Dorian Benkoil senior consultant at Teeming Media. An award-winning journalist and editor, he was a foreign correspondent for AP and Newsweek, and international and managing editor for ABCNews.com. At ABC News he moved to the business side, handling sales integration and business development, before joining Fairchild Publications as General Manager for their Internet division, becoming editorial director for mediabistro.com, then a consultant for Teeming Media in New York. He graduates this year with an MBA from Baruch's Zicklin school of business. Learn more about him at Benkoil.com or his blog - MediaFlect.com.
Robert Cauthorn is a journalist, former vice president of digital
media at the San Francisco Chronicle, and was the third recipient of
the Newspaper Association of America's prestigious Digital Pioneer
Award. He launched one of the first five newspapers web sites in the
world and is generally considered to have delivered the first
profitable newspaper web site in 1995. Cauthorn has been in the middle
of the transition from old media to new and is recognized as
frank-talking critic when he believes newspapers stray for their
mission. In mid-2004 he became the president of CityTools, LLC a new
media startup based in San Francisco.
Ben Compaine has divided his career between the academic world and private business. He was a journalist when manual typewriters were considered state of the art, but also led the conversion of his college newspaper to cold type. He has started and managed weekly newspapers. His dissertation at Temple University in 1977 was about the changing technologies that were going to unsettle the landscape of the staid and low profit newspaper industry. Since then he has focused his research and consulting on examining the forces and trends at work in the information industries. Among his most well-known works (and the name of his blog) is "Who Owns the Media?".
Vin Crosbie has been called "the Practical Futurist" by Folio, the trade journal of the American magazine industry. Editor & Publisher magazine, the trade journal of the American newspaper industry, devoted the Overview chapter of executive research report Digital Delivery of News: A How-to Guide for Publishers to his work. His speech to the National Association of Broadcasters annual conference was one of 24 orations selected by a team of speech professors for publication in the reference book Representative American Speeches 2004-2005. He has keynoted the Seybold Publishing Strategies conference in 2000; co-chaired and co-moderated last year's annual Beyond the Printed Word the digital publishing conference in Vienna; and regularly speaks at most major online news media conferences. He is currently in residence as adjunct professor of visual and interactive communications and senior consultant on executive education in new media at Syracuse University's S.I. Newhouse School of Public Communications, and meanwhile is managing partner of the media consulting firm of Digital Deliverance LLC in Greenwich, Connecticut.
About this blog
Two forces have shattered the news media. Technology is the first. Although media technology is undergoing its greatest change since the day in 1440 when Johannes Gutenberg first inked type, for more than ten years now the news industry has mistaken new technologies merely as electronic ways to distribute otherwise printed or analog products. Estrangement is the second. The news media has lost touch with people's needs and interests during the past 30 years, as demonstrated by rapidly declining readerships of newspapers and audiences of broadcast news. How we rebuild news media appropriate to the 21st Century from the growing rubble of this industry is the subject of this group weblog.
Another week, another front paper story on the media business from The Wall Street Journal. Today it was the lead story: “As Market Shifts, Newspapers Try to Lure New, Young Readers.” (subscription required)
The article provides some fresh data on advertising in newspapers: The categories of customers that provide by far the largest proportion of advertising have reduced the percentage of their ad budgets devoted to newspapers since 2000. In the case of employment—the highly profitable classified ads for jobs-- the decline was nearly 6%. In a high fixed cost business such as newspapers, this is a serious trend, though not a surprising revelation. Consolidation in the department store industry, highlighted most recently by the merger of May Co. and Federated, has only exacerbated the decrease.
The topic sentence for the Journal article: “Looking for ways to shore up their readership and broaden appeal to advertisers, many U.S. newspapers are adopting a new tactic: targeting narrower and younger audiences.”
