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Ken Doctor is an analyst with a ringside seat at the greatest story ever told about the global media industry. Fully employing more than 35 years of experience across a wide range of media, he’s become a go-to speaker, press source and consultant for legacy and emerging press around the world,... More
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  • The Newsonomics Of Rupert Murdoch, American Publisher

    First published at Nieman Journalism Lab

    State governments finally cracked down on Amazon's sales tax exemption, and Jeff Bezos found a workaround: same-day-delivery of retail ("The Newsonomics of Amazon vs. Main Street"). European governments and the European Community have tried every which way to crack down on Google, and still Larry Page has found a way to continue to dominate the continent's digital business. Scotland Yard, Parliament, and the Guardian have exposed the crimes and abuses of journalistic power of News Corp. in the U.K. - and now it looks like Rupert Murdoch may be moving the family - lock, stock and barrels of ink - to the U.S.

    Of course, it would be hyperbole to compare the move of the Murdochs, père, fils and the rest of the brood, to the Corleones. In that case, it was son Michael, seeing the difficulties of doing business in New York who moved the family enterprise to Vegas. In this case, it's father Rupert - who became an American citizen in 1985 in order to buy into the TV business - who is paving the way. It's son James, now taking over direction of the Fox Networks Group, who is taking firm control of the western move. It's the 2010s now, not the 1950s. Oh, and one's fiction. Power now can be exercised far more subtly.

    Yes, London has become inhospitable to the Murdochs, pushing him to vow to invest in the U.S., his comments not so much sour grapes as a recognition of reality. He could lie low and try to regain the awesome sway he once held over U.K. media, but that will take time. Besides, America is still the power of this century, with Britain in relative decline. Why not build the next generation of business in the U.S. - and build political power far beyond the programming of Fox News and the editorial pages of The Wall Street Journal? It's not a new trend, but one that's been building over the past year.

    It is within that context that we can place Rupert's L.A. Times reported ("Rupert Murdoch, other potential buyers eye L.A. Times") and Reuters-confirmed interest in two of the most distinguished nameplates in the American journalism, the Chicago Tribune and the Los Angeles Times. News Corp. denied the interest over the weekend, but the story, backed by multiple sources, says the Times is more than plausible.

    While it is undeniably true that the U.S. metro dailies are the sickest specimens in the global newspaper trade, Murdoch's interest in the press is beyond any immediate market value and often beyond long-term market value as well. The newsonomics of this potential deal go well beyond dollars and into the murkier count of political capital. Given what democratic havoc the Murdoch empire wrought in the U.K., and the fact that it dominates the Australian press (with 70 percent ownership of the daily trade), it's not too early to push into the open the question of who might buy these papers.

    Murdoch's game is the long game, and his long, wily career has shown his patience. Now as the U.S. newspaper industry continues its breathtaking implosion - and its under-covered shifts in ownership - it's a perfect time to pick up both prestigious names and the influence that still accompanies them. That's the landscape into which the Tribune auction of newspaper properties will enter. That auction is already quietly in process, as we wait for the Federal Communications Commission to okay the transfer of Tribune Company broadcast licenses to the three owners - investment companies Oaktree Capital and Angelo Gordon and bank JP Morgan Chase - approved by the bankruptcy court. Pending FCC approval, the final end of the Age of Zell should come before year's end. While newspaper stocks have enjoyed a nice run-up, you can still pick up papers the size of The Tampa Tribune for the price of the best real estate in town ("The Newsonomics of Near-Term Numerology").

    Tribune's own market assessment of all its eight newspaper properties, part of the bankruptcy proceeding, came in at $623 million, compared to $2.85 billion for the broadcast business. Without competitive bidders, that amount may be optimistic. With competitive bidders - especially in L.A. and Chicago - it may be low. For round numbers, let's say a competitive bidding process prices the Chicago Tribune and L.A. Times at a combined $600 million. That's a pricey number given the cash flows of the two papers, especially given that those meager cash flows have only been achieved with continuous cost-cutting. It's an above-market price, and the owners would need a heedless-to-market buyer to pay it.

