In Houston, Hearst bucks the industry trend and reinvests in journalism

Here's a novel management strategy for beleaguered metro newspaper organizations — don't cut, reinvest instead.

Privately-held Hearst has pursued such a program without fanfare at its five large newspapers for most of this decade — notably at its biggest property, the Houston Chronicle.

When Mark Aldam became president of Hearst Newspapers in 2011, he began by assessing the group as businesses and also for the quality of their journalism. "Our grades on both those scales were not very high," he told me.

The Houston Chronicle was a particular offender. In the nation's fifth-largest metro (and fastest growing since 2010), the organization was set in its ways and distinctly lacking ambition.

To remedy that, Aldam and his local team have overseen a gradual build-out in reporting and editing. And they have created an array of new business products.

A payoff is materializing, but progress has been painstaking, incremental without any one big splash, Asked for a summary, Nancy Barnes, now beginning her fourth year as editor, said, "we're probably about three-fifths of the way up the mountain."

Barnes and Managing Editor Vernon Loeb are friends of mine, and I had heard from both over several years that moving up from an underperforming base was proving even more difficult than they had thought.

"We inherited a really demoralized newsroom," Barnes said. "It still feels like marching uphill, but we have made a lot of progress. We have day-to-day and Sunday enterprise on track...and have filled most of the jobs that come open. Our editing ranks and beat reporting are a lot stronger."

When Houston experienced catastrophic storms this April, for instance, the paper was able to get quickly to "where it's flooding and why it's flooding," she said.

"We're still not as digitally agile as some, but we're working on that now."

A case in point of how far news capacity had fallen was that the Chronicle had a single statehouse reporter when Barnes became editor. Fixing that was a first order, and the bureau is now up to five.

Emily Ramshaw, editor in chief of Austin-based Texas Tribune, notices the difference. "Yes, they have absolutely rebuilt the bureau," she wrote in an email, "and their capital reporters are a force to be reckoned with. They've got a robust slate of terrific reporters who have gotten our competitive juices flowing!"

Also, with Houston the hometown of the oil industry and a vibrant economy generally, the Chronicle's business coverage had been ordinary at best. Identifying and recruiting new editors and reporters took time, but after a flurry of hires this spring, the Chronicle restored a seven-day-a-week business front and section.

Barnes is careful to say that as she turned to rebuilding "some of the best talent was right here is the newsroom." When the Chronicle finally broke a forever Pultizer drought in 2015, the winner (for commentary) was metro columnist Lisa Falkenberg, who had been at the paper for more than a decade.

Still Barnes and Loeb concede, and several other editors I spoke with volunteered, that the process creates an awkward dynamic — the old people and new people watching each other warily.

"There was a lot for them to fix," metro editor Tony Freemantle, a 30-year veteran, told me, "and the first couple of years was just getting the ship righted...That's takes a lot of time and it's been a hard thing to do, for people who had been here a long time and were well-liked...To match the new ambition, we all realized we were going to have to up our game."

"The next part will be the most difficult..." Freemantle continued — "finding a digital solution, finding the resources to increase the momentum."

Likewise, senior editor Maria Carrillo, recruited from the Virginian Pilot in 2014, said that the talent pool, while improved, could still stand to be deeper. And she casts an envious eye on The Dallas Morning News. "Our newsroom is about 200, theirs about 270. We're the bigger city and bigger circulation. For a city our size and sprawling, it's still a question for Hearst how we stack up."

There was a step forward on that front over the summer when Hearst bought a group of 22 weeklies and a small daily in the surrounding suburbs. They will continue to be operated separately but can be part of a package buy for advertisers.

"We had no one in most of those suburbs," Barnes said, "Now for breaking news, we have someone in place, rather than having to drive an hour to get there...There is a lot of potential for sharing back and forth."

A big reason the turnaround process has been so arduous is that it requires recruiting each step of the way. After some time looking, Aldam landed Barnes, who had no particular beef after a decade editing the Star Tribune of Minneapolis but embraced the idea of a new and bigger challenge.

She in turn hired Loeb, who, after a long reporting career, had held major state or local editing positions at the Los Angeles Times, Philadelphia Inquirer and The Washington Post.

