Saving newspapers: The PR campaign
Brian Tierney doesn’t dispute that U.S. newspapers are in trouble; he just wants to know why they can’t tell the good side of the story. That led to this article in today’s Philadelphia Inquirer, the paper he owns along with a group of investors:
The pundits and cynics who believe that newspapers are dead are dead wrong.
So says a small group of newspaper executives who this month organized an ad hoc group to alter perceptions and get the facts out… Dubbed the Newspaper Project, the grassroots effort includes the CEO and publisher of Philadelphia Media Holdings, Brian P. Tierney. [And executives from Parade, Community Newspaper Holdings Inc and others --ed]
Acknowledging that the newspaper industry faces challenges, the group roundly rejects the notion that newspapers have no future.
The group decided “because journalism is so essential for a democracy, we really need to tell this story ourselves in a more aggressive way,” Tierney said.
Starting on Monday, the Newspaper Project will launch an ad campaign in the Inquirer, The Washington Post, The New York Times, AdAge and other papers to spread the word. It’s a good fit for Tierney, who knows a thing or two about public relations. Of course, it’s also something that the Newspaper Association of America has spent millions on over the past few years, and that has yet to turn the tide of public opinion.
As the Reuters reporter who covers newspapers, I was nonplussed to only find out about this on the Saturday before the campaign launched, and said so on a comment on the Inky’s article. An hour or two later, I got a call from Tierney. That led to a chat about three fundamental facts about the state of newspapers today:
- Yes, they’re more read than ever, thanks to the Internet
- Ad budgets are falling in print, and online ad sales are too cheap to make up the difference
- A publisher might be profitable, but not enough to pay off debt, which raises the possibility of default, bankruptcy and extinction.
We covered the basics of the campaign and he touted how well the Daily News and Inquirer are doing in terms of Web audiences. But what about bringing in more money? Perhaps charging for the paper online (see Silicon Alley Insider for the latest free-vs-paid chapter) is inevitable, he said.
And how are he and his investors dealing with the papers’ debt, now at $400 million?
“We put 30 percent equity into our deal, which at the time seemed sufficient. Last year we did almost $40 million EBITDA [earnings before interest, taxes, depreciation and amortization], but our debt service is $40 million also, so we’re in kind of a covenant default. So the equity takes a haircut… and some of that debt needs to be significantly restructured… But the debt story does get in the way of the audience story.”
Tierney hopes to get the debt restructuring sorted out with lenders within a few months. As for injecting more cash into the two papers? “Our investor group is willing to put in more equity under the right terms,” he said. “No one in our investor group thought this was going to be a Google return.”
And advertising? It’s chiefly because of the decline in ad revenue that papers are struggling. At the Inquirer and Daily News, ad revenue performance was down about 17 percent over the past year. Factoring in circulation revenue gains from raising the papers’ price, overall revenue was off 10 percent in 2008. Ad revenue likely will fall the same amount this year, he said.
There’s no cause to celebrate a second year of 17-percent ad declines. On the other hand, it’s the kind of consistency that suggests that a bottom could be near. And a bottom usually is what precedes some kind of recovery. That sort of trend is its own public relations campaign.