By Paul Gillin | August 3, 2013 - 10:08 am - Posted in Business News, Local news, Newspapers

John W. Henry

Four years of turmoil appear to be nearing an end in Boston with news that billionaire financier and Red Sox owner John Henry will buy the Globe for $70 million.

The deal came quickly after Henry’s bid to purchase the Globe through a partnership was rejected early this week. On Thursday, Henry said he would go it alone. Hours later, the deal was done.

The news is good for the paper and for the city, both of which struggled through an agonizing showdown between The New York Times Co., which owns the Globe, and the newspaper’s unions in 2009. The Times Co. threatened to shut down the Globe at the time unless significant concessions were made, including the end of a lifetime employment deal that had been extended to more than 100 Globe employees in the 1990s.

After a two-month standoff, the unions caved in and agreed to terms that were actually less favorable than the Times Co.’s original offer. Since then the Globe has reportedly stabilized itself financially. The owners announced that the paper was for sale early this year. The $70 million sale price actually indicates some appreciation in the Globe‘s value over the past four years. When the paper was originally put up for sale in 2009, the Times Co. was reported to be considering offers of as little as $25 million. It paid $1.1 billion for the Globe in 1993, but has extracted more than the original purchase price in cash over 20 years.

Henry is somewhat of a local hero in Boston. A hedge fund manager with a brilliant analytical mind, he purchased the Red Sox in 2002 with two partners (one of which was The New York Times Co.) and put in place a new front office that led the team to its first World Series victory in 86 years in 2004. Henry also has stakes in  the New England Sports Network, the Liverpool Soccer Club and the Roush Fenway NASCAR racing team. He lives in nearby Brookline.

His decision to keep the Red Sox in Fenway Park instead of moving to a larger and more lucrative new stadium has been controversial, but the team’s on-field performance has quieted the critics. Henry has shown more of a tendency to invest than to cut costs. In a prepared statement, he said the region “needs a strong, sustainable Boston Globe playing an integral role in the community’s long-term future.”

Henry also gets Boston.com and BostonGlobe.com in the deal. Boston.com was one of the first newspaper-owned websites to feature a strong regional focus. However, it lost its uniqueness as the Globe‘s partners in the joint venture fell away over the years. The Globe relaunched Boston.com last year with a stronger Boston voice while breaking out BostonGlobe.com as the newspaper’s online flagship and its first paywalled property.

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By Paul Gillin | August 2, 2013 - 8:10 am - Posted in Best/Worst, Education, Future of Journalism, Journalism

Journalism Degree.org  just posted a list of 100 Exemplary College Newspapers for Journalism Students. The ranking isn’t in any particular order and there’s no explanation of what methodology (if any) was used to assemble the list, but we clicked around to some of the candidates are were impressed to see that good journalism is being nurtured on college campuses around the country. If you or someone you know is considering journalism school, consider this list because campus newspapers are where you’ll be practicing a lot of your craft.

 

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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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By Paul Gillin | June 27, 2013 - 5:00 pm - Posted in Business News, Layoffs, Newspapers

The ax is falling again at Advance Publications.

The company that cut back frequencies in rapid succession at its once-daily newspapers in New Orleans, Syracuse, Cleveland and, most recently, Portland,  is now threatening to shut down the Newark Star-Ledger unless it wins substantial concessions from the paper’s unions.

Publisher Rich Vezza  said the Star-Ledger, which is New Jersey’s largest daily, lost $19.8 million last year and will lose about the same amount this year this year. It’s threatening to outsource printing and production unless unions representing pressman, mailers, engravers and machinists  make significant concessions by a September 27 deadline.

A union executive said  union members are willing to negotiate but that the Star-Ledger has shown little interest in meaningful proposals. Ed Shown, president of the Council of Star-Ledger Unions, said the latest management proposal demanded a 55% cut in  wages and benefits.  The unions issued a joint statement  challenging management’s $19.8 million loss  estimate.

Vezza said the frequency cutbacks implemented at other Advance titles aren’t an option here. If an agreement isn’t reached, the paper will close at the end of the year, presumably idling its 771 employees. “This is not a threat. This is reality,” he told Philly.com.

This is the second time management has threatened to shut down the Star-Ledger. It used a similar tactic to bring significant concessions from unions in 2008, when it also laid off 40% of its newsroom staff.  Five years ago the paper employed 330 editors, but that number has since fallen by nearly half.

Other publishers have used closure threats of closure to pressure their unions. In 2009 The New York Times Co. forced major concessions at the Boston Globe and Hearst Corp. came within a few weeks of  shuttering the San Francisco Chronicle before unions gave in.