Does this tactic (or is it a strategy) make sense? It depends on what the editors and publishers have as their long term goal. One question that newspapers editors and managers must get clear in their heads is the line between their newspapers and the entity that publishes the newspapers. That is, when we talk about “saving the newspaper” or “developing new strategies for the newspaper,” should this refer to the ink on paper product that is manufactured on Goss Metroliners? Or does this refer to the role of a newsroom, advertising department, and marketing organization that create of bundle of information for distribution to an audience by whatever channels?
I raise this question because the answer would suggest the direction for strategy. Emphasizing the current newspaper product might result in actions such as redesign of the paper’s graphics, changing the editorial mix to target a specific group of readers (i.e., “younger, current nonreaders” as the WSJ headline suggests), raising local ad rates for the dwindling core of “must have” advertisers, and so on.
On the other hand, if the strategy is to ensure the health of the company that publishes newspapers, then a different strategy may emerge. That is more likely to focus on new products, such as online classified ad services, hyper localized neighborhood Web sites, specialized free print publications such as the Tribune Co’s RedEye.
The two strategies are not completely mutually exclusive, but how they are viewed by editors and publishers does make a difference. First is a matter of priority. If management believes that it is newspaper that is paramount, then it may over invest in that (new presses anyone?), making the new ventures skimp for internal venture capital. And new ventures may be viewed more as an end to subsidizing newspaper margins than to truly developing new businesses that will replace the declining size of the paper product.
On the other hand, a strategy that looks at threats and opportunities, at the publisher’s own strengths and weaknesses, would look at the pieces of the enterprise—the editorial resources, sales and marketing, even circulation – and be willing to strike out in a fresh direction. There are some innovations finally emerging that the tide may be turning to this latter mode.
A day after the official announcement of McClatchy’s intended acquisition of the much larger Knight-Ridder, some of the dust is starting to settle. It reveals a not very pretty picture.
First, the assurances that McClatchy CEO Gary Pruitt made on Monday that “We have no plans for layoffs or across-the-board cuts" in the newsrooms is rather disingenuous given that he also confirmed that McClatchy would sell 12 of the 32 Knight-Ridder dailies, ideally on the same day the acquisitions is closed. Indeed, Pruitt added "McClatchy would not operate those papers for even one day." Thus, his statement that they would not close any newspapers, even the troubled Philadelphia Daily News, is likewise meaningless, as any of the possible buyers of the Philadelphia papers are not bound by any such promise.
And McClatchy is generally rated one of the most editorially conscientious publishers.
Second, McClatchy is trying to thread a needle: On the one hand it must assure its stockholders that its purchase will lead to a growing, prosperous newspaper company. Thus Pruitt talks about the growth markets many of the Knight Ridder papers are in.
Pruitt pointed out that the average rate of household growth over the next five years in the markets for the 20 papers the company would keep is 11.1%, compared to the average growth rate for newspapers in the United States is 7.5%.
On the other hand, in the markets of the dozen papers that McClatchy plans to divest the household growth is 4.8% for the next five years. Yet if it is to attract buyer interest, it must put a positive spin on these papers that do not fit its “long-standing acquisition and operating strategies." In other words, they’re dogs (financially, not necessarily editorially).
Of the 32 Knight-Ridder daily newspapers, McClatchy will sell 38% of the total. However, they account for 44% of Knight-Ridder’s daily circulation
The 12 McClatchy “rejects” can no doubt be sold. At some price virtually anything can be. While some of the pundits have proclaimed the 30% premium that Knight-Ridder fetched over its value before it put itself up for sale as a sign that there is a bit of life left in the industry, there is little likelihood that buyers of the 12 orphaned K-R papers will leave them untouched once they buy. Curiously, The Wall Street Journal (sub. required) reported that The Newspaper Guild-Communication Workers of America, which represents workers at Knight Ridder papers, said it is interested in buying some or all of the 12 papers. “Union President Linda Foley says it ‘intends to be aggressive about making an offer’ and is contacting McClatchy about its interest. ‘We're reaching out to them as we speak,’ she said yesterday evening.’” Now that would be fascinating to see.
