Is this the year when the digital news network takes shape?
It looks like not much has changed since I’ve been away. For a start, the book is still not done. But it’s close my friends, it’s close. Thanks for asking, and please don’t tell anyone I’m over here blogging today.
I see that the Orange County Register finally went bankrupt. No surprises there, right? And Tribune Company, owners of the L.A. Times, bought the San Diego Union-Tribune. Look, after their Long Island Newsday – WPIX-TV misadventures in New York you would have thought mention of synergy would have been banned forever from the corporate suite in Chicago, along with the 30-year-old investment banker numbskulls who peddle the notion. Synergy is a crock. It never leads to more revenue. Never.
I note that print ad revenues everywhere have kept on sliding and digital ad revenues are still not growing. Lassitude in consumer brand loyalty is all that’s propping newspapers up now. And I guess the “strategy” of mining the print subscriber base for digital subscribers reached its natural point of exhaustion while I was otherwise engaged. That means only deeper and deeper cost-cutting can preserve margin now – which is important, because there might just be another bigwig patsy out there who wants to see his name on the masthead. The last time someone like Sheldon Adelson owned a paper it was a guy called Robert Maxwell, once proprietor of the Mirror Group in Britain and a man of the same astronomical self-interest and pro-Israel zealotry. His empire collapsed after his body was found floating in the Atlantic in 1991. Did he fall of his yacht, the Lady Ghislaine, or was he pushed? Nobody really knows.
Am I the only one who remembers this stuff?
I just took a quick gander at the last two quarters at the New York Times. Jeez. What a mess. One million digital subscribers now, but still 68% dependent on dead trees for revenue, still no revenue growth overall. And still no traction with mobile, that’s unbelievable, another six months lost. Oh, and here’s another thing to think about – while global subscribers boost that subscription number, they’re almost impossible to sell. No advertiser runs a seamless global campaign, not even big transnational luxury brands.
Thanks to some stock re-purchasing McClatchy recovered from its NYSE delisting. Chicanery of course, but hey, they’re listed again, for now. It’s perilously close, they’re back trading for a buck a share as I write this. The family shareholder covenants that bind that company’s future are strangling them, they have few options left. So they announced the shuttering of all their foreign bureaus. I had no idea they still had them. The share price rose when they announced it. Yes, it’s 2016 and even Wall Street has figured out such things are no longer relevant. The good citizens of Charlotte, Fort Worth, Sacramento and Lexington will have to get their foreign news somewhere else. But where? You need to ask?
Talking of foreign bureaus, years ago when the Chandler family still owned Times-Mirror, they bought in a guy called Mark Willes as chairman and chief executive. It looked to me like an inspired move – a former Federal Reserve regional director who had done a long stint with a major packaged goods company, he had the pedigree to transform the company into what it should be – a consumer marketing company. When he did his initial review he was astounded to learn that every single Times-Mirror paper operated its own foreign news bureau in the U.K. The L.A. Times, the Hartford Courant, Newsday, the Baltmore Sun, even the Allentown Morning Call, each had its own London office, its own reporters, its own budget, each operated completely independently, the one from the other. Predictably, there was a riot at each outfit when he tried to consolidate them. He didn’t last long. When Tribune bought Times-Mirror, he left. Because of the subsequent bankruptcy, they still owe him money.
Just another tawdry tale from the unwinding of the newspaper industry.
I see that private equity firms – known around here as corporate hospice – are still happily sucking the lifeblood out of the newspapers that are left. There’s no confusion or nobility in their agenda despite the nice-sounding PR they employ. The only real alternative to private equity now is Gannett, happily doubling down hard on the idea of consolidating its print – and digital – reach. They picked up ten Digital First properties while I was gone, and the Journal Media Group too. Did you know that Gannett now has a media outlet in 106 local markets, with branded USA Today content filling in the newshole? One thing about Gannett, they know how to work the ad:edit ratio to a fare-thee-well.