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How are the experiments in reduced frequency that began in Detroit more than four years ago and have since spread to Cleveland, Syracuse, New Orleans and now Portland working out? Not so well, says author and J-school professor John K. Hartman.

Writing on Editor & Publisher‘s website, Hartman says the most from seven-day to three-day home delivery has caused massive subscriber flight and forced publishers to quietly backtrack. Newhouse, which is cutting frequencies across its line of dailies, has already had to introduce a new tabloid to produce on the days the Times-Picayune doesn’t publish.

Hartman blames greed. He accuses Newhouse of sabotaging journalism at the papers it own in the name of maximizing profits for the Newhouse family.

Newhouse is saving big money by eliminating news staff, eliminating office staff, eliminating delivery staff, and eliminating delivery expenses. In other words, Newhouse is getting out of the daily newspaper business and into the tri-weekly advertising shopper business.

We didn’t know this, but Hartman says the Detroit Free Press and News have re-introduced daily delivery to about 15,000 homes. The experiment, which was positioned as a “bold transformation” in December, 2008,

lost so many readers they had to beef up their non-delivery-day newspapers and restore limited seven-day home delivery. The Free Press now offers home delivery to 15,000 households through independent contractors the other four days a week. Nonetheless, hundreds of thousands of readers of the print products were lost in Detroit, and the projected switch of readers and advertisers to digital sites has not taken place.

Continuing a newspaper industry tradition of burying bad news about its business, The Oregonian announced that it will scale back home-delivery frequency from seven to four days a week.

The news is tucked into the fourth paragraph of an otherwise effusive press release on Oregon Live that crows about the launch of a new company that will “expand news and information products in Oregon and Southwest Washington” and “introduce new and improved digital products.”

In reality, the main purpose of the new company over the next few months will be to hire survivors from Oregonian Publishing Co. which produces the state’s largest and longest continuously published newspaper. That company will close on Oct. 1. Oregonian write Brent Hunsberger provides balanced coverage – and leads with the real news.

Like newspapers in Detroit, the The Oregonian will continue to publish in print seven days a week but will limit distribution of Monday, Tuesday and Thursday editions to city newsstands. Its 170,000 home subscribers will see deliveries cut to Wednesday, Friday, and Sunday. In a baffling bit of doublespeak, the company also said home-delivery subscribers would get a Saturday edition “as a bonus.” It also stressed that the “Wednesday, Friday and Sunday editions will be enhanced with more content than current editions while the Saturday newspaper will have news and a strong emphasis on sports content, along with classified advertising.” In other words, a cut of 50% is an improvement.

The bigger story is that there will be unspecific but “significant” layoffs at The Oregonian, which currently employs 650 people. The paper, which has won seven Pulitzer Prizes and five since 1999, employs more than 90 journalists according to Hunsberger’s account. However, Ryan Chittum thinks the editorial cuts have been more severe. Writing on CJR.com, Chittum estimates that the newsroom staff has declined from about 315 in 2007 to 175 today. His assessment is blunt:

[Advance Publications'] new template for its newspapers is now depressingly familiar: End daily delivery; fire a third to a half of the veteran journalists, particularly the editors, particularly in news; replace some of them with young, inexperienced (and most important: cheap) labor; put them on the hamster wheel; toss around insipid buzzwords; spend a bunch of money on new offices; piss off readers; embolden competition.

Seems about right. Chittum also notes that Advance Publications’ cutbacks at the Times-Picayune in New Orleans backfired when a competitor from Baton Rouge moved in to take advantage of subscriber unrest. Advance has had to respond with a tabloid edition on days the Times-Picayune doesn’t publish, thereby negating many of its cost savings. Advance has said that it will make similar frequency cutbacks across its portfolio.

Oregon journalists are already rushing in to show their support. Former Oregonian reporter Ryan Frank has taken to social media to raise funds for a bar tab for laid-off staffers. He’s already raised more than $3,000. Follow the fund’s progress at #OregonianBarTab on Twitter. And give generously.

Thanks to Brian Parks for tipping us off to this news.

 

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By Paul Gillin | June 11, 2013 - 5:54 pm - Posted in Journalism

 

Infographic from InsideClimateNews series on the Dilbit oil spill

Infographic from InsideClimateNews series on the Dilbit oil spill

Editor & Publisher has details on InsideClimate News and the “ambitious, in-depth investigative series that began as a fluke,” winning the tiny nonprofit organization the 2013 Pulitzer Prize for National Reporting.

The online-only service, which publishes its work under a Creative Commons license, beat out some of the biggest U.S. newspapers to win the honor for its three-part investigative series “The Dilbit Disaster: Inside the Biggest Oil Spill You’ve Never Heard Of.” The series focused on a 2010 crisis caused by a ruptured oil pipeline that spilled at least 1 million gallons into Michigan’s Talmadge Creek and Kalamazoo River, forcing 150 families permanently from their home.

