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


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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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

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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

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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

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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.

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Gannett

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

the sign for Gannett headquarters is displayed in McLean, Va. (AP Photo/Jacquelyn Martin, file)

the sign for Gannett headquarters is displayed in McLean, Va. (AP Photo/Jacquelyn Martin, file)

Since the Newspaper Association of America stopped reporting quarterly revenue results last year, I have looked at Gannett’s numbers as a reasonable proxy for the industry. Here are three takeaways from yesterday’s second quarter earnings report and conference call with analysts.

  • National advertising was terrible in the second quarter (down 16.3 percent compared to the same period in 2013) for Gannett’s publishing division. Despite a small gain in digital advertising and marketing services, overall advertising was down 6 percent.CEO Gracia Martore told analysts she had heard of similar weak national results from friends in the industry, as have I.  One explanation, on top of the stop-and-go economic recovery — the World Cup was an attractive advertising opportunity for big companies, and they pulled from print budgets to go heavy in social media.

    The third quarter is looking somewhat better, she said.

  • Gannett’s results show just how unequal the local broadcast and local newspaper businesses have become.  Through the first six months of 2014 publishing had $1,709,000,000 in revenues, 2.2 times as much as broadcast’s $781,000,000.  However broadcast’s operating income was $326,000,000, 3.4 times as much as print’s $96,000,000.

    By my math that makes broadcasting 7.5 times more profitable.

    No wonder Gannett has bought two station groups in the last year and is on the prowl for more.  Martore also said she would consider buying more TV stations or digital properties but was not interested in acquiring more papers.  She added that the chain’s 81 local papers are not for sale. I also don’t think a spinoff of the whole division like the one Tribune is doing in early August is in the cards.

  • Circulation is a relative bright spot, though overall it was down slightly year-to-year in the second quarter (by 0.6 percent).  Martore and other executives continue to be pleased with a program putting a section of USA Today news in its 35 largest local papers.  That helps justify higher rates, strengthens subscriber retention and has supported gains in home-delivery numbers and revenue.  (USA Today is taking deep cuts in single-copy sales as part of its current strategy, depressing the total result.)Martore said that the company will roll out a smaller USA Today section in 13 more of its local titles later this year and may sell the supplement to others.  With the Washington Post now offering a free digital subscription to digital subscribers at a number of regional newspapers, these extra helpings of national news may be a mini-trend.

The Gannett results include its substantial holding of newspapers in Great Britain, which are having a reasonably good year. So the numbers might have been a little worse otherwise.  I look for similar trends as the New York Times Co., McClatchy  E.W. Scripps and other publicly traded newspaper companies report second quarter earnings in coming weeks.

(Clarification: An earlier version of this story said that Martore would consider selling some Gannett papers.   In fact, she said that some papers of other companies are on the market. but Gannett will not be a buyer.) Read more

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AP F IL USA EARNS TRIBUNE

Eighteen months after dropping AP, Tribune happy with Reuters

When newspaper ad revenues were in free fall in 2008, there was much angry complaining among editors about the high cost and inflexibility of the Associated Press service. At a gripe session in Washington, one editor compared the cooperative to the USSR’s politburo.  Threats to quit were common.

In the end though, AP cut its rates, offered several levels of service and has retained the great majority of its newspaper members (who also own the cooperative and hold most its board seats).

But there was an exception.

Starting in 2009, Chicago Tribune editor Gerould Kern quietly began working with Reuters to build an acceptable substitute service.  Kern told me the Chicago Tribune ran its last AP material in March 2012.  With six other Tribune papers (but not the Los Angeles Times), it dropped AP entirely at the start of 2013.

Kern said in a phone interview that he cannot recall a single reader complaint about inferior wire coverage.  At “a price that has saved us significant amount of money,” Kern said, the Tribune and others are getting “more than adequate” content from Reuters and can devote more resources to local investigations, arts and sports.

“We are not anti-AP,” Kern told me several times, “but we believe in competition and choice in the market place.  That makes everyone better.”

Reuters is pushing hard to recruit other converts but so far with only moderate success.  “We’ve been around for 160 years,” Steven Schwartz, global managing director of the Reuters news agency, said in an interview, “but we needed to create a (national) service from the ground up.  We have been encouraged by the uptake to date, but it’s a long road.”

For Reuters, the sales pitch is all about price, “a fraction of the cost (of AP),” Schwartz said.  Neither he nor Kern would be more specific, but I would guess that Reuters charges half or less of AP’s rates, themselves reduced by 30 to 40 percent since 2008.

Schwartz had no criticisms of AP’s quality, but when I suggested that some papers may be sticking with AP because of loyalty and the ownership connection, he flashed a competitive side:

Ours is an industry steeped in tradition and that’s both good and bad.  Gerry’s leadership (in making the switch ) has been unusual….I would say if a paper is continuing out of a sense of commitment to AP, that’s probably a breach of fiduciary duty.

AP too has some fighting words apropos the competition.  In a speech at the newspaper Association of America convention in Denver in March, CEO Gary Pruitt said of newspapers considering dropping membership:

If you walk away from AP, you walk away from your ownership stake in the most important news organization in the world. Good luck with that.