At the financial heart of any successful business is one central tenet, one lever where value is anchored. The financial relationship between advertising revenue and newsroom cost is at the center of the newspaper business – and nobody knows how to work that better than Gannett. Private equity shoots everything that moves, from parking lots to pensions, at least Gannett tries to maintain some kind of balance. They live right on the line of compromising product quality with cutbacks. They’ve been doing it forever.
It’s admirable, I think. A member of the executive team is an old friend and colleague. “There’s still some cash in these old print properties,” he told me during an interview for the book. “And we’ll take it, we’re not a charitable foundation.”
All this makes me wonder what in the name of god you’ve all been doing while I’ve been gone. No new products untethered from the print past, no vertical market segmentation, no mobile breakout. Nada. Meanwhile Buzzfeed has become the most important news organization in the world, thanks mainly to Facebook, the Huff Post has increased its audience engagement lead over nytimes.com in terms of posts shared, Upworthy, Gawker and Flipboard keep growing, Vox is too, despite beginning to understand that it’s really, really hard to do news well every day, even when you have Ezra Klein working with you. They’re at 60 million monthly uniques now, which means they’re level-pegging with nytimes.com and washingonpost.com – after just a couple of years. Vice is expanding internationally, helped along by Murdoch’s money. And Germany’s Axel Springer finally decided to buy their way in and bought Henry Blodget’s Business Insider for $450 million. Quite a comeback for Blodget. The thing gets 76 million monthly unique visitors, most of them millennials 18-34 years old. Another vertical newspaper franchise surrendered.
You know me by now. You know I don’t do this blog simply because I get my rocks off chronicling the unwinding of the business and castigating the moribund “leadership” that seems hellbent on driving it right over the cliff. And you also know that if you play your cards right, I will eventually get to the real point, which is usually found at the nexus of leadership, strategy and the future of news. In this case, you will be relieved to know, that point has now arrived…
As I looked back over the last six months I saw that the Washington Post is doing something pretty interesting. First, I noticed that they’re now leveraging Amazon for distribution and to add editorial value. Duh! Distribution is the most important aspect of running a media business today. If you don’t believe me, ask Buzzfeed. As I prowled around further I also noticed they have signed up more than 160 newspapers to their partner program. Here’s how this works. Let’s take the Dallas Morning News. If you sign up for, say, Sunday delivery of the paper in Dallas, for $2.99 a week you get free access to dallasnews.com – plus 52 weeks of free unlimited digital access to washington post.com, “a $180 value.” The Texans see this as a great subscription incentive, I’m sure. But I bet that Bezos, characteristically thinking long term, sees it as a great opportunity to steal the database of people who like local newspaper content in Dallas.
So that, right there, is the big thing that has changed since I’ve been gone. Giant news platforms are arising now. Networks.
Local is diminished further. As I’ve said before, local news was never much of a differentiator, its value was propped up by monopoly position, that’s all, and it was quickly exposed when the walls came down. local news is a weak differentiator The time consumed on local news is a fractionated sliver of the time consumers spend online. But in the ferocious battle for digital mindshare, even a fractionated sliver is important.
So one day, sooner than you might think, three or four national networks will have established dominant market position for the digital news era. And local digital news will look a lot like local television news – a tiny little piece of the network offering in any given local market, embedded within the national news window of a giant digital network, serving up local content on the basis of cookie identification or geographic data captured through registration, and programmed by a newsroom of a half-a-dozen journalists who eat humble pie for lunch each day. The accompanying sales team will be twice that number.
Maybe the Washington Post Network will be one of the platforms to emerge? Maybe the USA Today Network? Brand connection and transfer, digital sensibility and reach will determine if any legacy player has a role to play in this new digital network marketplace.
Or maybe Buzzfeed will take it all.
The market will, in the end, have its way.
I’ve looked hard at the economics of a news network that looks like this and will write about that in a subsequent post.
In the meantime, Happy New Year. It’s good to be back.