A Display Ad Debuts On The NYT Front Page; More Newspapers Share News; Two Print Classified Days Dropped; Print Dumped For Internet Only; And Newsstand Prices Hiked – Welcome To 2009

Philip M. Stone January 6, 2009

It may not be a big deal any more for most newspapers around the world to sell a display ad on the front page but now the New York Times, that most traditional of US newspapers, has succumbed to financial reality and on Monday across the bottom of its front page it ran a color ad for the CBS television network.

Surely there had to be Ochs and Sulzberger ancestors turning in their graves that the first New York Times front page display ad would be for a competing media! An economic sign of The Times.

And just how long is it going to take before we get to see The Washington-Baltimore Post-Sun now that the Post and Sun newspapers have agreed to share some of their Maryland news? It’s the same sort of consolidation question that is being asked in the Dallas-Ft. Worth metroplex as the two competing dailies there not only  help deliver one another’s newspapers, but are also sharing some arts editorial copy with more editorial co-operation said to be on the way.

More than one US publisher and general manager has told ftm the economics in 2009’s US newspaper world is bluntly that the only way forward for true economic survival is for those competing newspapers in close proximity to one another but in different cities to eventually consolidate. “It’s not a matter of if,” one general manager said, “but when.”

That becomes more and more believable as advertising forecasts continue gloomy with just about all predicting the 2009 advertising scene will be worse than 2008 with no guarantee there will be any real recovery at all by year’s end. This could well be the year where we see what was previously the unspeakable – big metropolitan titles either closing or consolidating with neighbors.

It’s all just more evidence that the newspaper industry is starting off 2009 the way it ended 2008, looking for new ways of earning new revenues while seeking innovative ways of cutting costs.

There can be no truer sick sign of the times than when a metropolitan newspaper decides to cut its print classified advertising for two days a week. The Gannett-owned Cincinnati Enquirer will still print on Monday and Tuesday but its bean counters must have figured out it is more cost effective to cut classified pages for those two days – less newsprint, ink and the like --  than to run the ads. When a newspaper actually cuts off what used to be its life’s blood – classifieds – then it really tells what kind of new world it is out there.

The Kansas City Kansan has announced it is giving up on print, its last edition will be January 10, and it will become an Internet-only publication. The newspaper had been printed five days a week until last September when it switched to two days a week. Now it is completely giving up the print ghost, following in the announced footsteps of the Christian Science Monitor that switches to Internet-only come April. 

The industry should take a close look at what is happening at that newspaper. When it switched to twice daily last September its Internet usage really shot up. “By going to two days, our online readership went through the roof, about 10 times our print circulation,” General Manager Drew Savage told the Kansas City Business Journal. 

The big question, therefore, is whether increased readership can translate into increased profits. Everyone knows print advertising rates are far higher than the Internet’s. So even with more eyeballs reading the news, how to get advertising rates that support such a move? Savage called that, “uncharted territory,” and he admits “that will be a challenge.”

Over at McClatchy, newspapers raising cash by selling property is still a big game-player but in these days of credit squeeze that’s not so easy. So a $190 million sale of 10 acres (four hectares) next to its Miami Herald building got frozen at the end of the year when the buyers had trouble coming up with the money. McClatchy has agreed to extend the closing date through June and has a non-refundable $10 million deposit in its pockets but it really wanted that $190 million now to pay down debt.

And talking of McClatchy, would you believe its shares actually hit a low of 62 cents the day after Christmas? On Monday the shares jumped what sounds like a massive 37.6% but in reality it means they closed at just $1.50, but it goes to show some people are still willing to take the risk to make a killing on newspaper shares with those getting in at that low now more than doubling their investment. When McClatchy announced in June, 2006, its agreement to buy the Knight Ridder newspapers its share price was $43.50.

The Tribune Company, in Chapter 11 bankruptcy, is continuing its policy of trying to earn more money from print deals. Its Baltimore Sun struck such a deal last year with the Washington Times, its Sun-Sentinel in Ft. Lauderdale, Florida started printing in December the Palm Beach Post, Palm Beach Daily News and La Palma, and now the flagship Chicago Tribune will be printing Murdoch’s Wall Street Journal and the weekly Barron’s for the Midwest market in a deal said to be worth some $2 million annually. The newspaper already has a distribution deal for those Dow Jones titles.

And across the Atlantic where the credit squeeze is, if anything, harder in the UK than it is in the US, newspapers groups there are dropping titles and consolidating operations as much as they can. On the national scene, The Times of London on Monday raised its newsstand price from 80 pence (about $1.15) to 90 pence (about $1.30) – it had increased it from 70 pence (about $1) to 80 pence just last September.

Fleet Street followers will remember that Murdoch in the 1990s started a price war via his Times, pricing it well under its competition – TheTelegraph and The Guardian. It was a multi-year bloodbath for all publishers concerned and it wasn’t really until just last year that The Times finally raised its price to meet its main competitor – The Telegraph. So what did the Telegraph do – it raised its price to 90 pence and in these days when obviously no publisher is looking for a bloodbath The Times actually increased its price to match the Telegraph. The floundering Independent is still at £1(about $1.45) – a move that cost it big circulation, so there is a limit to what people will pay – while The Guardian is still at 80 pence. But for how long?

And The Telegraph, which has been busy combining as many of its daily and Sunday functions as possible while maintaining they are still separate titles is still dumping people and cutting costs savagely. The latest to feel the effects – foreign news stringers who now will receive only £60 (about $87) a story whereas they had been getting £100 ($145) – that’s a 40% cut.

And this is just the first week in January!