    Enter Rupert Murdoch. He won his prized Wall Street Journal and Dow Jones from the Bancroft family. He paid $5.6 billion, and then wrote down about half that value within a couple of years. He knew he was overpaying - but it was what he needed to do to get what he wanted.

    So, first question: Can Murdoch buy these papers?

    Well, he's got the money and control of News Corp., even if investors have been making increasing fuss over that family control. The company should end the year with cash of something less than $9 billion after it completes planned Foxtel TV acquisitions in Australia.

    There is the little matter that News Corp. is in the process of splitting in two. Pressured both by Hackgate and those restless investors tired of the drag the newspaper holdings were having on profits, Rupert agreed to split News Corp. into two companies, one essentially TV- and entertainment-oriented and one largely newspapers. That split, though, isn't scheduled until roughly mid-2013.

    The Tribune properties will come on to the market earlier, probably around the beginning of the year. So pre-division, how exactly does Rupert take about five percent of his remaining cash to put it into the old business? You can bet News Corp. finance people are readying that analysis and argument.

    Certainly, investors will still raise the specter of the Dow Jones purchase - but that cost was almost 10 times what this one would be. Besides, Murdoch can point to another savvy investor, Warren Buffett, who is now getting intonewspapers.

    The fascinating thing here to Murdoch watchers is the split - and perhaps the consequence that many missed in the split announcement.

    Once the newspaper company is separate, the whining of those entertainment investors about musty old newsprint should go away. Murdoch will control the new newspaper company as well as the entertainment one. What better to do in his senior years than return to the newspapering - and the influence, in America and in Australia, that such ownership still conveys?

    The company split makes it easier to pursue titles like the Times and the Tribune, not harder.

    So if Murdoch can buy - will the owners sell it to him?

    That's the other wrinkle of our times. In the past, newspaper people sold to newspaper people. It's just what you did - in part keeping them within the fraternity, and in part the sense that newspapers have a special community tie.

    But for these banks and investment companies, community appeals will mean little. Their sole goal is profit maximization. It's not only Tribune that investors now control; it's also MediaNews and Journal Register, led by Alden Global Capital.

    Bottom line: Now that newspaper properties are dirt cheap, and sellers are giving no preference to community ties, papers - and their evolving online business models - can be bought by those who have more journalism on their mind.

    Call it Citizens United for journalism.

    Yes, other buyers will emerge - the Times names Austin Beutner, the former venture capitalist and ex-deputy mayor of Los Angeles, as leading a group there - but will they be able or willing to match a Murdoch bid?

    There are to be sure other complications. Among them is cross-ownership of TV stations, given Fox holdings in Chicago and Los Angeles. One question soon to be answered: The presidential election will determine whether the FCC remains Democratic-controlled or turns Republican, the latter likely to be friendlier to Murdoch and cross-ownership interests.

    Certainly, if Rupert were to get these prizes - or even one of them - the impact on the journalism is curious.

    He might well treat them like The Wall Street Journal, modernizing technology and investing in journalism - that's an undeniable fact of the News Corp. era. It would also help him build The Wall Street Journal's network, video and text, as business news finds new bigger city digital outlets.

    The wild card, of course, is a further gain in influence. Political influence. The kind of early 19th-century make-or-break-politicians influence that went on - largely uncovered until recently - in U.K., the world's oldest democracy. This is of course the age of unchecked big money, and media checks and balances seem like an idea hanging on by its fingernails. The Fox News game is indicative, driving big profits for News Corp. as it drives a stake into the body of "fair and balanced," purposefully confusing the political discourse to the advantage of those who know how to play it.

