What Is Wrong With Tribune's Math?

So, it's clear, that Randy Michaels knows how to draw attention. His 50/50 ad/news plan isn't exactly revolutionary, but it has become a lightning rod for the news industry, as it comes to grip with near-death experience.

Two weeks ago, Rupert Murdoch opined that print would outlive him, lasting (print!) another 20 years. Today, we had Steve Ballmer providing the half-life of 10 years for the newspaper, though the combo of the self-serving nature of the comment and Microsoft's (MSFT) Internet track record hardly make us mistake him for Nostradamus.

You can read MediaNews' Dean Singleton saying "It's time to get over it and move to a print model that matches the times." McClatchy's Howard Weaver, in a worth-reading Sunday post (the industry is really going 24/7!), was candid about the decline:

Revenues continue to be bleak, and it is increasingly apparent that fundamental shifts in competition and audience (combined with cyclical economic woes) demand permanent structural changes. Though many encouraging signs point us toward future success (total audience and online revenues are indeed growing at double-digit rates, for instance) the overall picture is undeniably changing.

Put it plainer: Newspaper companies will make less money, get smaller and face greater competition. As a result, we’ll have to become more efficient, make smarter choices and allocate resources to our essential activities.

Overall translation: It's The End of the World As We Know It. Get Over It.

That's a big turning point, and it is now sinking in universally.

So now is the time to sort out real solutions from ersatz ones, an exercise that will consume many of us for a good while.

Which brings us back, most immediately, to Mr. Michaels' halfsies proposition.

I consulted one of my best sources, a highly experienced ad director -- we'll call him AdMan, to protect one of those still industry-employed.

He doesn't think much of the Michaels plan.

It's nothing new that he is proposing. I don't know how many long meetings I sat through, looking at sectioning, looking at how to run the paper more economically.....I'm skeptical he can take pages out [we believe Tribune wants to cut another 500 pages chain-wide each week] and do it in strategic ways. Fundamentally, he's right, but Macy's is going to say you're not going to put my ads in the B section.

So AdMan gives an ad view of page make-up that is highly instructive. First, let's start with this irony. For decades, newspapers have sold advertisers on the value of the A section. Most read -- let us show you the Scarboroughs. Advertisers lined up for the A section with page-dominating ads. They don't take kindly to being placed on "composite" pages, in which ads butt up against one another.

The irony: in the digital age, it's the traditional content of the A section -- national and international news -- that's least useful. That stuff is commoditized, universally available online, and offering practically no distinctiveness under the local newspaper brand. So newspapers have built a print business around their now least-valuable-print content. And yet when calls to re-section surface -- Carole Leigh Hutton's sudden disappearance from Singleton's Mercury News comes to mind -- they're dissed as "radical."

Anyhow Metro, Business and Sports sections have already slimmed down, and whichever advertisers that have screamed the least have been placed there. In many papers, there's just not much room left in the traditional sections of the paper.

So AdMan says that to achieve a 50/50 balance, compared to the more traditional 60 [news]/40 [ads], the choices are limited, says AdMan:

• "Flow" ads around Op-Ed page content, one of the few pages left untouched by ads;
• Whack stand-alone feature sections like Food, Health, Weekend, etc.
• Or make advertisers "do something different," meaning accept placement that seems less valuable to them.

Door number 3 looks particularly perilous as ad buyers look for new rationales to move budget from print to online. Door number 2 drains away the kind of niche content that's useful to readers and most highly monetizable online. Door number 1 helps a little, but further diminishes the perception of a newspaper's strong community identification.

It's literally and figuratively true: the doors are closing. And "don't let them hit you on the way out" might be a message from the latest round of downsizings.

Something's going to have to give. We've heard the estimate that Tribune (TXA) might save 18% or so on newsprint if it can implement the new ratio. But Goldman Sachs recently estimated that newsprint pricing will go up 20% in the second half of the year. That's a lot of hard work of cutting -- diminishing circulation and advertising necessarily at the same time -- to essentially stay in place, budgetarily.

Gawker, responding to my Monday post made its call: "Our BOLD prediction: "The four-day print edition (Wednesday, Thursday, Friday, Sunday) will arrive in mid-major cities in the next 5 years."

I think that's right. The new daily paper is the web and the print is rapidly becoming a mostly-daily, sometimes-on-Sunday niche.

Comments

[tedstr:]

All you have to do is follow what has already happened to TV and Radio. More clutter, more ads. Less content (strip series are now common again, remember the days when a different show was on every hour, 7 days a week). Thinner cheaper content (i.e reality programming, ) Higher value content shifts to higher return mediums (movies and several larger production value series now appear on cable and pay cable) Centralized back office/production across newspaper clusters. And less output. Remember that network prime time used to start at 7PM?

2008 Jun 11 09:42 AM

[Malkiel:]

Don't assume that newspapers serve the same function in all markets. While newspapers may not seem "local" in a metropolis, in suburban and rural communities the newspaper may be the only source of news on local affairs and local government, and people (including generations who don't use the internet and social classes who can't afford web access) will loyally subscribe to their local paper. Free papers like the Advocate seem to thrive on a free distribution model because again, they offer the only source of information on neighborhood entertainment and local affairs. It's all about the local, identifying what that is and addressing the content and advertising to it.

The piece of the puzzle that needs to be looked at is the cost and method of producing the paper product itself. When papers are printed in magazine sizes and distributed by the US postal service or UPS rather than their own delivery fleet, that will be more like what needs to start happening. Having the publication be printed on spec by local outfits who are licensed to download and deliver the content is another way to get rid of owning infrastructure...

2008 Jun 11 11:31 AM