Buyers Want Newspapers to Reinvent Model
by Lucia Moses - Mediaweek
Shrinking newsrooms. Falling operating margins. Double-digit declines in ad revenue. American newspapers today are awash in ink—but the ink is red. Soaring newsprint prices and stalled ad business have, in fact, led analysts to call this year the worst for newspapers since the Great Depression.
A recent Pew Research Center survey illuminated the sorry situation. More than half of 259 papers polled reported cutting full-time newsroom staff and the news hole over the past three years. Large dailies have been hit hardest, with waves of layoffs sweeping through the Atlanta Journal-Constitution, The Washington Post, the Tribune and McClatchy companies, and others.
Print media buyers like Melony Rios, director of buying at Novus Print Media Network, which handles most of OMD’s newspaper placements, have taken notice of the industry’s woes. “I think there’s definitely a concern there,” she said of the Tribune Co., whose salty-tongued chairman, real-estate mogul Sam Zell, grabbed headlines when he recently announced the company would slash staff and print fewer pages across its 12 papers, which include The Los Angeles Times and Chicago Tribune. “The hope is, they’ve got some research behind it. We hope every decision they make to cut costs is not going to result in loss of audience.”
With the Web a major factor in print’s decline, papers are introducing blogs and microsites focused on narrow interests and training journalists to shoot and file video for the Web. On a larger scale, they’re banding together to sell ads online. Cox Enterprises recently plunked down $300 million for Adify, which helps publishers build niche online ad networks.
Michael Clay, senior vp, chief revenue officer at Cox-owned Atlanta Journal-Constitution—which is slashing about 200 jobs, or 8 percent of its workforce—said the paper was adapting an integrated sales approach for print, online and direct-marketing products. “We’re attempting to position ourselves as more than just the newspaper,” he said.
“While we’ve had all these products before, our go-to-market strategy was very fragmented.
You could, in theory, have six or seven people sell different parts of an Atlanta Journal-Constitution portfolio.”
Buyers and industry observers stress that for newspapers to survive, they can’t do business as usual anymore. Anne Gordon, one-time managing editor of The Philadelphia Inquirer and now a partner at Dubilier & Co., a private equity firm, said that the strategy of large regional papers to serve the whole of their sprawling markets with local news sections has been a bust. Instead, papers should leverage their depth of coverage by, for example, publishing e-newsletters on single topics like business or the arts.
Industry watchers also call for publishers to be more aggressive online by partnering with or buying niche sites. “They may have to expect that innovation will take place outside their doors,” Gordon said.
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