    David Brock's new book, The Fox Effect: How Roger Ailes Turned a Network into a Propaganda Machine, isn't just a good telling of the brilliance of Roger Ailes, who just got a new four-year contract. It may be a cautionary tale for the next stage of the plans of Rupert Murdoch, American publisher.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 28 11:55 PM | Link | Comment!
  • The Newsonomics Of The New York Times' Expanding -- Now Brazil -- Global Strategy

    First published at Nieman Journalism Lab

    SAO PAULO - Arthur Sulzberger, the Times publisher, made his first trip to Brazil this week. It was a three-day visit to Sao Paulo, and it had a single big purpose: announcing that, in the second half of 2013, The New York Times will launch a new Portuguese-language website for this nation, now the sixth-largest economy (having surpassed the U.K.) in the world. The economy has slowed a bit in Brazil, alongside the latest global economic stuttering, but this emerging powerhouse is looking at lots of upside. Beyond its own dynamic growth engine, the world's attention will turn here anew for 2014 World Cup and the 2016 Summer Olympics.

    Sulzberger spoke to the continent's long-standing (68th conference this year) association of journalism, SIP-IAPA (Sociedad Interamericana de Prensa-Inter American Press Association), and I was able to catch his speech and a bit of the reaction to it a few hours before I spoke to the group on the changing economics of the global news industry.

    This has been the year of global expansion for the world's biggest news companies. The Wall Street Journal launched its Deutschland digital edition in January, and Alisa Bowen, WSJ's head of product, tells me additional international expansion, along with video, is a top 2013 priority. The Financial Times, which had retrenched from non-English language initiatives a number of years ago, just launched a new Latin American homepage on and rolled out a new mobile app for the region, while initiating "digital printing" through HP. Reuters and Bloomberg have both also upped their presence in the market. For the Times, the Brazil edition follows on its China edition launch in June. (For more on this developing phenomenon, see "The Newsonomics of Global Media Imperative."

    It is the early success of that Chinese edition that is serving as a model for the Times' new global push, says Sulzberger. "In just the first 90 days, we reached the traffic goal that we hoped to achieve by spring 2013," Sulzberger said.

    The Brazil edition will follow a similar path, including:

    • Content: About two-thirds of the content will be translated New York Times stories, about 20-30 a day. The other third will come from local reporting staff, as the Times has done in China.
    • Local staff: The Times hired 30 to 35 people to staff the Chinese edition, a mix of journalists and technologists. It plans a similar investment in Brazil.
    • Sponsorship/ad model: Neither the Brazilian or Chinese sites will embrace the Times' 10-article-a-month limit. They are free - for now at least - with early sponsorship (Omega, Bloomingdale's, Salvatore Ferragamo) paying the bills. Importantly, readers in those countries who want full access to the English-language Times must pay for it.

    Sulzberger came back to two words throughout his 20-minute talk, emphasizing them as the new mantra of Times strategy: digital and global, global and digital. That theme meshed with the obituaries that followed his dad Punch's passing three weeks ago. Punch was also a builder, with an expansive vision. He used the technologies of his day to move the Times from New York-centric to national through satellite printing.

    Now the Times' national and global reach is fitting with the technologies of this decade and the digital circulation model that now makes it increasingly viable.

    The Times is already partially global, even before it makes its moves into China and Brazil:

    • One-third of its readers live outside of the U.S.
    • Of the Times' 2 million paying (print and digital) subscribers, about 10 percent live outside of the United States.
    • The Times supports 70 full-time reporters and correspondents "working in cities and countries outside of the United States. We have more foreign correspondents now than any point in our history," Sulzberger said in Sao Paulo.
    • Those global readers are taking to mobile products far faster than the English-speaking core. "Predictably, the top four countries driving traffic to our website are English-speaking; the U.S. followed by Canada, the U.K., and Australia. But it's a different story in terms of our mobile apps. Our iPhone traffic comes first and foremost from the United States, but that is followed by China, Canada, South Korea, and Japan."

    The strategy, then, makes elementary economic sense for the Times, the Journal, Reuters, Bloomberg, and the FT. Leverage that expensive investment in high-quality journalism by exposing it to lots more people, at a very small marginal distribution cost. That's the translation of articles in the Chinese and Brazilian examples. Then modestly invest in new in-country content, icing the cake. Figure that in each of China and Brazil, the Times is making roughly a small $2.5 million annual investment.

