By paulgillin | August 14, 2008 - 10:14 am - Posted in Facebook, Fake News, Google, Hyper-local

Tribune Co. posted a $4.5 billion loss on a massive writeoff of goodwill to reflect the lower value of its newspaper assets. There was no good news in the results. Print revenue was down 15%, classified revenue off 26%, circulation sales down 2%, even online revenue was down 4%. The company’s next move will be to sell the Chicago Cubs, Wrigley Field and possibly its famous headquarters building in Chicago to meet a debt payment. After that, it’s a matter of crossing fingers and hoping that the economy improves enough to make more asset sales possible.

Alan Mutter thinks the Tribune writeoff may be the largest ever by a new owner. He pulls out the calculator and estimates that the value of the company has declined $20 million a day under Sam Zell’s leadership. Of course, Tribune is owned by its employees, so everyone shares Sam’s pain. Only Sam’s not feeling much pain because his highly leveraged position is funded almost entirely by other people’s money. Mutter’s Default-o-Matic ranking now rates Tribune as the company most likely to default on its debt. “At its new Caa2 [junk bond] rating, Tribune’s issues are considered to have a 48.3% chance of not being repaid,” he writes.

Needless to say, the not-so-loyal opposition at Tell Zell finds more to hate in the numbers. Pointing out that Tribune’s investment in its television assets actually increased in the quarter along with revenues, the anonymous blogger comments, “They realize that investing in the product can produce increases in revenue.” True ’nuff, but when a 7% increase in investment yields a 2% increase in sales, that’s the equivalent of selling dollar bills for 95 cents. You’ll sell lots of product and still lose your shirt.

For Zell and crew, this is simply race against time. Ken Doctor sums up the company’s dilemma: It’s bailing water in a rising storm tide and desperately hoping that the storm will stop. The more assets it sells (and there are rumors that the LA Times may be the next big property to go), the fewer resources it has to generate revenue to meet its debt payments. At some point, this model simply collapses.

The only scenarios that can rescue Tribune Co. from ultimate default are either a reinvigoration of the newspaper industry (unlikely) or a turnaround in the real estate market (more likely, but not soon). But with many economists now predicting that the hoped-for 2009 economic turnaround probably won’t happen, it’s hard to imagine a scenario in which this company survives intact much beyond the end of next year. What does that mean for all the employee retirement funds being held in the form of Tribune stock?


The heavy debt load borne by many newspaper owners continues to take its toll. Cox Enterprises is looking to sell the Austin (Tx.) Statesman and 28 other regional newspapers in hopes of raising enough money to meet its debt obligations. Cox also owns the better-known Atlanta Journal Constitution but is selling the Statesman because the paper is profitable and may fetch a better price. Don’t count on it, says analyst John Morton. “The sales value of newspapers has probably dropped in half in the last five years,” he’s quoted as saying. “There are a lot of newspapers that are up for sale and there are no takers.” (via Romenesko)

Media Organizations Pull Back on Convention Coverage

Now this is progress. Newspapers are reducing their reporting staffs at the political conventions by up to 20% this summer, apparently in response to the fact that these vacuous, over-scripted media circuses are becoming less and less relevant to an American public that finally has alternatives. The fact that American Idol is the most popular alternative is beside the point.

As we’ve pointed out many times, the practice of sending 15-20 reporters to transcribe the same speeches that the TV cameras are already capturing makes no sense. With both parties’ nominations sewn up months ago, there is nothing happening at these conventions that’s going to make a difference to the democratic process. The most interesting insight to come out of the conventions is the speeches by the up-and-coming party insiders, and those are broadcast anyway.

Interesting tidbit in this story: some 320 bloggers are credentialed for the two conventions this summer, compared to just 42 in 2004. These people are mostly traveling on their own dime and they will work tirelessly because each and every one is competing with all the others. Instead of sending staff reporters to cover the convention, couldn’t newspapers contract with some of these bloggers for exclusive interviews and color pieces? Wouldn’t that be a lot cheaper than paying full-time staff and travel expenses? Is anyone actually doing this? Share your comments.

