High hopes dashed — why The Salt Lake Tribune fell so far so fast
When the Huntsman family bought The Salt Lake Tribune in April 2016, rescuing it from Digital First Media ownership, the more secular of the city's two newspapers seemed to have gained nothing less than a new lease on life.
Patriarch, billionaire Jon Huntsman Sr., who had long wanted to buy the Tribune, told the newspaper's staff in a visit as the deal closed that the family was prepared to devote money and work "for five, 10, 15 years bringing back the great Salt Lake Tribune of yesterday."
Son Paul, who financed the deal and has since been running the Tribune as publisher, said the Huntsmans were "honored to be stewards" of the 146-year-old institution and hoped "to ensure (its) independent voice for future generations."
Earlier this month, a chastened Huntsman, still grieving from his father's death February 2, told the staff that things had not gone at all as planned. Punishing losses had forced him to a decision that the newsroom and the size of its print editions needed dramatic downsizing.
A week later, 34 journalists in the Tribune's newsroom of 90 were let go.
With many (me included) touting "benevolent billionaire" owners as one way to ease the industry through its huge financial challenges, the Salt Lake story is a sober reminder that deep pockets and community-spirited good intentions may not be enough.
Huntsman told the grim staffers that ad revenues had declined 40 percent just in the two years of family ownership; in the last four years, daily print circulation had fallen from 85,000 to under 31,000.
I have been pondering why those reversals turned out to be so much worse even than the weak industry norm and can see a number of reasons why:
TWO-NEWSPAPER TOWNS ARE NO LONGER SUSTAINABLE. If there is barely enough revenue for one legacy print-digital operation in most U.S. metros, as seems to be the case, how can splitting that pie in two be made to work?
Salt Lake City has one of five surviving Joint Operating Agreements (there once were 28). That allows it to share printing and many business functions with the church-owned Deseret News.
The arrangement creates savings, to be sure. And the purpose of JOAs, to preserve two separate editorial voices in a given city, makes particular sense in the Salt Lake area with roughly an even split of Mormon and non-Mormon residents.
However, those distinct roles are not going to hold back the tide of readers switching to an array of digital news sources or advertisers bolting to Facebook, Google and now Amazon.
THE JOA TERMS ARE UNFAVORABLE. Before the Huntsmans took over, the JOA was renegotiated in 2013 in Deseret's favor. Deseret gained voting control of the agency that runs business functions. In exchange it bought the Tribune's presses, providing a needed cash infusion. Deseret flipped its share of profits, if there were any, from 42 percent to 70 percent.
Finally, it obtained veto power over any potential buyer but ultimately was comfortable with the Huntsmans, a prominent Mormon family including Jon Jr., former presidential candidate and now ambassador to Russia. Deseret also softened the split to 60-40
Through the years, the Tribune had the larger circulation. But with the backing of its owner, the Church of Jesus Christ of the Latter Day Saints, Deseret gradually gained economic leverage. By early 2000s, it had a huge and well-run television and digital empire; then under the leadership of Deseret president Clark Gilbert, a former Harvard professor and a specialist in digital disruption, the organization went on to develop new products that targeted a national and worldwide Mormon audience.
THE HUNTSMANS INHERITED BROKEN-DOWN TECHNOLOGY. The family, full of businessmen and investors with wide-ranging experience but none in media, probably did not realize how critical a smooth functioning content-management system and other technology have become in the print-digital era. They found out in a hurry.
In explaining the cuts, Huntsman said that he had to put more than a million dollars into digital upgrades. Digital First, despite its corporate name, had never spent much on modernizing and integrating technology across the chain of 75 dailies. In recent months its parent, hedge fund Alden Global Capital, drew rebellious criticism in opinion pieces in its own Denver Post, followed by related horror stories on cuts and dismal working conditions at other titles.
THE TRIBUNE COMES LATE TO SELLING PAID DIGITAL SUBSCRIPTIONS AND HAS A PARTICULAR DISADVANTAGE. Many newspaper sites are now five to 10 years into asking digital readers to pay. Everything about that exercise is complex — introducing a paywall, setting the number of free articles, pricing a sequence of introductory and full-price offers, offering friction-free orders and payments, adding a mix of newsletters to target different subscriber segments.
The Tribune did not begin its paid subscription push until earlier this year. A long learning curve lies ahead.
Plus, the Tribune has a unique problem. The Deseret News site is free. Even with a different viewpoint that will appeal to readers who want an independent take on city and state news, that's a killer price to compete against when the offerings of local news are bound to be often the same.
In announcing the coming cuts, Huntsman offered some reasons for optimism. The contract with the Deseret News is being renegotiated again to ease the Tribune's pain. As was evident in earlier negotiations, Deseret seems to want to preserve the alternative independent voice rather than drive the Tribune out of business.
Were Deseret the only game in town, soft coverage of the Church and its influence would be more of a lightning rod to critics.
Another speed bump lies ahead. The Joint Operating Agreement expires in 2020. Huntsman framed the cuts as necessary preparation for possibly becoming independent if the arrangement is not renewed.
(While Huntsman, unlike some corporate owners, stood up for 50 minutes to explain what was happening to his staff, my voicemail and email messages asking for an interview were not returned.)
A final question raised by The Salt Lake Tribune's troubles is what the situation says generally about billionaire owners and their future role.
I have noticed that many of the families buying legacy titles are headed by older men like the senior Jon Huntsman or Sheldon Adelson in Las Vegas. While they are sharp enough businessmen to understand the need for a digital presence, their own experience and reading habits probably confer luster on the print edition and its role in the community.
No less an investment-wise man than Warren Buffett, as he was buying up papers and assembling the BH Media chain in 2011 and 2012, said that print-digital operations in mid-sized towns retained a substantial and defensible franchise value. However, at his last two shareholder meetings, Buffett had soured on the industry, predicting that only a few national papers have good prospects of surviving.
Longtime industry hands probably did not see coming the degree to which Facebook, Google and other digital competitors would drain print advertising budgets and simultaneously block progress on building a new base of digital advertising. Not to mention the toll Amazon has exacted on brick-and-mortar retailers who had long provided the lifeblood of pre-printed inserts.
Businessmen who made their fortunes elsewhere would have had even less reason to see advertising and subscription revenues falling off the cliff.
I still consider individual local owners — like John Henry in Boston or Glen Taylor in Minneapolis — a positive force. Local ownership groups like the one that bought the Santa Rosa Press-Democrat (winner of the 2018 Pulitzer Prize for breaking news reporting) can work out, too.
The combination of closeness to the community, putting a journalistic mission first and accepting modest profits remain predictors of success or at least relative success.
Many titans of business got where they are by accepting short-term losses for the sake of growth (what Jeff Bezos has called runway). Covering accelerating losses as the core business shrinks, however, won't lead to anything good — and for Huntsman that ended up making the cutbacks and strategic retreat from print necessary.
Correction: The profit split for the Joint Operating Agreement has been updated and an error corrected.