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


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9 takeways from the New York Times Co. 3rd quarter earnings call

The New York Times building in this 2009 file photo. (AP Photo/Mark Lennihan)

The New York Times building in this 2009 file photo. (AP Photo/Mark Lennihan)

The New York Times Co. joined McClatchy yesterday in booking a rare operating loss for the third quarter, $9 million or about 2.5 percent on revenues of $364.7 million.

But the many moving parts of the Times digital transformation effort had a number of positives mixed in as well. Here are nine takeaways:

  1. About that loss. It was driven by high costs associated with staff reductions ($20 million) and investment in new products. The first will be a one-time blip. But the Times will be launching and relaunching new digital versions for some time to come. Each is expensive to develop and market, and significant new revenues may be slow in coming.
  2. Equilibrium in ad and circulation revenues. A 17 percent year-to-year gain in digital advertising for the quarter roughly offset a 5 percent decline in print. Similarly revenue from a net gain of 44,000 digital-only subscribers offset revenue losses for print and print-digital subscriptions. That’s an achievement. On the ad side, most of the industry is not yet growing digital and other revenue fast enough to cover print ad losses — and Times execs, in a conference call with analysts, concede that they don’t expect to do so again in the fourth quarter.
  3. Room to grow digital audience. The 44,000 quarter-to-quarter gain, the largest the company has recorded in several years, CEO Mark Thompson said, came mainly from new international customers and the “consumer education” sector (i.e. discounted subs to students). Thompson said that with improved marketing abroad he expects to continue growing that group of subscribers.
  4. Too expensive? The Times has raised print subscription prices this year, but the higher revenue per customer, chief financial officer James Follo said, was “outweighed by volume declines.” Daily print circulation was off 5.2 percent year-to-year and Sunday 3.2 percent. With the cost of a seven-day print subscription outside the New York metro area inching close to $1,000 a year, the Times may find renewals, new subscriptions (and newsstand copies) a tougher sell — especially as a range of much cheaper digital options are available.
  5. About those executive changes. Thompson had little to add to the announcement earlier this week that 26-year veteran Denise Warren was leaving the company after her chief digital officer job was split in two. But he did drop a hint, saying the Times would be looking for “an injection of specialized digital expertise.” Warren was an experienced and talented generalist who moved from overseeing advertising to the successful completion of the Times paywall strategy. But deeper digital roots may be needed in the executive suite for the next round of growth.
  6. Women in leadership. Warren’s is the third high-level executive departure in three years, following the firings of Thompson’s predecessor as CEO, Janet Robinson in December 2011, and Executive Editor Jill Abramson this May. The Times did add a woman in its top advertising job, hiring Meredith Kopit Levien away from Forbes in July 2013.
  7. Mobile advertising progress. Kopit Levien said mobile advertising is finally gaining some traction, accounting for about 10 percent of digital ad revenue. On the other hand it lags mobile audience which now accounts for more than 50 percent of the digital visits to Times’ sites and apps.
  8. Newsroom hiring. Thompson said he expected a modest wave of hiring following the well-publicized downsizing by 100 jobs. But as at many publications, the newly hired will have different job duties like audience development rather than traditional reporting and editing roles.
  9. Lower revenue per customer. Several questions and answers in the earnings conference call focused on so-called ARPU, jargon for average revenue per user (or unit). With the changing product mix, ARPU is falling at the Times, though Follo said by only about 5 percent year-to-year.

That spotlights a huge financial challenge for the industry. As business moves down the price chain (both ads and circulation) from print to desktop/laptop to smartphone, a company can end up running fast just to stay even in revenues. And that’s likely to persist for years not just quarters.

New York Times shares traded down about 5 percent at market close. Read more

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Why the newspaper industry is leaving six-month circulation reports behind

For several years now, the Alliance for Audited Media (AAM) has been reporting more and more detail on print and digital audience numbers for individual newspaper organizations while saying less and less about the industry as a whole.

That progression reaches its conclusion today with AAM’s final six-month report, to be supplanted by required quarterly updates and monthly digital numbers too if a company chooses.

Related: USA Today, WSJ, NYT top U.S. newspapers by circulation

The current six-month reporting format, now called Snapshot and previously FAS-FAX, has been in place since 1968, AAM spokeswoman Rachael Battista told me.  But audited newspapers have been compiling six-month averages, she added, since the organization (formerly the Audit Bureau of Circulations) was formed in 1914.

