Freedom Communications' Aaron Kushner (photo by Jebb Harris, Orange County Register).

Freedom Communications’ Aaron Kushner (photo by Jebb Harris, Orange County Register).

California newspaper defies industry wisdom to stay alive – and prospers” declares The Guardian in an analysis of the Orange County Register‘s death-defying experiment under the leadership of a former greeting card executive with no background in newspapers.

Aaron Kushner (right) and his partner, Eric Spitz, formed Freedom Communications and bought the Register a year ago. They then stunned the shell-shocked newspaper industry by declaring their intention to go completely against the prevailing practice of layoffs and cost cuts. They would invest in print, double their reporting staff,  increase subscription prices and  put up one of the industry’s most rigid barriers to online access.

They’ve kept their promise. Newsroom staff is up to 360 from a low of 180 when Freedom took over. The Register routinely publishes daily issues that are nearly twice the size of its nearby rival, the Los Angeles Times. Page counts have been increased by half, color expanded and even the quality of paper improved.

Daily circulation is holding steady and total circulation is up sharply if you include the 28 weekly papers the company has invested in over the last 12 months. The Register has hired investigative reporters and lured newspaper wunderkind Rob Curley out of exile to rejuvenate the editorial product with a focus on local news and practical advice.

Freedom is showing particular sensitivity to  local businesses. One promotion late last year gave each reader the opportunity to contribute $100 worth of advertising to his or her favorite charity. Some 1,300 nonprofits benefited from the program.

Kushner thinks the time is right to place a big bet on print. “Never before and never again will so many people be in the sweet spot of newspaper readership as the next 20 years,” he told the Guardian. “It’s called the baby boom.”

There’s no doubt the Register is growing, but is it prospering as the Guardian‘s headline proclaims? The jury is still out on that.

Ken Doctor ran the numbers back in January and concluded that the Register may be able to cover its estimated $9 million+ in additional annual costs through higher subscription fees, but that the advertising market is in long-term decline and there’s little that any newspaper can do about that. Doctor contrasted Kushner’s growth strategy with the slash-and-burn tactics being applied by Advance Communications and said we’ll know in about two years whether growth or contraction is the recipe for success. Clearly, we’re pulling for Kushner.

Writing on CJR.com in May, Ryan Chittum said the odds are against Kushner, but noted that if he fails, “he will have gone down investing in journalism.” Chittum also has some revealing stats about the profitability of newspapers, which remains quite strong. When newspapers shut down, it’s because they can’t afford the cost of their debt, he says. Most are still in the black on an operations basis, which makes Advance’s frequency cutback strategy all the more puzzling.  It also suggests that value investor Warren Buffett  isn’t a billionaire for nothing.

Kushner says he’s in it for the long haul and he now has his eyes on a bigger prize: the L.A. Times. Tribune Co. is going to be looking to unload some assets now that it has exited bankruptcy, and many observers believe the Times will be on the auction block. If Kushner buys it, he can all but own the southern California market. Regardless of the  current fortunes of daily newspapers, having a  near-monopoly on even a shrinking media business in the country’s largest media market has to be attractive.

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This entry was posted on Thursday, July 25th, 2013 at 11:07 am and is filed under Business News, Circulation, Layoffs, Local news, Newspapers, Paywalls. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

5 Comments

  1. July 25, 2013 @ 12:47 pm



    I guess you meant “exited bankruptcy” in the last paragraph?

    Whatever. I still don’t see anyone under 25 reading a physical paper. That’s something that can’t, won’t and shouldn’t be fixed.

    Posted by Pete Gilio
  2. July 26, 2013 @ 7:50 am



    Fixed typos. And yes, readership by the under-30 audience is tiny. I think the Register benefits from an older demographic in its region. Kushner said the next 20 years are a great time to be in print. He did not specify what the future holds beyond that.

    Posted by paulgillin
  3. July 26, 2013 @ 10:18 am



    Why “shouldn’t” people under 25 read a print newspaper? A well-conceived local newspaper offers content readers can’t get anywhere else. And thumbing through a paper will make you more informed about your community than a similar amount of time spent online. There clearly is value in both products, and I applaud the investors behind the Register for trying something counter to a formula that clearly isn’t working.

    Posted by John
  4. July 27, 2013 @ 6:03 pm



    John,

    I appreciate your enthusiasm.

    Part of my “shouldn’t” (a large part of it) is environmental; the energy costs involved in printing and distributing a physical newspaper are high, and I think that, as we try hard to reduce our carbon footprint (and landfill), physical newspapers become a luxury.

    But the “can’t” and “won’t” still exist, regardless of the “shouldn’t”. My son and daughter absolutely never read a physical paper and I don’t see any of their friends engaged in the practice. Sooner rather than later, the economies of scale are going to catch up with the print news industry.

    I agree with you that a well-conceived local newspaper can be of great value (unfortunately, the ones in my community are stuffed with petty politics and other nonsense, so I for one would love to have a real community paper). I just respectfully disagree with you that the physical paper model will work in the long term.

    Posted by Pete Gilio
  5. August 26, 2013 @ 7:53 pm



    Actually, the OCR has large, and growing, editorial/newshole ethics issues. No smart, conscientious reader would look at that paper: http://socraticgadfly.blogspot.com/2013/08/a-new-ethics-low-for-newspaper.html

    Posted by SocraticGadfly