"I didn't know Nancy at all..." Loeb recalled. "I had never been to Houston and had no sense of the place." But after the Graham family sold the Post, he reasoned, "Jeff Bezos was going to do his thing with me or without me...and if there was anything else I wanted to try, I was free to do it.

"I really like her and liked her pitch — that Houston deserves a great newspaper as much as D.C....She and I are both journalism idealists."

Now it falls on Loeb to sell top-notch reporters and editors on the city and the Chronicle. "We're finally hiring from our peer papers — the Boston Globe, St. Louis, The Denver Post. We just hired a terrific arts reporter from Indianapolis."

He says Barnes is the equivalent "of a five-tool player" in baseball — she deals smoothly with the business side on joint projects but also regularly stays late for hand-on editing.

Loeb, for his part, finds time to aggregate content most days for the Chronicle's Grey Matters "local intelligence" blog. It's an exercise in setting an example, Loeb said. "There's a saying 'every marine a rifleman.'"

Digital remains a conundrum. "I'm always amazed and perplexed, Loeb said, "at how hard it is for some print people to reimagine (their work) — to write on a new time cycle or more incrementally or in new forms. Sometimes a card stack, infographic or short video is the way to do it, but that doesn't come naturally.

"There's not any resistance left in the newsroom. Everyone embraces it, but just executing it (is not easy)."

While editorial was the more urgent case, the Chronicle's business side was similarly entrenched, top heavy and in need of a shakeup. Aldam completed a series of moves a year ago moving John McKeon, from the company's San Antonio Express News to Houston.

In San Antonio, McKeon had presided a yearlong celebration of the paper's 150th anniversary in 2015, and "blatantly stole the idea" for the Chronicle's 115th this year. Historical features are well-read, and a civic, feel-good project is catnip to local sponsors.

The Chronicle (like other Hearst papers) has both a free site (for breaking and commodity news) and a hard-wall paid site with premium content and no ads. That is being supplemented by video and audio projects, an e-replica edition, specialized sport channels and collaborations with a TV partner.

"I'm always hesitant about saying we've turned a corner," McKeon told me when we spoke earlier this year, but for the first time a Scarborough study had shown an uptick in readership — 4 percent daily and 6 percent Sunday.

Aldam said when we first talked in the summer that the initiatives "are not unique to Houston. We've now upgraded the leadership (editorial and business) at all five of our large properties (Houston, San Francisco, San Antonio, Albany, N.Y. and a group of four Connecticut properties)."

When I checked for an update last week, Aldam said that he had several year-end markers of improved performance:

Hearst Newspapers will close out their 5th consecutive year of earnings growth in 2016! Our revenue performance remains at the top of the industry by 4 full points, on average against our peer set...

(With investments) in our digital development capabilities made in 2016 and continuing into 2017, we are very excited about the prospects for an exceptionally strong year ahead. We expect digital ad revenue growth to continue as we bring new ad solutions to life (branded content, video, commerce and new content sponsorships) across our digital products in addition to doubling the number of paid digital subscribers to our premium product editions.

In a follow-up email, Aldam added:

"One more fun fact that should be interesting to your readers – over this same 5-year horizon, we have increased the number of jobs for journalists at our large newspapers in total."

The Hearst/Houston story seems to me to hold several lessons:

  • A re-investment/turnaround strategy remains an option, even given the current intense financial pressure on print advertising. Tough times are squeezing resources for the digital push, but that phase was going to spread over years not months anyhow.
  • Editorial ambition and demands for higher levels of the performance are a necessity to upgrade content. That makes the new Chronicle an exciting place for committed journalists but not necessarily cozy and nurturing.
  • Not reporting results quarterly as the publicly-held chains must gives a company like Hearst freedom from trying to please the market with quarterly results. If progress is gradual, so be it. I also found it curious that while Hearst and the Houston editors were happy to discuss their strategy, they appear never to have sought any publicity for it.
  • The Houston example gives me some hope that financial "runway," as Jeff Bezos like to call it is not exclusively the province of the benevolent billionaire owner class he represents. An investment strategy can make sense both as good journalism and good business for a big New York-based corporation like Hearst as well.

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