Miscellany

Wirting in Editor & Publisher, former editor and ad sales rep Maegan Carberry says the unspeakable: journalists have to learn how to help their employers make money. “I was aghast when I asked the (UCLA) Bruin staffers how many of them knew what a CPM (cost per thousand) was and my question was met with resounding silence,” she writes. “Same for an Alexa ranking or Google Analytics. Viewing the news through a myopic editorial lens is prohibitive to success.” Journalism schools still appear to be teaching their students to think of themselves as siloed and separated from the business side, a luxury no one can afford any more. Quoting a colleague, Carberry relates, “The person who figures out the revenue model for 21st century journalism will be a hero in the industry along the lines of Gutenberg with his printing press.”


CNN is actually hiring. It plans to expand its number of bureaus to 20 from 10. Some of these new staff will be what the news network calls “all-platform journalists.” They each get laptops, cameras and online editing tools as well as the capacity to upload video reports from their remote locations. Some may get canteens and K-rations, too. CNN’s SVP of newsgathering insightfully observes, “Everyone’s a reporter now. Even our viewers.”


Tell Zell analyzes a curious list of laid-off staff that was distributed to departing LA Times employees and calculates that older workers were more likely to lose their jobs. Twenty-one percent of workers over 50 were terminated, compared to 10% of workers under 40. Naturally, the entire internal memo is on the site for all to e-mail to their friends.


Blethen Maine Newspapers continues to exemplify the concept of bleeding staff.It’s cutting 20 full- and part-time positions at the Kennebec Journal and Morning Sentinel. That’s about 10 percent of the payroll. A lot of the laid-off employees are from the pressroom. Blethen unsuccessfully tried to shore up its business by doing commercial printing work, but that market collapsed as the economy worsened.


The Newspaper Guild is going to become more active in trying to reinvent the industry, says its incoming president. Bernie Lunzer says the union will actively investigate new ownership models, since the old ownership models have failed so badly. “There are non-profits, co-op ownership along the lines of what was used in agriculture for many years,” he tells E&P. And he won’t rule out the possibility that the Guild could take an ownership stake in some concerns. Lunzer says the Guild is also going to take a strong stand in defending newspaper ad salespeople, who are increasingly threatened with a move to 100% incentive-based competition. Fear is not a good motivator for sales people, he says.


In other union news, Philadelphia’s two biggest unions have agreed to forego a $25/week raise they had negotiated for Sept. 1. Members apparently want to help company ownership avoid total financial collapse. They might give a call to their colleagues in Honolulu and share this perspective.


Sun-Times Media Group (STMG) is outsourcing its inbound classified advertising sales to Buffalo-based Classified Plus. It didn’t say how much the move would save. Classified Plus handles calls for more than 200 newspapers in the U.S. The way things are going, it may soon be able to do that with a single employee.


David Esrati’s “How Newspapers can become relevant in a Web 2.0 world” reads like an extended blog comment, but has some sound advice for how newspapers can learn a few things from Google and other  Web properties.

And Finally

Christian the LionThis 2 1/2 minute video has scored over 11 million views on YouTube, and if you watch it, you’ll understand why. It’s an incredible love story that could only be told in this medium. What a heartwarming story of love across the boundaries of time and species.

By paulgillin | August 4, 2008 - 7:29 am - Posted in Facebook, Solutions

Washington Post Co. dipped into the red for the first time in its 37-year history, reporting an operating loss of $2.7 million in the second quarter.  A big factor was the cost of an $87 million buyout program intended to reduce headcount, but the newspaper division lost money on operations for only the second time in the company’s history. The $5.3 million operating loss came on a 22% dive in print  advertising revenue. Online advertising was up an anemic 4%. Fortunately for the Post, it owns the Kaplan education company and some cable and Internet franchises. Unfortunately, it also owns Newsweek, which had an operating loss of $3.7 million for the quarter.

Troubles in Hyper-Local Land

Local Ad Share - Borrell Associates

Some people say the savior of the newspaper industry is to go hyper-local, but remember to tell that to the ad sales people, who could make a lot less money. The Wall Street Journal reports on the sliding market share of newspapers in their own local ad markets, where one researcher says they now control only 27.4% of the business, down from nearly 36% two years ago. The reasons? Ad commissions for online sales are much lower than those of print sales, meaning that ad reps have less incentive to sell digital ads. Also, newspapers are mostly limited to selling poorly performing banner ads to local business, while pay-per-click programs like Google’s are cheaper and more cost-effective. Newspapers need to come up with more innovative sales programs and retrain their sales forces to live on lower margins than they’ve been accustomed to, and that’s not easy.