    This new strategy builds on the first generation of print-oriented Times expansion.

    Indeed, The New York Times International Weekly still publishes in six languages, including Portuguese with partners Folha de Sao Paulo and O Povo in Fortaleza. Sulzberger says plans call for expanding into more Brazilian states soon.

    That raises the immediate question of how Brazilian news media will react to the Times' new foray into the market.

    Sulzberger gave interviews to the local quality press while in town, and praised those news partners - Globo, Estadao, Fola, RBS, UOL, and MSN.Brazil - who have taken The New York Times News Service.

    Those in the local press with whom I talked clearly see the Times' move as new competition, but competition that they don't expect to hurt them much. In hiring local journalists, it may set off a minor talent war - but the staff reductions of the last several years here have created a surplus of talent. "I think this movement does not have the potential to estimulate a talent war. The shrinking of the main newsrooms, through the recent years, have made many trained and skilled people available," says Ricardo Gandour, executive editor and content director of Grupo Estado, the company that publishes O Estado de S.Paulo, one of Brazil's major quality newspapers.

    Advertising will also be a point of competition, but the Times will need a substantial new audience before it will take away national business; expect it, in the meantime, to focus on the international luxury category.

    How about reader competition? The Times will try to establish itself as mandatory second or third read. In the U.S., many readers now go directly to for national and global news, bypassing metro papers that used to provide that as well as regional news.

    In Brazil, the large new staffs of the quality dailies like Estadão, Folha, and Globo will greatly outproduce what the Times' new hires will generate. Even in international news, these are papers that have a half-dozen or so global bureaus each and use a variety of wire services to bring a world perspective to their readers. Yet that quality press in Brazil is now enduring the problems of their peers worldwide, as print advertising turns down; this year, digital advertising passed print in the country for the first time, just as it has in the United States.

    So that leaves room for the Times to reach an elite, that growing number of affluent, educated Brazilians. Its competition, though, will grow more intense. Yes, in the digital age, readers are reading more news, but those other big global brands see the same opportunity, here and elsewhere. The battle for this next generation of digital-mainly readers is on.

    The Times' move makes more complex the relationship between the North American and Latin American press. For decades, SIP-IAPA has fought the good fight in the region for press freedom. These are not the dark, junta-run days of the '70s, but there are always continuing issues, the latest in Argentina, as Cuba and Venezuela remain major concerns.

    The Times, The Washington Post, and some regionally oriented papers like The Miami Herald, have long supported and participated in SIP-IAPA, which in some ways serves as a South/North fraternal organization. This new competition may further complicate an always complicated relationship.

    Further, international expansions offer all kinds of wild cards. In China, even international press freedoms are built on eggshells. In Brazil, media law calls for 70 percent Brazilian ownership, an issue Sulzberger didn't confront directly, but said he will respect.

    Consider the Times' Brazil foray and the Journal's move into Germany just the top of their lists. Both companies are concentrating less on producing more robust city-based editions in the U.S. and more on huge markets around the world. Forget San Francisco - Sao Paulo, here we come.

    In a game of digital scale, that's a no-brainer. The Bay Area added about five percent to its population over the last decade. In Brazil, 31 million people entered the middle class in about the same period. Other growing markets offer similar huge potential. Add India, South Korea, Mexico, Turkey, Taiwan, and Argentina to the list of targets over the next five years.

    While only one in 10 paying Times subscribers today live outside the U.S., that number could well be 30 percent within 10 years. That's why global media have scale in their favor. As print fades into the past, the digital future is bigger - and less expensive to build and grow. Finally, after more than a decade of pain - and pain that's not yet over - high-quality global-oriented media can reassert one of those early Internet maxims. No, not "content wants to be free" - rather, "produce once, distribute many."

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 28 11:51 PM | Link | Comment!
  • The Newsonomics Of Advance's New Orleans' Strategy

    First published at Nieman Journalism Lab

    I was struck, as I'd bet many of you were, at how New Orleaneans reacted to the impending lost of their daily print newspaper. People out in the streets (iconic for the ages Ted Jackson photo), demanding their paper.

