Tuesday media highlights
Here are some of the day’s top stories in the media industry:
U.S. business magazines face a shakeout (Reuters) Robert MacMillan writes: “Business news publishers rubbed their hands in glee when the financial crisis grabbed headlines last fall, saying the meltdown would deliver a windfall blown in by widespread interest in their stories. It did not turn out that way. Appetite for news does not always translate into revenue, especially at a time when blogs, wire services such as Bloomberg and Thomson Reuters and other outlets crowd into news analysis territory that the big magazines had long claimed.”
McClatchy quarterly profit rises on cost cuts (Reuters) “U.S. newspaper publisher McClatchy Co reported higher quarterly income on Tuesday because of cost cuts, pushing shares up as much as 67 percent, even as advertising revenue fell by nearly a third. McClatchy, publisher of The Miami Herald and Sacramento Bee, also said it reduced the amount of debt that it owes and sought to reassure investors that it will not violate the terms of its lending agreements,” reports Robert MacMillan.
Economist Group Buys Congressional Quarterly (WSJ) Kevin Kingsbury writes: “The deal, terms of which weren’t disclosed, will create a new company called CQ-Roll Call Group. Roll Call is owned by the Economist Group, the London-based publisher of its namesake magazine. Roll Call is buying Congressional Quarterly from Times Publishing Co., whose primary operations is the St. Petersburg Times and related assets.”
James Murdoch Approved Payment to Phone Tap Victim (Bloomberg) “James Murdoch, the son of News Corp. Chairman Rupert Murdoch, agreed to a 700,000-pound ($1.1 million) payment to a victim of phone-tapping by the News of the World, the editor of the company’s newspaper said,” writes Robert Hutton. > Ex-Murdoch paper editor says phone taps not policy (Reuters)
Conde Nast September Monthlies Lose 1,680 Ad Pages (NYO) “Vogue tumbled to 427 pages total, down 36 percent from last September. W is down 53 percent; Allure and Gourmet are down 51 percent; and Self is down 50 percent. Vanity Fair came in just above average for the company, dropping 36 percent,” writes John Koblin.
In other news:
Newspapers plot survival as quietly as they can
Newspapers are in the business of making information public so readers can benefit. Newspaper publishers are in the business of revealing as little as possible unless someone springs a leak.
In the case of the two-dozen newspaper publishers who met in the Chicago area to discuss ways to get people to pay for the news they read online, the leak landed in the hands of The Atlantic. Here is an excerpt:
There’s no mention on its website but the Newspaper Association of America, the industry trade group, has assembled top executives of the New York Times, Gannett, E. W. Scripps, Advance Publications, McClatchy, Hearst Newspapers, MediaNews Group, the Associated Press, Philadelphia Media Holdings, Lee Enterprises and Freedom Communication Inc., among more than two dozen in all. A longtime industry chum, consultant Barbara Cohen, “will facilitate the meeting.” …
There was a dinner Wednesday and, according to the agenda, Thursday begins with a quick declaration of goals at 8 a.m., then an 8:10 a.m. session labeled, “Fair Syndication Consortium/Attributor.” …
That first session is followed by “Journalism Online: Presentation on proposed service to charge for access to newspaper content and to license that content that (sic) online aggregators” (the assistance of at least one of the many copy editors sent packing by the attendees might have been sought).
It’s now safe to wager that most attendees, who were scheduled to include Michael Golden of the New York Times, Gary Pruitt of McClatchy and Tom Curley of the Associated Press, will be dragged into charging for at least some online content.
In other words, the papers are trying to figure out how they can charge people for news on the Internet after largely giving it to them for the past 10-15 years. They have to do this so they don’t have to shut down when print advertising revenue gets so low that they can’t afford to stay in business anymore.
Newspapers still fail to understand the nature of the internet and, in doing so, have revealed their elitist attitude, not to mention their lack of business savvy.
Here’s a quick primer:
Information = Free (because that is what draws the audience)
Advertisement = Charge (that is the revenue source)
Trying to charge for subscriptions to online news is ludicrious– it’s like trying to charge for air. Go ahead and try. But most people will take the free air over the charged air everytime. Case in point, WSJ.