(The Associated Press is a non-profit cooperative owned by its newspaper members. “Profits” are held and reinvested in the company. Newspaper members get special input on news or business matters only in the sense that newspaper executives have a large majority of seats on the board. However, broadcast and international are now bigger business segments for AP.)

Pruitt promised improvements in state coverage, more video  and further pricing options.  But with industry advertising revenues sinking again this year, I don’t see much likelihood that the issue of settling for a “good enough” wire alternative will go away.

Kern and Schwartz concede that even getting to good enough took some doing.  Reuters is part of Thomson Reuters, an internationally oriented company whose main business is specialized financial information.

So for a start Reuters needed to hire correspondents in cities like Denver and Dallas to provide its own coverage of the biggest breaking national news in the U.S.

“We didn’t want a fire hose,” Kern said.  “We have a news service of our own (McClatchy/Tribune) that is the largest supplemental wire.  With that and some other contributors, we already had a rich vein of national content.”

“Sports was a crucial issue to resolve,” Kern continued.  Reuters needed to build out with affiliations to many single-subject digital sites and piece together sports agate.  That was the last content category to be finished before Tribune was ready to go without AP.

AP also prides itself on deep election night coverage and an ability to call races accurately.  Reuters began testing a new system in the March 2012 presidential primaries with IPSOS market research doing the polling and forecasting.  It has performed well, Kern said, and will be expanded by this November’s general election.

On the other hand, Reuters has made no attempt to build state-by-state bureaus with legislative coverage like AP’s.  Kern said that content-sharing arrangements among previously competing papers and other sources serve that need adequately.

Pruitt hinted at a counter-offensive in his March speech to NAA, and that is now rolling out.  AP has assigned a senior executive to oversee the state reports and hired additional journalists.  The service also has started producing national packages on issues like flood insurance and ethanol that can easily be localized by a member paper with a little additional reporting.

Kate Butler, vice president/ membership and local markets, told me that a new mid-tier level of service will be offered soon and begin operation in January 2015. At the same time, she said, the AP will expand its cafeteria-style add-on content packages on topics like the arts and sports from 5 to 10.

Its current limited basic member service costs roughly 50 percent of what a paper would pay for the full basic package, Butler said.  The new mid-tier will be about 75 percent with extra slices of content 5 to 10 percent.

Traditionally Associated Press required member papers to provide two years’ notice to cancel. That’s now been reduced to one year for those who pay a small premium.  That window allows AP to adjust rates and address individual complaints, though for fairness’s sake it offers comparable pricing for papers of similar size.

Butler said that at least two other chains looked at the Reuters alternative but have decided to stick with AP.

Even after the rate adjustments, full AP service costs a typical metro over $1 million a year and a bigger metro like the Chicago Tribune considerably more than that.  Even a mid-sized paper can rack up a bill well into six figures.

Reuters offers typically include extended free trials and a willingness to tailor the package individually to what a paper feels it needs but cannot produce itself.

In a dozen of my own searches of Tribune’s content, I found few if any obvious gaps in wire coverage of major stories.  For certain story types — breaking news obituaries, for example — the Reuters’ versions were not as complete or well-crafted as AP’s.  But I doubt the typical reader would notice a difference.

Tribune and other defectors would also lack access to AP enterprise stories, its deep foreign reach and top-of-the-line photography and video.  But from the readers’ perspective, they may literally not know what they are missing.

Some of AP’s past programs at the newspaper publishers convention included live hook-ups to world trouble spots and in one instance, a presentation  by a photographer/reporter who had talked her way into a Middle Eastern opium den and came out with riveting video. This year, the content portion of Pruitt’s talk, emphasized First Amendment initiatives and a practical effort to get better access for White House photographers.

Over the next several years, I think AP clients and the service itself, will be asking just how much excellence they can afford.  The good old days of monopoly-pricing power are gone.

Even with a focus on keeping expenses lower, AP’s Butler said, “I know (the service) is a substantial cost, but we think it also delivers a substantial value.”  As for Reuters, she added, “It is good to have competition and choice. We wish them well but not too well.”

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Rupert Murdoch

News Corp. rumored to be putting together a new bid for Tribune newspapers

Rumor has it that News Corp — with a $2.5 billion cash kitty for acquisitions — may be mounting a new bid for the Los Angeles Times, the Chicago Tribune and the six other Tribune newspapers.

Rupert Murdoch and his company were first reported interested in the acquisition (in a story in the L.A. Times and elsewhere) when the papers were being shopped in late 2012 and early 2013.

No deal was struck, and last July Tribune announced that it would instead spin off the papers into a new publicly-traded company, Tribune Publishing. Tribune Publishing has recently hired a CEO and other staff, and the split is now scheduled to happen as soon as Aug. 4, but at least within the next several months.

I would not typically report a publishing rumor. This one could prove dead wrong. But a confidential tip that started this inquiry was more substantive than gossip on the street. Various circumstances would make such a deal logical for both buyer and seller.

Robert Willens, a New York-based corporate tax analyst who has previously commented on the spinoff plans, said in a phone interviews that a sale to News Corp would be plausible — but much more likely after the spinoff had been completed. In other words over the next year or two rather than in the next weeks or months.