    For years, we've seen the wasting away of local dailies - not just in pages, but in staffing, in reporting - with curiously little protest. Readers, like hypothetical frogs in slowly heating water, haven't registered much reaction. It took Advance Publications throwing a bath of cold water, one late spring, 2012 day, on The Times-Picayune for readers to react. (Gambit's Kevin Allman sums up the summer that was well in "The Fight to Save the Times-Picayune.")

    Now, The Times-Picayune has gone three days a week, and the reach for metaphors continues. Is this a milking of a dying franchise? The corralling of remaining print advertisers into a smaller, less-expensive-to-keep pen? Is it the tale of the Newhouses trying to keep their storied brands alive as print continues to weaken? We'll need David Simon to properly chronicle this New Orleans drama.

    In the meantime, we're left with hard and perplexing questions about Advance's New Orleans strategy. I've talked to many in the business, and, for most, it's a head-scratcher; they have a hard time seeing Advance's end game in New Orleans, Alabama, Michigan - and soon Harrisburg and Syracuse - as journalists and readers at other Advance properties in Cleveland, Newark, and Portland all nervously watch on. They worry that Advance-like moves will only hasten newspapers' irrelevance to advertisers and readers, and further limit the time they have to transition to mainly digital enterprises.

    We all realize that, at some point, daily print will go away. Is Advance simply ahead of the pack in leading the way, or has it taken a terrible misstep?

    In thinking through and talking through the change, here's my sense: The New Orleans strategy, brilliant perhaps in its analysis of the current print ad market, will be long hampered by its reliance on advertising and its further minimizing of reader (circulation) revenue. Consequently, it is at best a conservation strategy, making growth - revenue growth and journalistic growth - hard to achieve. 2012 may well be the highest point The Times-Picayune sees, as the likelihood of future cuts increases. It's near impossible to see how this is a growth strategy for the T-P's (and the city's) future.

    I've arrived at that conclusion in looking at the newsonomics of Advance's New Orleans strategy. Given that Advance is among the most private of private companies, we'll have to use a neo-Rumsfeldian approach to the analysis. Here, that means we've got the tangibles, the intangible tangibles, and the intangible intangibles.

    In the first group, we've used comparative hard numbers on revenues and costs, extended by extrapolation and likely impacts of the print shrinkage. While Advance won't release numbers, the Times-Picayune mid-market metro experience isn't all that different from its peers, so we can look at comparative business practice.

    Then we've got the fuzzier "reader habits" and "advertiser habits," both of which will produce tangible results in circulation and ad revenues, as they inevitably change as The Times-Picayune morphs to more and more digital.

    Finally, we've got the impossible-to-put-a-calculator-to issue of lost institutional clout, of influence. Newspapers' abilities to influence local public policy - an ability mainly used for good over the years, but whose loss is way underestimated in the carnage of cutback - has been in decline. In New Orleans, this move, despite the continuing efforts of of Jim Amoss and the editorial page leadership, is likely to see it decline further.

    Keeping those intangibles firmly in mind, let's run some numbers.

    The goal here seems clear: produce a more sustainably profitable paper. That position is common among dailies, especially metro dailies. The only way they've maintained even single-digit profitability since 2009, when they lost about a fifth of their ad revenue, has been to slowly cut, and then cut some more. So Advance's moves across its markets are a dramatic re-set, an all-but-public announcement that the death of print is nearing, and that digital is no longer a destination. Digital is where The Times-Picayune has had to sprint to, in a short four months ("The Newsonomics of New Orleans' Forced March to Digital").

    Simply, then, if you want more profit, and more likelihood of it, those revenues have to more comfortably - and predictably - out-distance the costs. So, let's look the changes in both, and see what we can figure out. We've seen various estimates of Times-Picayune overall revenues, but since they're not verified, let's just look at likely percentage cuts in revenues and costs.