It makes much more sense to give the news for free and cash in on a newspapers reputation by charging for advertisement. Even if they just added an adsense ad, they would join the Fed-Ex club in no time.
The only real trouble is, the newspapers have been “double-dipping” (i.e., charging for both) for so long and now they have to suck it up like the rest of world. Elitist pigs, that’s what they are.
And, by the way, their level of writing has gone down as much, if
not more than, the rest of the world– enough, so that they can stop pretending to be better than anyone else. They aren’t.
Period.
McClatchy will make $200mln from digital this year
McClatchy Chief Executive Gary Pruitt shared some details of the newspaper publisher’s operations in his speech on Tuesday at the Newspaper Association of America’s annual meeting. Here’s what he said, based on a transcript posted at the NAA’s website:
At McClatchy, 15% of our advertising revenue today comes from online. McClatchy, a company founded before the advent of electric lights, will generate nearly $200 million dollars in digital revenue this year at a higher profit margin than our print business.
What significance is this?
- Fifteen percent is above the average newspaper publisher’s take from digital
- $200 million would be almost enough to run The New York Times’s newsroom operations for a year. Not bad.
Higher profit margins than print? We know Gary is a big fan of pop music to highlight his industry presentations, and that he likes the Rolling Stones in particular. Maybe “Time Is on My Side” would be a decent choice for those kinds of numbers.
Actually, Gary *did* think of some Stones songs that would characterize the current state of newspapers: “(I Can’t Get No) Satisfaction,” “Gimme Shelter,” “Shattered” and “19th Nervous Breakdown” made the list. In the end he scrapped Mick and Keith and went with the Battle Hymn of the Republic.
If that gives them enough time to fix the ad sales process to be able to economically sell local ads to local business in versioned newspapers, I’m seeing a light at the end of the tunnel for McClatchy.
Sound familiar? McClatchy cutting jobs
These have been a couple of ugly weeks for the newspaper industry. First, EW Scripps pulled the plug on the Rocky Mountain News, and then, today, McClatchy said it was cutting about 1,600 jobs, representing 15 percent of its workforce.
For those who like to look at the bright side of things, McClatchy isn’t shutting down The Miami Herald, Sacramento Bee or Anchorage Daily News. But the staff cuts are deep and undoubtedly will hurt the quality and depth of coverage at some of those newspapers. How couldn’t they? After all, they come on top of two other major rounds of layoffs at McClatchy.
The move isn’t really a surprise, given that McClatchy said back in early February that it had to come up with a plan to cuts more costs given the deterioration of the industry. Still, it seems job cuts at the company come as frequently as seasons change.
Here’s what CEO Gary Pruitt had to say in today’s statement: “We have been transitioning steadily from a traditional newspaper company to a hybrid print and online, news and advertising company for some time. The effects of the current national economic downturn make it essential that we move even faster to realign our workforce and make our operations more efficient. We previously discussed a plan to reach a targeted level of cost savings, but given the worsening economy, we must do more. I’m sorry we have to take these actions, but we believe they are necessary.”
If that sounds familiar, it should. On two previous occasions in recent months Pruitt has used similar language to announce job cuts. Here’s a refresher.
– September. McClatchy announces it is cutting 1,150 positions. Pruitt: “It is painful to announce these staff reductions, but the continued restructuring of our company is necessary given the relentless economic downturn and its impact on our business.”
