The sickening plunge in newspaper stocks; the human toll

I’m finding it hard to concentrate this morning, so riveted am I by the death spiral of newspaper-related stocks and the carnage in newsrooms.

The day started with a terrible earnings report from Gannett, the largest publishing company. Earnings down 36% on a 14% drop in second quarter newspaper advertising revenue. USA Today ad revenue was down 17%. 

Alan Mutter, my blogging hero, reports that newspaper stocks have lost $4 billion in value since the beginning of the month. That’s his chart at right.

Meanwhile, the bodies stack up, day by day. the Atlanta Journal Constitution reported this morning it will eliminate 8 percent of its employeees, 189 jobs. It will also eliminate its geographically targeted sections, including a Gwinnett County section it has published for 20 years. I remember when it started, with great resolve and fanfare, to beat back a frightening challenge from a New York Times suburban newspaper, the Gwinnett Daily News.

That was a great time for readers, with two formidable competitors fighting for their loyalty with strong, locally-focused news and advertising products. The AJC destroyed the NYT entry. But even with a strong web presence of its own, it can’t compete toe-to-toe with all of the social, economic and technological forces making it more and more difficult for newspapers to prosper.

Saving the classifieds business

Steve Outing and Chris Ryan have a great new website, ReinventingClassifieds.com. Steve asked me for a piece. Here’s what I sent him.

Second thoughts of a publisher turned professor

In nine months since I was carried from the bloody arena of the newspaper business and ascended to the ivory tower, I’ve gained this perspective: Most newspapers don’t need the best new idea to grow their classifieds business. They mostly need to get better at executing what they already know.

I’m not an expert on classified advertising, so I can’t offer advice to anyone else. Here are a half dozen things I wish I’d done about classifieds and what I would do today:

·      Stop obsessing about the national trends.  Here in flyover country, there was no real estate boom and there’s no bust. Employment numbers remain healthy. Wichita Craigslist has been around for a few years, but hasn’t become an established marketplace in any vertical. It isn’t too late to save the business in Wichita or lots of other places in America.

·      Invest in technology.  We dithered endlessly over how to get our advertising and accounting systems to talk to each other. We found a hundred barriers to having our customers place and price their own ads. I should have been more insistently impatient about finding and financing solutions.

·      Invest in people. Newspaper/internet outside salespeople should be the most qualified and the best paid in the market. They should have the technical and clerical support they need to focus their time on selling to auto dealers, Realtors, employers and employment agencies. That wasn’t true at any of the newspapers I worked at over a span of 35 years.

·      Get rid of the newspaper/internet pricing silos. Advertisers should be sold eyeballs, not platforms. Companies allocate revenue to make their web operations look better at the expense of their newspapers. No wonder people think newspapers are failing. The truth is, the local newspaper and its website are a dynamite combination. Sell them that way.

·      Stop tinkering with in-paper presentation. If the type is readable and the classifications are clear, readers will find and act on the ads. No amount of tweaking the color and headers and unpaid content will make a material difference in profitability.

·      Promote. Promote. Promote. God should strike us down for cutting the classifieds promotion budget year after year. We got the results we paid for.

News and Advertising: Hanging together or separately

When the nation’s key editors and publishers met in Washington this week, one of the topics was “Making the Publisher/Editor Partnership Work.” These days, that often means editors understanding they need to take down some of the wall with advertising departments, as Louis Hau describes at Forbes.com. That doesn’t mean giving up a bit of responsibility for producing an honest news report. It does mean being smart about finding the sweet spot where reader and advertiser interests overlap and both are served by cooperation between news and advertising. One example I can point to proudly is the Business Today section in the Wichita Eagle, now about 18 months old.  Editor Sherry Chisenhall, Advertising V.P. Wendell Funk and their staffs were in close contact all through the development of the section. It turned into an outstanding reader and advertiser success, as Sherry told the Readership Institute at Northwestern University.  The bottom line on cooperation is that profits, readership and advertiser satisfaction are all served when newsrooms and advertising departments find ways to cooperate.

A new voice on the future of the news media

Hi, I’m Lou Heldman, a short guy with the tall title, Distinguished Senior Fellow in Media Management and Journalism. That’s at Wichita State University, the only urban-serving research university in Kansas.

Monday nights this fall (2008), I’ll begin teaching Strategic Issues in Media Management, to MBA students from the Barton School of Business, and graduate students and advanced undergraduates from the Elliott School of Communication.

One element of the seminar is that we’ll all be blogging about the future of the news media. I’m starting this blog now to get a four-month headstart on the students, sort of like reading ahead in the textbook!

 

A model media executive — Jay Smith

Jay Smith today announced his retirement as president of Cox Newspapers, which owns the Atlanta Journal Constitution, Austin American-Statesman, Dayton Daily News and other excellent local newspapers. I’ve known Jay since our first journalism class together at Ohio State 40 years ago. In my completely biased opinion, he’s been one of the outstanding media executives of our generation. The proof is in the quality improvements in the newspapers Jay has served as publisher (those above) and in other Cox papers in Palm Beach and elsewhere. Jay chaired the Newspaper Association of America, served on the board of Associated Press and held other key industry roles. In each case, he been an untiring advocate of quality journalism and the public’s right to know. He’s still a young man, so more great things are expected. In an email to friends this morning, Jay said:

The challenges facing newspapers are daunting, but the men and women of Cox Newspapers are up to the task. As long as we remember to exist for others, not for ourselves, we will do fine. How will it all turn out and what route will get us there? Darned if I know, but I’m confident of a good outcome. And may you never lose sight of the fact that newspapers and, increasingly, their Web sites are vital to an informed and active democracy. 

Jay goes out as he has always been, a class act.