    Figure that The Times-Picayune will fairly immediately see lower revenues of about 16 percent. How do we get to that number?

    • Reader or circulation revenue should drop by about 21 percent.The reasoning: Circulation revenue accounts for about 30 percent of total revenues, extrapolating from similar paper data and overall trends. Of that, assume that about a fifth of that is single-copy, four-fifths subscription.Single-copy prices are unchanged in the transition. With four fewer days of publication a week, though retaining the higher priced Sunday, figure that the T-P loses a third of its single-copy revenue. So that's 2 percent of overall T-P revenues.Subscription pricing is changing from $18.95 for seven days to $16.95 for three days. That's a 10.5 percent decrease in subscription revenue for any household keeping its subscription. Further, figure that 8 percent of subscribers balk at the new deal, a combination of recognizing a whopping price increase and a protest about the print cutting move overall. Certainly, some of those protesters may come back - or the T-P may lose more. Add up the lost subscribers and lower pricing and the T-P loses about 21 percent of its subscriber revenue. And that drop represents a little more than 6 percent of total revenue.
    • Advertising revenue should drop by 13.5 percent.The reasoning: Ad revenue accounts for about 70 percent of total revenues, extrapolating from similar paper data and overall trends. Of that, assume that about an eighth of that is digital, the rest, print.We'd assume that ad pricing will be stable. The paper's insert or preprint business, probably about 20 to 25 percent of its total print revenue, should be saved; in fact, that's a cornerstone of the Wednesday/Friday/Sunday strategy.About 25 to 30 percent of its print ad revenues runs on the other four now-cancelled days of the week. So let's stay the T-P loses a little more than half of that, or about 15 percent of its print advertising overall. That number could be higher. Caveat: As one publisher savvily put it: "Advertisers are looking for excuses not to run in newspapers, and this presents the ultimate excuse."

      Could it see an increase in digital ad revenue? Sure, but much of that volume will be in "general news," so pageviews only won't make a big difference. Over time, a 20 percent increase in pageviews might spur a further 10 percent gain digital ad revenue, but that will take time to develop.

      With a 15 percent cut in print ads and steady digital, that's an about 13.5 percent loss in ad revenue. And that drop represents a little under 10 percent of total revenues.

    Figure that The Times-Picayune will fairly immediately see lower expenses of about 27 percent.

    Clearly, the major target of these cuts is the legacy print-and-distribution anchor of the business. Manufacturing (printing), newsprint, ink, and distribution are a good 40-plus percent of costs. Cutting four of seven days doesn't provide easy math. Distribution centers are built out and maintained for the big, prosperous Sunday edition; maintenance, overhead, employee, contractor agreements. and more add in costs that may appear variable, but are at least in the shorter term fixed.

    So let's figure that Advance can cut 35 percent of those legacy print-and-distribution costs. That yields an 14 percent overall cost cut.

    The T-P cut a third - or 201 positions - of its workforce in a June announcement. Most of those would have come out of the reduced printing/circulation operations.

    Publisher Ricky Mathews told me that the sales staff is "up," so while it's possible higher-priced staff have been replaced with more lower-priced ones, let's call that flat.

    In the newsroom, Mathews says there are "156 people in our news operation. We started with 181." About 40 of those positions are new - differently skilled and presumably lower-priced, on average - hires, with 84 of 173 newsroom staffers let go. Let's say the 14 percent cut in headcount yielded a 20 percent cut in newsroom costs. With newsrooms accounting for as much as 15 percent of the costs of a newspaper, let's call that 3 percent additional savings to the overall T-P budget.

    How much in other cuts have been made, as the company cleaves itself into two, a NOLA Media Group and Advance Central Services Louisiana?

    As another publisher put it, there's the direct operational costs due to the print shrinkage…and then there's the opportunity to right-size that such massive change brings along with it.

    "But beyond print, distribution, and newsprint savings, you also get savings throughout for things like less editorial needed, less human resources, less utilities, less IT, less equipment, mileage for all of those folks. When you reduce staff, you do end up with a lot of other savings…These departments also tend to have a greater percentage of workers comp and insurance costs which are under G&A and are not reflected in department budgets. Even though you might not naturally yield savings in some areas due to the fewer days, you can use it as part of a cost-cutting review exercise."