The Executives from McClatchy don’t know what they are doing. When the McClatchy family ceased running the company, the “new executives” have cut back all of the incentives that “Ms. Eleanor McClatchy” had set up for her employees. She treated her employees as if they were family, they were paid the best in the business, the employees were happy working for this company. Not any more. The “New Executives” have terminated almost all of the veteran employees, replacing them with employees who have no experience and will work for minumum wage. The employees who are still there are there just to complete their time and to get their retirement. Even that is uncertain, now that the McClatchy company has frozen their Pension Plan. Almost everything in the future is uncertain as far as veteran employees are concerned, the only thing that is certain is that the “New Executives” will continue to get their
bonuses regardless of what the economy is going through, of how much debt the company has. If it were not for the CEO, Gary Pruitt’s biggest mistake, buying the KNIGHT RIDDER PACKAGE, THE COMPANY would still be in good standing and making alot of money. Because Pruitt is so greedy and so hungry for attention he wants for the public to think that he knows what he is doing, NOT
TRUE, he was there when the company was doing good, and he just happened to be there, it has nothing to do with him. Most McClatchy employees would love it if he were fired today, and never heard from again. I know for a fact, that I would. He should be fired for making the worst Business Decision in all of McClatchy’s history, buying the KNIGHT RIDDER was the biggest mistake of the entire McClatchy History. Now, there is a big probability that the company will go under sooner than
the public knows.
S&P upgrades McClatchy, man bites dog
McClatchy’s third-quarter financial results could have been written last quarter, or two quarters ago… or last year. Short story: Ad revenue plunged some more, the company is doing everything it can to pay debt, online revenue is rising but not by enough, [insert here boilerplate paragraph on newspaper grappling with financial crisis/cyclical trends/slow decline of industry] and so on.
What a day for S&P Equity Research to say that it’s upgrading McClatchy to a “hold” from a “sell.” Here’s what it said:
MNI reports Q3 adjusted EPS from continuing operations of $0.13 vs. $0.31, in line with our $0.12 estimate. On a GAAP basis, loss per share was $16.42. Revenues declined 16%, with advertising falling 16% and circulation off by 5%. On a positive note, online ads grew 9%, representing 12% of total ad revenues. With a restructuring plan in place for $100 million in annual savings, and MNI’s success with its credit amendment, we are increasing our 12-month target price to $5.00 from $3.00. We lift our opinion on MNI shares to hold from sell.
Does this mean they can bring back some of those thousands of people they’re getting rid of?
Private equity publicly disses newspapers
When it comes to newspapers, there’s nothing like the thrill of defeat. Scott Sperling, co-president of private equity firm Thomas H. Lee Partners, sounded anything but disappointed on stage Tuesday at the Dow Jones Media and Money conference when he told Wall Street Journal reporter Peter Lattman about dropping out of the bid for the Knight Ridder newspaper chain in 2006.
THL avoided the newspaper beat early on, Sperling said, after deciding that newspapers were just too expensive. “We looked at Knight Ridder more recently,” he said. “But we weren’t able to approach the price.”
So what does he think of the amazing advertising revenue plunge that has smacked newspaper publishers silly since then? “I would have predicted a lesser decline than what we’ve seen… We were probably too kind in our assessment of the industry three years ago.”
To drive home the point, Sperling told Lattman about reading the Journal on its website.
Lattman: You read the hard copy too, I hope?
Sperling: [pause] Sometimes.
[cue audience laughter]
McClatchy: three new publishers in two days
McClatchy Co, fresh off amending the terms on paying back its debt, is busy making some changes at its newspapers. The owner of the Miami Herald and Sacramento Bee has replaced three publishers in the past two days. We don’t yet know if this is coincidence or part of a coordinated move.
Here’s where we are so far:
The Tribune in San Luis Obispo, California: Bruce Ray takes over from Chip Visci, who is retiring, according to a press release. Ray previously was chief financial officer at the paper. Visci, according to McClatchy Chief Executive Gary Pruitt, is starting “the next chapter of his life.” Visci’s previous chapter was as a Knight Ridder guy before McClatchy ate up the chain and incurred all those billions of dollars in debt.
(Visci just called back and left a message, which is worth reporting for its humorous candor: “I can assure you that there’s no such shuffle underway… If there really were something up, I probably wouldn’t have called you back.”)
The Bradenton Herald in Florida: Robert Turner Jr succeeds William Fleet, who will become president and publisher of McClatchy’s Fresno Bee in California. Turner is a 29-year veteran of the Herald, according to another press release. Fleet was in California and unavailable. Turner was in a meeting, so we left a message.
The Fresno Bee: Fleet replaces Ray Steele Jr, who is retiring. No word about the next chapter in his life. He has worked for McClatchy for 41 years.
