With Newspaper Publishers Harping That New Print Business Models Are The Name Of The Game Here’s What They’re Doing

Philip M. Stone June 10, 2008 Follow on Twitter

The theme of many publishers at last week’s World Association of Newspapers (WAN) meeting is that new business models for print are necessary and staff had better see the light or else, so as publishers talk the talk here’s what they’ve been up to in the past 10 days:

• The Washington Times ended its Saturday edition because of low circulation but Saturday news remains on its Internet site.
• The St. Petersburg Times imposes a one-year pay freeze and offers an enhanced retirement option.
• Newsday lays off 32 following a 120-person cutback in March.
• Ottaway Newspapers announces laying off an unspecified number of employees at its eight media groups and corporate headquarters. Rupert Murdoch has put the group up for sale – he got them in the Dow Jones purchase.
• Gannett lays off 55 at four New Jersey newspapers.
• Tribune announces it is retrenching – it wants a 50-50 split between editorial and advertising, and it is counting bylines because it believes many journalists are not carrying their weight.
• The San Jose Mercury News says it will probably have a 15% plus cut in its news hole in the fiscal year beginning July 1 because of a projected newsprint price hike.
• The Star-Ledger of Newark, New Jersey says it will no longer supply newspapers to newsstands that sell less than 20 copies daily.

But not all ideas involve cost-cutting. Murdoch’s Sun tabloid in the UK is trying an novel experiment – since Poland entered the EU more than 1 million Poles have moved to the UK so for the European Soccer Championships now being co-hosted by Switzerland and Austria (Poland is in but no UK side is) the Sun is running a daily Polish-language edition at 50 pence an issue – more than what the daily English language Sun sells at but considering the cost of hiring Polish reporters and editors probably not a bad deal. The BBC showed the first Polish game against Germany (the Poles lost 2-0) and garnered a 21% share.

Another big WAN theme was that newsrooms must integrate, and the UK’s Telegraph group has announced the integration of the news desks  for its Daily Telegraph and Sunday Telegraph which really is a big deal considering how tradition has dictated that both newspapers have separate staffs and are very different entities, let alone sending material to the Web first.

Alan Rusbridger, editor-in-chief of Guardian News and Media is creating a single news, business, and sports team across the Guardian, The Observer (Sunday) and the Web, and again, given the tradition of very separate daily and Sunday editions, it is a really big deal in British journalism.

He told the UK’s Press Gazette, “It’s not seven-day publishing, it’s going to be something more ambitious.” He explained further, “At the moment most of our revenue is in print, we’d be crazy to switch it off, but we had better be ready with whatever comes next.”

Gavin O’Reilly, WAN’s president, laid into financial and media analysts for their bad-mouthing of the newspaper business, so he won’t be happy with two major outlooks that came out while he was smorgasbording at the Gothenburg, Sweden meeting. Moodys said the fundamental credit outlook for US newspapers remains negative and “Downward pressure on newspaper credit ratings will remain until the industry can demonstrate that it is keeping pace with changing consumer media consumption.”

JP Morgan analyst Alexia Quadrani warned that newspapers are suffering from a double whammy – the economic downturn plus advertising dollars migrating from newspapers to the Internet. She warned that even if the economy rebounds, advertising revenues would remain in decline. And she warned that newsprint increases already being implemented are not going to help the newspaper cost base.

With all of that it is fascinating to watch, pardon the expression, the “pissing match” going on between Roy Greenslade, the premier UK commentator on media affairs, and Timothy Balding, WAN CEO.  Greenslade, who hosted a panel in Gothenburg, wrote in his Guardian blog that he saw an “illusion” between how WAN was saying everything was great while the editors at their sessions were trying to figure out the new business models for survival in today’s tough eco0nomic climate.

Greenslade wrote, “The congress, the publisher’s conference, was dominated by the upbeat statistics about the good health of newspaper sales, newspaper launches and newspaper profits unveiled by the chief executive of  WAN, Timothy Balding, and the very positive interpretation of those figures by WAN’s president, Gavin O’Reilly. This was the great illusion.

“Yet all the discussions at the editors’ forum were dominated by how to deal with the decline – whether rapid or gradual – of newspaper circulations and the accompanying flight of advertising as people turn their backs on newsprint in favor of the Internet. This was the reality.”

Now, ftm, having had its own disagreements with Mr. Balding in the past, figured it would only be a matter of time before he would fire two cannons back, and Greenslade to his credit printed the response in its entirety on his blog Monday. Balding took him to task on several subjects, but on the divide between publishers and editors Balding shot, “I am surprised that Roy, an honest man, tries to invent a division between the publishers and editors in Gothenburg and can only put it down to the fact that (and I’m sorry if this is hurtful to his loyal followers) he is not, as previously thought, ubiquitous, and could not be in two halls at the same time.” Ouch!

“Publisher after publisher examined and explained his or her multi-media strategy in the Congress meeting room, with great and successful examples of digital integration and multl-media editorial and advertising convergence operations,” Balding continued.

ftm’s annual complaint about the WAN numbers has always been that the tremendous growth in Asia masks the declines going on in Europe and North America, but if you were called the World Association of Newspapers then you would probably do similar. But ftm detected that this year at least Balding did not say all is well everywhere.

“Newspaper circulation has been rising or stable in three-quarters of the world’s countries over the past five years and in nearly 80% of countries in the past year,” he told the Congress in his annual World Press Trends presentation. “And even in places where paid for circulation is declining, notably the United States and some countries in western Europe, newspapers continue to extend their reach through a wide variety of free and niche publications and through their rapidly developing multi-media platforms,” he said.

Yes, he throws in combining print and web readership to say all is really well in North America when we know it is not, at least as far as profitability is concerned even if there is more readership,  but at least it was a nod in the right direction.

Most of the comments definitely favor the Greenslade view, and there is a very interesting note from Piet Bakker, perhaps the foremost expert on free newspapers, who seriously questions the stated WAN circulations for free newspapers.

In the meantime, increased readership or not, two more big US newspapers are choking on their chain of debt.  The Minneapolis Star Tribune is said to have asked creditors for a delay in debt payments and basically got told that before that would happen the owner, Avista Capital Partners, a New York private-equity firm, should invest a further $50 million – not exactly what Avista wanted to hear considering it has already written down by 75% its $100 million investment made just in 2006.  Creditor discussions continue.

And Philadelphia Media Holdings, owner of the Inquirer, says it is seeking an $8 million equity investment and says it must cut is cost structure by another 10%. In the meantime it is said to have fallen into technical default on loan covenants, according to Standard & Poors, and a June 1 interest payment to second tier lenders was blocked by senior lenders. Bloomberg quotes CEO Brian Tierney warning of “a dire situation” if the cuts are not made.

The pity, of course, is that there are not more bright ideas out there like the Sun’s Polish edition – yes, it’s only temporary and we don’t really know yet  if it will turn a profit, but at least it is an idea to earn revenue— new print business models don’t really have to be ALL about cost-cutting.

Many presenters said in Gothenburg that the core print product must remain the anchor of everything a newspaper does elsewhere whether it be the Internet, mobile or whatever. And yet with all the cutbacks continually being announced it seems that for too many newspapers there is little creativity in finding new print revenue streams and “new business models” is really just code for “Fire the Bastards”! 

And if that keeps up then publishers will have nobody but themselves to blame for what they have left.