“Internet companies like Google and Local.com, which collectively control 53.3% of the local online ad market, up from 25% in 2006. And they’ve done that with only 1,400 ad-sales reps,” says the Journal. That’s one reason that E.W. Scripps, A.H. Belo and Lee Enterprises all reported declines in online ad revenue in the most recent quarter. (WSJ chart)

Maine Chain Finds a Buyer

Looks like Seattle’s Blethen family is finally going to rid itself of  a troublesome chain of newspapers all the way across the country in Maine. A group of four investors with local ties has secured exclusive rights to negotiate terms to buy the papers, which includes  the Portland Press Herald/Maine Sunday Telegram,  the Kennebec Journal in Augusta and the Waterville Morning Sentinel,  as well as some weekly publications. A spokesman for the group said the investors are all savvy businesspeople who are committed to the newspaper business and who see the purchase as an opportunity to grow the properties. Richard L. Connor is the most likely candidate to head the operational turnaround. He’s had success in his most recent role as  editor and publisher of the Wilkes-Barre (Pa.) Times Leader, where circulation has actually grown since he took over in 2006. A spokesman for the investors said the group is going to ask for concessions from the Newspaper Guild. A Guild spokesman said the union is happy to work with someone who has a plan.

Miscellany

The Hartford Courant has been pretty quiet about covering its own layoff of  57 newsroom employees,  and TV newsman and blogger Rick Hancock says he’s heard that reporters have been told to spike such stories. He quotes the paper’s reader representative confirming that at least one story about the matter was killed, although she didn’t know why. The Courant has cut its newsroom staff by 55% since 1994.


Ted Rall has radical prescriptions for the industry. Go offline, copyright everything and stop feeding the wire services.  Newspapers’ troubles began when they started to give away their products for free to online distributors, says the noted cartoonist and liberal columnist. So it’s time to shut down and declare ownership of intellectual property. Newsosaur Alan Mutter may agree. His analysis of Associated Press content shows that only a small percentage is contributed by AP reporters, about a third, by his estimation. “If newspaper staffs continue to erode, where will the AP and its clients get the news in the future?” he asks.  Rall might also find an ally in Goodloe Sutton, publisher of the Linden Democrat-Reporter in western Alabama. He’s just raised the price of a daily issue from 75 cents to one dollar and it hasn’t made a whit of difference. Maybe people are willing to pay for news they can’t get anywhere else.


Slate’s always provocative media critic Jack Shafer probes at an underlying reason for newspaper troubles: they’ve lost their role as social currency. Shafer remembers the days when conversations typically started, “Did you read the story in the paper today about…?” and observes that those discussion-starters have been replaced by comments on Facebook and Twitter. The loss of that central role as the source of current information deprived newspapers of their “must read” status, he says, and that made them less crucial to the everyday needs of local communities.


Yahoo! has driven more than 100 million page views to its 779 member newspaper  sites with a traffic-generating power that one publisher described as a “fire hose”. The Deputy ME of the Dallas Morning News says, “We’ve had placements that have accounted for up to 27% of the day’s page views, and 65% of the day’s unique visitors.”E&P quotes liberally from the Yahoo press release in its  coverage, which omits important details like how the traffic patterns break  down between member newspapers and how traffic has grown since the project’s inception. But it  was a Friday afternoon…


Playboy publisher Christie Hefner blogs about the newspaper industry’s troubles and suggests that papers should market their products better and unify print and online sales, as her publication has done. Perhaps they should also adopt the Page 3 Girl idea that’s worked so well for the U.K.’s Sun.


Shares of Journal Register Co. fell to a penny in over-the-counter trading on Friday. That values JRC, which traded at $20 a share less than three years ago, at just $590,000.