The changes aim for greater timeliness, AAM executive vice president Neal Lulofs said in a phone interview, and need regular adjustment as organizations explore varied and more complex audience strategies.

Along the way, a bottom-line of paid print circulation has give way to a measure of total circulation, including paid digital on several different platforms and some non-paid but “qualified” or “verified” print edition distribution.

The way circulation numbers had traditionally been reported in news stories was one casualty of the changes.  A total circulation projection for the industry, compared to previous years, would be highly imprecise now because of constant rule changes and some double-counting.  Similarly comparisons between newspapers or a Top 25 circulation list are close to meaningless, given different strategies and considerable leeway in what a given paper chooses to count.

Some examples:

  • USA Today now claims more than 4 million total circulation, more than double what it was reporting two years ago.  But that growth has been entirely generated by digital and Gannett’s decision to insert a section of USA Today news into its 35 largest regional papers. Digital and the insert section now account for roughly three quarters of USA Today’s circulation. Its paid print circulation in news racks and subscriptions is actually falling fast.
  • In recent years,  AAM instituted, then rescinded, a requirement that papers report a five-day weekday print average, though many still do voluntarily.  Advance’s Plain Dealer, in Cleveland, would rank in the Top 25 for the two weekdays it still home delivers a print edition — but that circulation cannot be intelligibly be compared to papers like the Boston Globe or Dallas Morning News with high-price subscriptions and seven-day a week delivery.

Some industry critics would characterize the jumble of new rules and new totals as a smoke-and-mirrors exercise to obscure newspapers’ continued losses of core paid print circulation. It is worth noting, however, that AAM’s board has a heavy representation of advertisers, who have agreed to the changes and typically care more about a detailed breakdown for a given newspaper organization than comparisons among them or industry totals.

Among the complications AAM has dealt with in recent years is the widespread adoption of Sunday Select products, bundles of inserts with little or no news content delivered to non-subscribers in certain zip codes.  These are now counted as “branded editions,” a designation that also applies to clusters of papers published under different titles owned by a single company, like Digital First’s Los Angeles and San Francisco Bay groups.

Also the majority of mid-sized and large papers have now instituted digital paywalls.  That creates a new group of digital-only subscribers and an even larger group who get digital access along with a print subscription. Some subscribers pay for and use desktop/laptop sites, tablet editions, smart-phone apps, replica digital editions and versions for Kindle or Nook devices.

Broadly AAM’s approach has been to measure each type of audience separately, accepting that some readers will be double or triple-counted.  To fix that confusion, it is currently experimenting with a Total Consumer Accounts metric, that would capture how many subscribers are paying for either a given platform or total access.

More changes in circulation practices and AAM rules are in the offing. The Washington Post has been offering free (for now) digital subscriptions to paid digital subscribers of regional papers and is reviving a national weekly print summary that papers may insert in their Sunday editions.

The New York Times counted both its new, slimmed down smartphone-targeted news product, NYT Now, and its international edition in the final AAM six-month report. Like the Post, the Times is starting a weekly print supplement for insert in regional papers.

Over time almost all papers except very small ones expect growth of digital readership while accepting continued erosion of paid print circulation.  A few — mainly papers owned by Advance publications — are trying to accelerate that movement by eliminating home delivery or print editions entirely several days a week.

John Murray, the Newspaper Association of America’s top circulation executive, has generated several studies analyzing trends that can be identified in the AAM numbers.  He may do so again, Murray wrote me in an e-mail, but had no immediate comment on what the final Snapshot report says about the industry. Read more

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Tough times at McClatchy — A quarterly loss and four assets sold

McClatchy closed the books today on a rocky third quarter with an earnings report yesterday showing a small loss of $2.6 million (1 percent on revenues of $277.6 million).

But CEO Pat Talimantes instead opened the conference call with analysts offering commentary on a much bigger issue, what he described as “important events that have sealed our financial flexibility.”

An unfriendly commentator might describe those “events” as a yard sale. So far in 2014, McClatchy has sold four separate and substantial assets. The largest of them, in a deal with Gannett closed the first week in October, was a 25.6 percent stake in Classified Ventures’ Cars.com, which will bring in $631.8 million before taxes, $406 million after.

Earlier this year McClatchy sold its stake in Apartments.com (another part of Classified Ventures)  It also sold its half of McClatchy/Tribune Information Services to Tribune and the Alaska Daily News to wealthy investor Alice Rogoff.  Those transactions generated another $181 million.