The watchdog organization has a staff of only seven full-timers who work virtually in offices and homes around the country. It’s funded entirely by donations, a similar model to ProPublica, the nonprofit investigative reporting service launched in 2007 that has won two Pulitzers.

The E&P also documents the resourcefulness and determination that enabled the service to bring this story home despite a tiny budget and far-flung staff. The visibility of its work was helped by the fact that media coverage of climate change has declined steadily since 2009, according to E&P.

 

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The World Association of Newspapers and News Publishers (WAN-IFRA) released an upbeat report on the state of newspapers worldwide, pointing to growing readership levels in emerging economies but cautioning that engagement levels are still low.

The report includes data from 70 countries that account for more than 90% of the industry’s value. It shows:

  • More than half the world’s adult population reads a daily newspaper, with 2.5 billion reading in print and more than 600 million consuming in digital form.
  • The newspaper industry generates more than US$200 billion of revenue worldwide each year. However, that figure is down 2% from last year and 22% since 2008. The numbers are dragged down by plummeting ad sales in the U.S., which has seen print advertising revenues fall 42% since 2008. The good news is that ad revenues are up 9.1% in Latin America, 3.6% in Asia and 2.3% in the Middle East and North Africa.
  • Newspaper circulation remains high, through stagnant, globally. Circulation declined only .9% worldwide in 2012 from a year earlier, primarily due to  rising circulations in Asia. Circulation is down 2.2% globally since 2008, with the steepest declines in Europe.
  • While newspapers are a vital information source, they aren’t engaging online audiences very effectively. Newspapers accounted for only 7% of visits, only 1.3% of time spent online and only .9% of total pages visited.
  • U.S. newspaper publishers now generate 27% of their revenues from non-traditional sources, such as digital advertising, services and ancillary products.

While the report can be seen as a glass-half-full scenario, we think it’s encouraging to see publishers diversifying their revenue sources. The industry’s historic dependence on print advertising in general – and classified advertising in particular – is at the root of its problems. The rapid decline of those revenue sources is prompting some publishers to get creative about finding new revenues. Those that succeed will be stronger for it.

 

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By Paul Gillin | June 9, 2013 - 10:42 am - Posted in Advertising, Business News, Newspapers

PwC (formerly PricewaterhouseCoopers) has issued its 14th annual outlook for the global entertainment and media industry, and the trends are mostly positive – or at least not horrendous – for mainstream media through 2017.

Newspaper advertising is expected to decline 2.9% annually to $28.5 billion in 2017, from an estimated $33 billion last year. The sector “is not in ‘terminal decline,; at least in the near or medium term,” writes MarketingCharts in a summary article. “In fact it has shown some resilience, and print circulation has stabilized even as newspaper websites attract an increasing number of readers.”

TV advertising looks particularly strong, with a 5.1% forecasted compound annual growth rate. Advertisers are particularly intrigued about the potential of personalization and so-called “second screen” viewing which permits audience members to interact with the broadcast as well as with each other.

Even radio is forecast to grow, driven by satellite networks. And then there are billboards. Those out-of-home vehicles will lag only TV advertising in projected revenue growth, perhaps because they still deliver a unique experience and you can’t avoid looking at them.

The full report costs $2,200, but the links above provide the highlights.

US Traditional Media Outlook 2013-2017

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By Paul Gillin | June 6, 2013 - 7:43 am - Posted in Advertising, Business News, NewMedia

ZenithOptimedia just released a list of the world’s largest media companies ranked by media revenue, which it describes as “all revenues deriving from businesses that support advertising, not just the advertising revenue itself.” Number one on the list is Google at nearly $38 billion in 2011 revenues. It’s followed by DirectTV and then News Corp. which owns The Wall Street Journal, Fox TV and many U.K. newspapers.

How dominant is Google? It accounted for 49% of the world’s internet ad expenditure in 2011, according to the ZenithOptimedia press release. Three other Internet media owners (Facebook, Microsoft and Yahoo!) generated another $11.3 billion. Much of this revenue came out of the hides of traditional media companies.

That isn’t to say that mainstream media is standing still. “Of the top 30 global media owners, 22 are companies whose main business is to attract audiences with strong content,” says the press release. “Between them, these 22 generated $169 billion in media revenue in 2011, or 61% of the total generated by the Top 30.”

So content rules, but search rules more. The world’s biggest media company produces almost no content, and it’s in a market that’s growing 13% per year.

ZenithOptimedia Top 10 Global Media Owners in 2011

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