Tribune Publishing pay a good price for its U-T San Diego acquisition (“Newsonomics: Tribune Publishing wraps its arms around San Diego — and all of Southern California”)? TPUB investors appear uncertain, as the share price has dropped since the announcement. Why can’t The Village Voice, once a jewel of the alternative press, find a buyer, as Voice Media offers it up for sale? Will anyone buy the storied New York Daily News, if only for $1?
Transformation
Every newspaper chain talks about getting digital faster. The plain truth is, that despite almost two decades of effort, most aren’t close to where they need to be. Even The New York Times can count only 28.2 percent of its ad revenue coming from digital; Tribune Publishing said last week that of its total revenues, 12 percent were digital. All these companies still find themselves more dependent on print than digital, and they haven’t weaned themselves off of it fast enough to absorb the now-brutal print losses.
Most CEOs offer reasonable plans for “transition” or “transformation,” but the financial impact of those strategies — if wholly successful — would still be a couple to several years away. And those plans require some investment. That’s where this meager net income trips up strategy. Public companies, especially, find themselves having to satisfy investors to some degree, and that certainly means, at a minimum, positive net income. But you can see how close almost all of them are to going negative.
Last week, Tribune Publishing CEO Jack Griffin, who took on his job just last August, reiterated for investors his five-point plan, which focuses on digital innovation, cost reduction, accretive acquisitions, revenue diversification, and new national ad strategies. This week, he named former New York Times digital and ad exec Denise Warren to lead the digital strategy. For Griffin, transformation first means catching up.
“We’re early days,” he told me Wednesday. “We’ve built common user interfaces, common e-commerce engines. The databases talk to each other now. We didn’t have those a short time ago.” He’s also playing catchup in digital subscriptions, which suffered from poor tech and decision-making in previous implementations. Today, TPUB can only count 67,000 digital-only subs among its eight metro properties — about the same number as regional digital-only leader, The Boston Globe. Griffin explains that his new digital sub leader has been “visiting with editors and publishers around the country. He’s trying to find the right permutation of the product for each market.”
Smartly, Griffin — an originator of modern content marketing at Meredith — is helping lead the local news industry in combining two related disciplines, digital marketing services and content marketing, and in the long term, those few millions in new revenue could blossom into tens of millions. His plans, in theory, stand out, as does the wider local marketing diversification in Dallas (“Jim Moroney’s digital-reaching Dallas Morning News”).
But TPUB illustrates this larger point about U.S. regional newspaper companies. They’re playing catchup (especially in technology and analytics) and testing revenue diversification strategies for meaningful scale — at the same time that they’re forced to pinch operating pennies.
Business model thinking for 2016-17
If stubbornly small profits seem here to stay, we have to ask what impact it’ll have on newspaper companies’ strategy going forward. With print ads continuing to fall, and cuts already so deep, what can they do as they plan for the next two years of publishing life?
One answer under consideration: cutting back to something less than daily print, much as Advance has done in cities like New Orleans, Portland, and Cleveland. Many publishers find themselves immediately (and understandably) allergic to the idea of going less-than-daily. However, day-cutting (“Why aren’t more newspapers cutting the number of days they print each week?”) may seem like a more reasonable strategy as other options fall by the wayside. Such cutting wouldn’t necessarily have to involve the same kind of newsroom cuts Advance instituted along with its reduction of print paper days.
By 2020, what may have seemed like a loony idea in 2012 will likely be more commonplace, one way or the other.