Talamantes said the cash infusion will go to investments in “digital transformation” and to pay down some high-interest (9 percent) debt.

On the operating side McClatchy had a year-to-year third quarter decline in advertising of 8.2 percent. Print advertising was down 11 percent. Though national advertising makes up only a small part of the total (about 7 percent), it was off 23.2 percent for the quarter compared to 2013, which was not a good year for national either.

Trends were better in audience revenues and remaining digital businesses, Talamantes said. With continuing diversification the company now gets 64 percent of revenue from categories other than print advertising.

Under questioning from analysts, Talamantes said McClatchy was unlikely to acquire any of the 76 Digital First papers or others up for sale. “We would rather invest n opportunities in our markets … (with) greater digital resources.”

McClatchy continues an affiliation agreement with Cars.com and Apartments.com., but going forward it will need to split some the proceeds of sales with the new owners, thus reducing the revenue it realizes.

Also, while McClatchy will continue to look for savings, he declined to predict that expenses will fall in t he fourth quarter or in early 2015. Digital transformation is essential, Talamantes said, “and that requires some investment.”

For the day, McClatchy shares were up slightly in mid-afternoon trading. However they have now lost roughly half their value from a 2014 high April 2 of $6.81. Other newspaper-only stocks including the New York Times Company (which has sold many non-core assets in recent years)  and Lee Communications have declined in value since the spring but not nearly so much. Read more

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The politics of reforming digital audience metrics — don’t underestimate the status quo

Long-time critics of imprecise unique visitor and page view metrics like me have had reason to cheer in recent months.

Both the Financial Times and Economist have started to offer advertisers the alternative of rates based on time spent rather than raw traffic numbers.

Chartbeat corrected a major flaw in existing measures of time spent, then got its system “accredited” by the influential Media Ratings Council. And Chartbeat CEO Tony Haile has been an effective evangelist in interviews and speeches for a more sophisticated way of looking at the attention of digital audiences.

That’s real progress. But plowing through dozens of articles and interviewing a few key sources, I have concluded that it is way early to declare victory and a new day dawning in digital measurement.

Oddly, although we like to think of the digital world as fast-moving and progressive, there is an established status quo for counting digital audiences backed by powerful vested interests who remain mostly happy with the unholy triad of uniques, page views and clickthroughs.

Start with the digital big guys — Facebook, Google, Yahoo, AOL. They lead the pack in traffic volume as conventionally measured. With targeting capabilities, they suck up a huge share of digital ad spend — even more now with the shift to smartphones than they already did in the desktop/laptop era.

Uniques and page views have also been good to the most popular start-up digital-only content providers — Huffington Post, BuzzFeed, Upworthy and more.

A more surprising source of resistance is a large slice of the advertising industry, as spotlighted in Ad Age’s excellent takeout a month ago, “Is Digital Advertising Ready to Ditch the Click?” It summarized the resistance this way.

“Agencies are among the entrenched interests,” said Benjamin Zeidler, director-research and analytics at digital-marketing agency Tenthwave. “They’re good at buying ads. They know how to do it. It’s probably scary to change the mode of how they do business — how they sell it, price and benchmark it.”

Also, as you may have heard, these are boom times for “programmatic buying” — eliminating the middle men of sales people and media planners and instead relying on algorithms to locate and book available inventory at the lowest possible rate. Thoughtful consideration of a range of attention metrics would only get in the way of that process.

Pay-per-click may be a relic of the early days of internet advertising. But the measure still makes sense for a certain kind of ad — trying to grab attention for the unfamiliar — like the pitches for Harry’s Razors or the Bellroy Skinny Wallet that stalk me as I move around the web.

A middle-of-the-road constituency may buy in intellectually to a case for more varied metrics, but as a practical business matter needs to keep selling the way most advertisers are buying.

That was the drift of a thoughtful rejoinder from News Corp.’s Raju Narisetti to an earlier screed of mine this spring denouncing uniques and page views. In his view, some of this kind of criticism comes from print traditionalists who would prefer not to give audience metrics a prominent role in news coverage decisions.

Narisetti made the additional good point that metrics like page views per visit or repeat visits per month, “variations on relatively conventional” measures, are a reasonable way to identify attention.

Trade groups like the Newspaper Association of America and the MPA magazine association also do versions of the straddle. Both have working groups exploring new metrics that may capture what they see as unique strengths of their digital offerings for advertisers. But neither is abandoning the standard measures just yet.

