Traditional Newspaper Ultimate Business Plan –To Survive

Philip M. Stone February 24, 2009

More and more newspapers are making staff take unpaid days off, they’re decreasing print days, cutting labor and supplier costs to the bone, and, for a few, there’s even Chapter 11 bankruptcy. The goal can be summed up in just one word: survival.

And more than one publisher is now openly saying that there may be a silver lining to this current economic mess – some of the weaker players may well disappear and that means once there is recovery it should be much better for those that survive. If that isn’t taking Darwinism to the full, then what is?

Rupert Murdoch, who deep deep down is a newspaperman above all else, told journalists and analysts last week, “There has never been a greater appetite for news in the community and I’ve got great faith in newspapers. We may even get lucky and may not have as much competition at the end of it all.” Doesn’t get much blunter than that!

And that’s from a publisher who has his share of problems with his newspaper stable. Advertising really tanked in January at his beloved Wall Street Journal and his UK Sunday Timesis also having a tough time. At the WSJ it was always going to be a “how many years” proposition when that $5.6 billion investment would turn into a profit – he has already written down half of that investment – but what is going on at the Sunday Times it really is a big blow because that newspaper has been as close as there can be to being a license to print money, necessary to support, for instance, The Times that has always lost money.

And even Murdoch is somewhat perplexed at what is going on there. “We have in the Sunday Times a totally dominant newspaper in the quality market, with the circulation a lot greater than the combined circulation of its competitors, yet, what could be broadly called classified, whether it be jobs or travel or whatever, we have lost out on. I would say we are getting all the business at full rates that is available, but the profit of the Sunday Times is down quite seriously.”

But Murdoch knows at the end of the day his newspapers will be survivors. He has some seven years worth of debt repayment sitting safely (hopefully) in the bank and he can weather the storm. Yes, cutbacks have been announced for New York and his four UK national newspapers, but those newspapers will survive. In the UK, it is very possible that the Independent on Sunday, for instance, could disappear unless fresh money is found to support that weakest member of the national UK Sunday quality market.

And then there was a fascinating article in the New York Times recently about how that newspaper’s own policies are directed at weathering the storm and coming out stronger in what it believes will be weaker newspaper market.

The newspaper noted that Janet Robinson, CEO and President, said just last month, “As other newspapers cut back on international and national coverage, or cease operations, we believe there will be opportunities for The Times to fill that void.”

The newspaper says the industry calls this the “last-man standing” strategy – that’s pretty harsh and blunt. TheTimes has been doing what it needs to do to ensure it will still be around – hence that Carlos Slim loan last month at the more than 14% interest rate, for even it is feeling the heat – ad revenue fell 14% last year and it has taken a shot below the water line in its Web strategy that digital revenues will make up for print’s losses -- in Q4 Web revenues actually declined.

That led to a 9.5% cull of its About.com staff, and many analysts continue to ask whether the newspaper itself can really afford to keep America’s largest print-digital editorial operation at such levels – a newsroom of 1,300 costing $200 million annually.

Many newspapers are reinventing themselves, dumping coverage that would have been the norm, reducing the number of pages, and the size of those pages, because the great unknown out there is when the economy does recover (and when will that be) will the advertising return to traditional media at levels before the downturn or is some of that spend gone for good?

And it is not just newspapers, the announcement by Newsweek that it basically is going to stop covering what happened in the past week but rather will look forward turns the idea of what a news weekly does completely on end. It is yet another major media culture change.

“The drill of chasing the week’s news to add a couple of hard-fought new details is not sustainable,” says Editor John Meacham.

Just think, a little more than a year ago Newsweek promised its advertisers 3.1 million circulation. By next January that promised circulation will be less than half at 1.5 million. In other words the news magazine fully expects its new policy will cost it even more readers but it has obviously taken the marketing strategy it can do better appealing to its core well-educated audience rather than going after the masses.

The magazine hopes that core readership gets to keep their jobs and the magazine can make a go of it with about 1.2 million readers liking the new format -- not only that but that they actually pay higher subscription rates, too.

The problem, of course, is that news weeklies in particular rely on advertising from the automobile and pharmaceutical industries, and it is those two very sectors that have cut way back. So even if Newsweek’s new editorial policy is a hit there’s no guarantee the necessary advertising spend will be there in support.

No doubt Time Magazine is looking at all this and figures that it has ended up being the fittest of them all. US News & World Report is now relegated to the Internet, Newsweek is going to be forward-looking and not worrying about past events, so if we really want those scraps of information on last week’s news that hasn’t previously been reported, is Time now the one?  Time will tell if Time has won.