Layoff Log

  • The Newark Star-Ledger is looking to cut 200 jobs, or about 15% of its 1,400-person payroll, through buyouts, according to publisher Advance Publications. If it doesn’t hit that goal, the paper will go up for sale. Editor & Publisher’s Joe Strupp says the paper’s troubles symbolize how bad things have gotten in the industry. The Star-Ledger dominated New Jersey life, he says, and the paper was so fat and happy that it didn’t even see the need to invest in its online properties until recently. Strupp quotes one reporter as saying that news of the extent of the Star-Ledger‘s problems come as “a punch in the gut.” Advance is also seeking to wrest concessions from the union that represents about 750 employees.
  • Times are tough in Idaho. The Press-Tribune of Nampa will  lay off 16 employees, or about 10% of its staff, and leave an unspecified number of vacant positions unfilled. The move comes a month after the Boise Stateman laid off 16 people and cut another 22 pressroom positions by combining printing operations.  Lee Enterprises will combine five Idaho daily and weekly papers into one daily – the Times-News – and lay off 14 people, or about 12% of the total staff. The move sounds sensible, given that two of the weeklies had circulations of less than 600.
  • Another Lee property, the Munster (Ind.) Times, has laid off 12 employees  and cut an unspecified number of additional positions through attrition. The story in the Gary Post-Tribune didn’t say how many people the Times employs.
  • The Bozeman (Mt.) Daily Chronicle will lay off six full-time and three part-time employees and hold nine vacant positions open.  Five of the affected positions are in the newsroom.
  • The Des Moines Register may also announce some job cuts soon, internal sources told  the Iowa Independent.  Specifics were hard to come by, however. Management raised the possibility as part of a standard staff meeting and didn’t elaborate. The paper, which dominates the Iowa market, has about 200 editorial staffers.
By paulgillin | April 23, 2008 - 9:37 am - Posted in Facebook, Fake News

Reports Say Newsday Goes to Murdoch; Rivals Disagree

Tuesday must have been a busy day for media tycoon Rupert Murdoch, who concluded a handshake deal with Tribune Co. to buy Newsday while also removing the top editor of another area property: The Wall Street Journal. Newsday said its price would be $580 million, which would just about cover Tribune’s impending debt obligation. Murdoch has already contacted the county executives of two Long Island counties to confirm that he’d be spending more time there. He told one of them that he hopes to conclude the deal in two weeks.

News of the Newsday sale was first reported on Monday, and dribs and drabs of information filtered in yesterday. Editor & Publisher says the deal isn’t done yet. Rivals thought they had until next week to submit a bid and plan to do just that. E&P also notes that Murdoch’s ownership of three newspapers (he also has the Daily News) and two TV stations in New York could raise regulatory concerns. It sounds like the fat lady has yet to sing on this deal.

More Tumult at the WSJ

Meanwhile, the managing editor of The Wall Street Journal resigned after less than a year on the job. The announcement made it clear that this was a Murdoch bag job. Marcus Brauchli had appeared in public less than two weeks earlier acting like a good company man, and the official statement said only that he was leaving to become a consultant. In his letter to the staff, which the Journal published, Brauchli said, “Now that the ownership transition has taken place, I have come to believe the new owners should have a managing editor of their choosing.” That can’t have lifted the already low morale on the staff.

E&P was all over this story, too, noting that Brauchli was respected as a guardian of editorial independence and wondering what role the newspaper’s editorial independence committee would have in choosing a successor. Given the success Murdoch has had in effecting momentous change at the Journal in such a short time, it’s likely that the owner will get his way.

Times Management Caves

The prospect of being cornered by Murdoch must have the Sulzbergers nervous. Under pressure by two large investors, the Times ownership added representatives of those funds to its board and expanded the total board size to an unwieldy 15 members. Chairman Arthur Sulzberger also dismissed talk of a possible sale of the company, which is what chairmen usually say just before they sell the company. Michael Bloomberg is rumored to be interested.

Sulzberger also outlined a four-part turnaround strategy for Times Co. including cost cuts of $230 million this year, the sale of some divisions and expansion of its online advertising programs with Google and Yahoo.

Latest Earnings Reports Dribble In

News that Journal Communications’ first-quarter profit dropped 91% would usually have some brokers on the ledge, but in this case the previous year’s numbers were boosted by an extraordinary gain. The actual revenue decline was about 9%, on par with recent results posted by other publishers. The industry-wide trend is clear. Year-over-year declines are running at about 10%. In an otherwise upbeat note to staff, McClatchy CEO Gary Pruitt confirmed that the double-digit percentage declines are a fact of life adds, “At this point we simply can’t tell when this decline will end.”

Short takes

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By paulgillin | March 19, 2008 - 7:52 am - Posted in Fake News, Google

Hapless Sun-Times May Be Next Big Downturn Victim

Historic Sun-TimesCould the Chicago Sun-Times be the next big city daily to shut down? Read this BusinessWeek profile and you’ll probably come to that conclusion. Once a hard-hitting scourge of local politicians, the Sun-Times has been slammed by a combination of the industry downturn and management misdeeds that landed two former executives in jail. Having hacked away at costs in an effort to stabilize the ship, the paper that once won seven Pulitzers in one 20-year stretch is now reduced to haranguing rival Tribune Co. owner Sam Zell while also outsourcing its delivery to him. Concludes BW: “it’s hard to see how the Sun-Times will be around much past its 61st birthday next year.”