Spokespersons for both Tribune and News Corp. declined to comment, citing corporate policies not to respond to sale rumors and speculation.  Gary Weitman of Tribune said the company is committed to completing the spinoff (effectively ruling out a sale before).

So why is there reason to think such a deal might happen, later if not sooner?

  • News Corp. is itself a spinoff publishing company, separated from its parent, now renamed 21st Century Fox, in June 2013.  It owns Dow Jones and The Wall Street Journal as well Murdoch papers in Great Britain and Australia and the book publisher HarperCollins.
  • The new News Corp. came with a generous cash allocation of roughly $3 billion.  A company that size with that much free cash in hand is under investor pressure to make strategic acquisitions. News Corp. management has indicated it will. So far purchases include social media agency Storyful (in December 2013) and romance novel publisher Harlequin (announced in May), reducing available cash to about $2.5 billion.
  • Questioned by Capital New York in a brief interview at a social event in April, Murdoch said:

    News Corp. is in the first, sort of, transformational year….There’ll be some interesting deals.

    Potential acquisition targets, he added, would likely include both “print and web.”

  • Murdoch is a longtime reader of the Los Angeles Times and, according to a New York Times report, covets owing it.  A purchase, along with the Chicago Tribune, would give News Corp, leading print assets in the three biggest metro markets in the U.S.While the other six papers — The Baltimore Sun, the South Florida Sun-Sentinel, the Orlando Sentinel, The Hartford Courant, The (Allentown, Pennsylvania) Morning Call and the (Newport News, Virginia) Daily Press — would hold less interest, News Corp. could operate them for a time then sell, as Murdoch did with a group of mid-sized dailies that came with the Dow Jones deal.
  • Recall that Murdoch is willing to pay top dollar for what he wants most.  In his successful 2007 bid for the Journal, he offered the Bancroft family, which controlled the majority of voting shares in Dow Jones, a price roughly 65 percent higher than the stock’s trading value.
  • Tribune Publishing has been valued at $623 million in a 2012 bankruptcy filing.  So it is not too big financially for News Corp. to swallow.
  • Unlike News Corp.with all its cash, Tribune Publishing is being spun off on less than generous terms.  The papers operate profitably but will be assuming $350 million in debt and required to pay rent for its offices to Tribune Company.  And the parent is keeping all the proceeds of the sale of a profitable digital ad site with a second up for sale.

Congressman Henry Waxman, who represents a Los Angeles district, has claimed that the deal terms are setting the newspapers for failure. A well-capitalized buyer could be an attractive alternative.

Tribune’s own announcement and commentary on the deal have highlighted that the publishing assets can be transferred to the new company tax-free.  By contrast, direct sales of all or some of the papers out of the existing Tribune Company would come with a tax liability of hundreds of millions of dollars.

Besides the financial implications, tax consequences are a particularly sensitive consideration at Tribune, which is still sorting out a $200-million plus claim by the IRS related to its sale of Newsday in 2008.

If News Corp were to mount a bid after the spinoff, how soon could that happen? My sense is that a public company cannot be flipped like a real estate asset. Tax analyst Willens told me there is no statutory requirement to wait for a given period, but “if a plan had been agreed to or substantially negotiated” before completion of the spinoff, he said, “that could render it taxable.”

In the earlier attempt to acquire some or all of the Tribune papers, Murdoch faced a deal-killing regulatory barrier.  Under Federal Communications Commission rules, his company could not acquire a paper in Los Angeles or other markets where his Fox News owned local stations.

While Murdoch and other publishers have long tried to get a waiver or repeal of the rule, he told a reporter at the 2013 Golden Globes awards, “it won’t get through with the Democratic administration in place.”

But that was before News Corp’s own corporate split.  Now with newspaper holdings in the publishing spinoff and the local television stations part of 21st Century Fox, it could be argued that the joint ownership rule no longer applies (though Murdoch remains as executive chairman of News Corp. and chairman and CEO of 21st Century Fox).

Another open question is whether News Corp., given industry reverses, would make a big investment now in owning more American newspapers.  Asked in a recent conference call with analysts what kind of acquisitions the company was seeking, CEO Robert Thomson replied:

I think it’s fair to say that the two guiding trends of our strategy generally are globalization and digitization. You’ve seen that with the first acquisition, Storyful, which has been very well received, both from an editorial perspective, but not just for our newspapers, from our digital sides particularly, but also from a commercial perspective because Storyful will be able to create content communities around products and companies. And I think you’ll see some of that in coming months. So (as) we said during the Investor Day, globalization and digitization, and that’s very much what the team is doing.

Tribune Publishing does not seem a fit with those goals, and perhaps Murdoch has less latitude to push his personal enthusiasm for print newspapers than he did when News Corp. made its premium bid for Dow Jones seven years ago.

Still the record shows the 83-year-old Murdoch to be persistent in stalking the trophy properties he wants, sometimes over decades. If the L.A. Times and the Chicago Tribune are still on his list, I wouldn’t bet against his mounting another bid. Read more

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