So what’s the news, McClatchyites? Write to robert dot macmillan at reuters dot com and let us know. We won’t rat you out.
It is boom time as far as media is concerned. Now, there is no scarcity os news feed. It is a feast for media in the time of crisis.
All eyes on Goldman — the conference, that is
We’ll be paying close attention to Goldman Sachs today for reasons other than the wrenching financial crisis. Our interest relates to the investment bank’s Communacopia conference, an annual meeting of some top media players.
Of course, it’s impossible to escape Wall Street’s woes, even at a media conference. After all, there are questions about the ripple effect on the economy — and that includes the advertising business, the bread and butter of media.
We spoke to a number of experts and the consensus was that while financial services make up just 6 percent of advertising spending in the United States, which is no small sum, the bigger issue is the influence that the crisis has on confidence throughout Corporate America. Watching this week’s turmoil, will corporations be as free with spending?
Here’s how Zain Raj, chief executive of Euro RSCG Discovery, a unit of France’s Havas advertising company, put it:
”Normally, when Wall Street sneezes, Madison Avenue ignores it. In this case, Wall Street has pneumonia and Madison Avenue better realize it.”
Whether in presentations or on the sidelines of Communacopia, that’s sure to be a topic of conversation. Let’s hear what News Corp, Time Warner and CBS, among others, have to say.
Keep an eye on:
Rolling stones with McClatchy’s Pruitt
McClatchy Chief Executive Gary Pruitt is one of those newspaper executives a reporter can get along well with because of qualities that are not always common to your typical CEO:
- He leaves the jargon behind at interviews.
- He is honest about bad news, making it easier to believe him when he delivers good news.
- He believes in the product — good journalism — as fervently as he does in his duty to please shareholders (which in McClatchy’s case includes the company’s namesake family and a bunch of other unhappy people).
Trouble is, there isn’t much good news to tell about the newspaper business. Pruitt has said as much to us and others, but in his latest interview in the Sacramento News & Review, (which we found on Romenesko) he shows us how much he feels his employees’ pain:
This has been the worst year of my life, by far.
That’s a pretty grim assessment. Then again, he’s presided over a 90 percent drop in McClatchy’s stock price, he’s cutting staff by 10 percent, and there appear to be few options open to the company to change the way it’s set up. The primary obstacle is $2 billion in debt from its acquisition of newspaper publisher Knight Ridder just before the key advertising struts supporting the company snapped.
Here’s more from Pruitt, on the economy:
One of the things that I wanted to emphasize is, obviously, we’re impacted by the economic downturn… It’s difficult to tease out how much of this is cyclical, and therefore temporary, and how much is secular and permanent. People have a tendency to conflate the two and assume, “Oh my god, it’s the end of the world as we know it-so why do you feel fine?”
McClatchy, other newspapers think vertically
Friday’s press release from McClatchy Corp about its new vice president for strategic initiatives includes a quote from interactive media VP Christian Hendricks that caught my eye:
It’s clear there’s a tremendous opportunity to provide local readers with a richer online experience by creating niche and vertical websites that combine our local experience and content with national brands and content… We are confident advertisers will also benefit greatly from better targeted advertising opportunities and increased traffic in topic-specific content areas on these sites.
By now you’ve realized that it was “niche and vertical websites” that got me all excited. Normally I find ways to translate that kind of jargon into English, but not this time.
It must have been nearly two years ago that former Wall Street Journal Publisher Gordon Crovitz started talking about “verticals” — websites and other vehicles that present news geared toward a narrowed audience as a way of attracting advertising dollars because the advertiser would know that a bunch of lawyers, say, would read the law vertical that a news organization creates. The New York Times is trying something similar with its business news section, and Gannett is doing this with “mom” websites.
And now, apparently, so is McClatchy. Newspaper publishers tend to pick up each others’ catchphrases about what they’re doing to save themselves as advertising revenue dries up, and they often try to shape the story of their fortunes in similar ways until they’re forced to retreat and find a new way to explain how they will survive. Until now, however, I hadn’t heard any of them aside from the Journal and the Times use the term “vertical.”
Personally,I prefer to read news online rather than buying some business magazines.