Meanwhile, the Chicago Sun-Times Media Group (STMG) reported a dismal fourth quarter 2007 net loss of $59.1 million, up from $34.6 million a year earlier. Editor & Publisher notes that “STMG, which publishes about 100 dailies and non-dailies in the Chicago market, is in the midst of a study of ‘strategic alternatives,’ including a sale of all or part of the company.”And to highlight how bad things are, “STMG launched a plan to reduce operating costs by $50 million by June 30, 2008. Among the measures the company undertook was outsourcing distribution to the rival Chicago Tribune, outsourcing ad production, newsroom and management layoffs, and folding some newspapers.” Can you imagine outsourcing distribution to your competitor?

Profitless in Seattle

Wanna buy a newspaper? Or three of them, actually. The Seattle Times. Co. is trying to unwind its ill-advised 1998 decision to go into debt to buy three newspapers in Maine. Apparently, the purchase was homage to the paper’s founder, who hailed from the Pine Tree State. However, the cash-strapped company can no longer afford such folly and is looking to dump the Portland Press Herald, Waterville Morning Sentinel and Kennebec Journal. There’s even talk that Portland’s newspaper union might buy the local rag. Perhaps that’d be a way to restore the 27 jobs the paper recently cut.

Dow Jones Surveys the Damage

Regular NDW readers won’t find much new in this Dow Jones story about the perilous state of the U.S. newspaper industry, but it is a good wrap-up of recent events. It’s generous to the industry in recounting why newspapers didn’t invest more aggressively online a few years ago. Quoting:

“For one, many newspapers were scared away from online ventures when the dot- com boom turned to a bust in 2000. In order to fully nip online competition in the bud, however, newspapers would have needed to invest heavily in burgeoning Web ventures before those entities got too expensive. For many newspapers, that kind of investment was not within their means.”

Not within their means. That’s like driving a car on bald tires because new ones are not within your means. Newspapers have had gross profit margins of more than 20% for decades. There were plenty of “means” to invest if owners had simply seen the bullet train that was heading at them. The post-bubble period was the best time in a decade to buy into the Internet. So why didn’t any newspaper companies do that?

The best quote in the story comes from McClatchy CEO Gary Pruitt, who told a December conference that a “significant portion” of the current troubles the industry faces are “cyclical.” Right. So is global warming.

Envisioning the Future of Journalism

The Editors Weblog interviews Jim Brady, Executive Editor of Washingtonpost.com, who provides sensible insight on the future of journalism. Newspapers aren’t going away, he says, but many smaller papers are finding that the economies of scale of online publishing make it a more sensible route that newsprint. Journalism itself will also evolve to include more reader interaction, with readers doing more of the legwork. “Iif journalists allow readers, not to investigate for them, but to help them flag and acquire easily accessible information, it makes investigative journalism easier to do than it was fifteen years ago, when the journalists had to make dozens of phone calls and go down to the public library.”

Online Media Baron’s Advice: Blow It All Up

Billionaire entrepeneur and former AOL top executive Ted Leonsis has a 10-point plan to rescue the newspaper business. It basically comes down to blowing up the existing model, going entirely online and distributing through every available channel. Oh, and search-optimizing. Veteran journalists will love this suggestion:”Get rid of senior editors. Turn them into algorithmic managers…Knowing statistically what content gets the best click through across all media is a key deliverable. Newspapers need math majors running big swaths of the organization…There are too many English majors in key positions.”

Milestone Award for New-Media Publisher

Joshua Micah MarshallA landmark event in online journalism occurred in late February, when Talking Points Memo was awarded a George Polk Award for its coverage of the firing of eight United States attorneys. This New York Times account points to the difference between the new breed of online reporting and traditional print journalism. Chief among them is the involvement of readers in the process. “There are thousands who have contributed some information over the last year,” the paper quotes Talking Point’s Joshua Micah Marshall as saying. Marshall has even been known to give “assignments” to his readers, asking them to comb through official documents. His journalism also mixes original reporting with generous links to other information online. It’s very Wikipedia-like. And it’s working. The reader- and advertising-funded site gets about 400,000 page views a day and has about 750,000 unique visitors a month.

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