Then again, Pruitt can also see how much he can get for the 12 on eBay—with no reserve.
Finally: The New York Times to Cease Printing Daily Stock Tables
The New York Timesannounced today that it would cease printing the daily stock listings, except on Sunday. It joins, among others, the Tribune Co.’s papers in Chicago, Los Angeles, New York and Orlando in cutting back on the pages of agate type. This has been a long overdue measure. The Internet has provided financial data faster and easier for years. Most investors who need to know the price of their securities would have found online access worth the price of an ISP service long ago. It's a no-brainer for saving tons of newsprint at a time when big city newspapers are under cost ands revenue pressures. The Times Co., however, declined to provide an estimate on its savings.
John Naughton Foresees the End of Traditional Broadcasting
British TV reviewer turned internet guru, John Naughton, foresees the end of traditional broadcasting and the rise of a new media ecology amid unending change. He names a few of its characteristics he foresees, in a Guardianessay (free registration required) that's adapted from the UK Marketing Society's Annual Lecture he delivered on February 28th. Worth reading.
Among the worst performing publicly owned companies over the past three years are a collection of media companies. At my Who Owns the Media? blog I discuss the implications of this in a media ownership context. However in the Rebuilding Media space there is a different, though related message. First the data.
The Wall Street Journal last Monday tallied the best and worst performing stocks (subscription required). Among the 50 poorest performers were six media companies, four with major holdings in the fading newspaper segment, but also two major broadcasters, including the largest owner of radio stations. Among the best performing media companies were younger and thus more volatile entrants.
Worst and Best Performers, Total Return, Past 3 Years
# 4 New York Times Co.
# 5 Sirius Satellite Radio
# 8 Tribune Co
#9 XM Satellite Radio
#39 CNET Networks
#27 Dow Jones
# 33 Clear Channel Communications
Source: The Wall Street Journal, Feb 27, 2006, R1. Compiled by L.E.K. Consulting LLC.
Last year Adam Thierer and Dan English published a paper, “Testing ‘Media Monopoly’ Claims: A Look at What Markets Say” that I wrote about in September. In brief, Thierer and English found that Time Warner, Viacom, News Corp., Clear Channel, and Comcast lost a combined 52 percent of their value (in terms of market capitalization) over the previous five years. Time Warner in recent months was the target of an attempt by major stockholder Carl Icahn to break the company into four pieces to “unlock value.” Time Warner’s capitalization was lower in 2005 than in 2001. Knight-Ridder has been forced to put itself up for bid.
Although one might criticize Wall Street as being obsessed with last quarter's and the next quarter's earnings, over the longer haul the financial markets tell a story of substance. Out of 76 industry sectors (from home construction to computer hardware), the publishing industry was 72nd over the three year period, broadcasting and entertainment was 63rd. This is a statement about expectations of the future—the one year and five year future.
Folks who put our money (most of the big investments come from our retirement and mutual funds) out for investment are saying that there is so much uncertainty in the media arena that even when companies show reasonable profit they are not attractive bets for the future. On the other hand, some companies that have little or no profit may be worth the uncertainty and risk because their upside is substantial.
One clue to the media future may be found in following the money. But look at where it’s not going as well as where it is.
That was a good 'take-out' quote for those stories to use. However, I made that comparison towards the end of my speech just to show the newspaper advertising executives that they must greatly increase their online revenues, particularly if their readerships continue shifting from print to online.
Other points I made were that American newspapers are earning significant revenues online, particularly now that local advertisers are going online. However, newspapers are in danger of losing local online advertising revenues, not to TV or radio stations but to 'pure-play' Internet competitors such as Google and Yahoo. And that newspapers must their expand their online advertising focus well beyond just the traditional classified advertising categories of jobs, properties, and automotive, because those three categories account for just a fraction of the monies advertisers are spending online.
So, for the record, here's the text of that speech: