and investigative bent have joined, and editors at ProPublica and Texas Tribune are on ASNE’s board. But most of the largest digital news ventures like Huffington Post and Yahoo have not joined.

Boardman said that he is encouraged that the digital sector has participated in ASNE events like a recent “hackathon” in Austin or the upcoming joint convention with the Associated Press Managing Editors in Chicago this September.

My own take is that the continuing editorial job losses steadily erode the coverage of communities newspapers once provided.  Boardman made the point that at the Seattle Times, where he was executive editor until last year, and at many other papers, great effort has been made to conserve front-line reporting and editing jobs with copy editing and layout jobs taking a bigger proportion of the hits.

And editors will concede privately that cost control pressures made them reorganize functions that could be done more efficiently and move out some less productive employees whose jobs were secure in flush times.

It is still an open question, however, whether the mix of jobs at digital-only sites makes up for what has been lost as newspapers (and magazines as well) get smaller.

Traditionalists will contend that trading an experienced government accountability reporter for, say, a listicle producer, is a net loss to the news media’s civic function.  Digital enthusiasts might counter that the infusion of programmers and other technologists into the news industry is doing more to expand volume of coverage and its reach than the duplicative news production teams at individual newspapers ever did.

I’ll agree with Boardman that the next few years ought to be a time for better estimates of the total number of news professionals at work, how many are “feet on the street” and how the focus of the content they produce is changing.

  Read more

Tools:
4 Comments