NAA, for instance, puts out regular releases on industry gains in uniques and page views. That has always been a charm of the two measures — between the steady movement of audience to digital platforms and the easy tricks available to inflate the numbers, a growth story is all but sure to emerge.

Another slightly different middle ground position fits auditing, rating and standards groups like the Alliance for Audited Media (formerly ABC), Nielsen and the Interactive Advertising Bureau. They naturally watch carefully for any new metric offerings in their core business. The IAB even has instigated important reform with work showing that the majority of “impressions” as measured a few years ago were not even seen (because they did not load fast enough or were too low on a screen page).

But the heart of the auditors’ business interest is that if something new is going to be measured, they want the contract to be the recognized verifier of those numbers. For example, Nielsen, facing some new disruptive competitors like Rentrak, announced Tuesday a collaboration with Adobe on a new set of measures it is developing for digital viewing of television shows and other video.

I also need to concede that the reformers have a self-serving agenda of their own. The Economist and Financial Times have strong paywalls, dedicated high-demographic readers but relatively modest total audience numbers. So it is to their advantage to shift the discussion with marketers to time spent engaged with their quality content and accompanying ad messages.

Chartbeat and CEO Haile have made a great case for the flaws in traditional measures and the logic of shifting to time and attention (which are finite) from “impressions” which seem to multiply endlessly and are often fleeting at best.

Chartbeat in its accredited “time spent” measure also did the good deed of correcting earlier stabs at such a metric — the loophole that counted a tab left open while the user shifted to something else conceivably for minutes or hours, as time on site. The Chartbeat refinement is that “time spent” is counted only if some indicator of viewer action registers every five seconds.

Haile also announced this week that he will make the company’s methodology public, aiming for even further credibility, accepting some risk of giving away competitive secrets to a knock-off vendor.

All that said, Chartbeat (and the similarly oriented Moat in the video sphere) are fighting the good fight for what they have to sell against established competitors who have built a good share of their business around uniques, page views and clicks.

More sophisticated digital agencies like Razorfish are also in the camp advocating a combination of metrics and strategies they provide that are missing from more perfunctory ad placement methods.

Where does this state of play leave legacy media or local digital startups in searching for a business model in the digital sun? Even the pioneers like the Financial Times are hedging their bets — their minutes viewed metric is being offered to a limited number of pilot advertisers in a beta test (going well according to Haile) while the majority of ads are still sold the old-fashioned way.

I would look for companies like the New York Times, with good raw traffic numbers, to also explore alternative attention metrics. And the trade associations are likely to at least give a nudge to consideration of a suite of metrics in measuring audience and pricing ads rather than just the conventional big three.

Jerry Hill, Gannett’s top audience executive and chairman of the newly formed NAA task force, told me the group is starting by surveying advertisers and agencies about “what they look at” now in evaluating effectiveness. The next step, he said would be to identify new measures that could be validated and “communicated out in simple terms.”

The MPA has launched what it calls the “360-degree brand audience report,” a monthly update by participating magazine sites that measures audience on multiple dimensions in a standardized format, including, for instance, referrals from five social media channels.

Mark Contreras, then of E.W. Scripps, led a crusade for better digital audience metrics during his term as NAA chairman in 2009. He hoped to establish a better “gold standard,” perhaps with a nudge from government, as happened with a move from chaotic claims from competing vendors measuring television audience in the 1950s and early 1960s to the agreed-upon methodology Nielsen and others now follow.

A gold standard does not appear in the cards right now, but movement to a more  varied and logical set of metrics has at least started. Contreras, now CEO of a small private TV and newspaper company, Calkins Media, told me in a phone interview that the logic remains unchanged: “For local papers, relying on a CPM (cost per thousand impressions) economy is not going to grow digital ad revenue as we need to.”

One alternative, Contreras added, is to “find niches and sell sponsorships” on roughly the same principle as “soap operas did in the 1950s,” aimed at stay-at-home housewives. Targeting is more important than a raw audience count for a sports site or a food site, and smartphone apps or specialized sites lend themselves to the “brought to you by…” format.

A number of the articles on this fall’s metrics developments stumbled upon the same summary phrase — “a step in the right direction.” That seems about right. The current system is unlikely to be turned on its head anytime soon.  But content providers who think they can offer sustained attention are beginning to get some tools to make the case to advertisers that they offer a superior value. Read more

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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

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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

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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

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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

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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

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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

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