    So let's say that Advance took out another 10 percent of total costs in its sweep. That may be generous, but we know the intent behind the entire strategy.

    That would yield a total savings of 27 percent over the old seven-day costs.

    The grand math: 11 percent more cost savings than revenue losses. It could be high or low, but at 11 percent it would double or triple the profit margins of many metro papers. It would also buy time, but only if those revenues hold at estimated levels and don't take a deeper, self-inflicted swoon.

    Advance is making a contrarian bet here. Most other daily publishers around the world are laying new strategies on two fundamental principles:

    • They need to reduce their reliance on advertising as a major (the major) revenue line for news publishing.So we see lots of efforts to diversity revenue sources, from new events businesses to marketing-services businesses to treating their presses and distribution investments as profit centers, through in-sourcing.
    • They need to get readers to pay lots more for the news. Digital circulation, a.k.a. paywalls, has emerged as the definitive strategy for 2013, as publishers rapidly move to an era where readers (the best being all-access, print-and-digital combined ones) pay for more of the enterprise than advertisers. ("The Newsonomics of Majority Reader Revenue").

    As other publishers approach 40 to 50 percent of revenues coming from readers, the T-P is doubling down on advertising as a strategy.

    Maybe that's not surprising. As a seven-day daily, its $18.95 a month rates was well below an industry average which is rising toward $30 a month for like-sized papers. It could have priced up significantly, as others have done in the last three to five years - but now it can't. If the T-P had charged $30 for print, and then added all-access digital subscriptions - a prevailing strategy of the day - then it would have a much better shot at keeping much more circulation revenue longer-term. Now it will struggle to hold a lower $16.95 price point and has little chance of raising it soon.

    In advertising, it faces the same print downturn as its peers. Remember that's why it made this move. So, yes, it is pushing that - maybe - 85 percent of retained ad revenue into fewer print days, but that's not a stable number. Print ad revenue has been dropping for six years, and most metro publishers believe they'll see another 5 to 10 percent drop next year. Digital advertising? All of the newspapers in the New Orleans metro market account for only 23 percent of the digital ad spend there - a couple of points lower than other metros, says Gordon Borrell, whose Borrell Associates tracks such spending. Yet, most studies point to print getting a smaller and smaller percentage of the digital ad growth. In New Orleans, the weakened T-P must now battle with 24 other dailies and 15 weeklies, in addition to taking on Google, Facebook, Yelp, and dozens of others.

    It is offering marketing services, essentially acting as a regional ad agency, as Hearst, Gannett, Tribune, and McClatchy operations are doing, confirms Randy Siegel, Advance's president of local digital strategy. But there's little sign of that push on's ad page or Advance Digital's own site. That looks like still another sign - like the failure to embrace digital circulation before it halved its print franchise or to create state-of-the-market apps beforereaders are shoved into online access - of a rush to digital that looks too fast for Advance's own good.

    That timing, and the locale, may be the story here. In most of the other Advance markets now going three-days-a-week, competition is more minimal. In New Orleans, though, feisty local TV stations, partnering here and there with others, are upping their news competition.

    On the nonprofit side, the competition is led by The Lens, a serious journalism upstart whose initial quality is vaulting into the top echelon of regional startups, pioneered by MinnPost, Texas Tribune, and California Watch. It has now hammered out an agreement with public radio's WWNO, which has had little news presence but can now act as an effective conduit for a growing The Lens, and the evolving Digital News Alliance.

    The daily Baton Rouge Advocate won lots of headlines for its New Orleans edition. Though it won't impress anyone as a New Orleans substitute, it further nibbles around the T-P's increasingly tattered edges.

    Simply, the T-P's slimming has opened up a floodgate of competition. That competition makes the distinctive value proposition of the T-P harder and harder to get paying readers to accept.

    So, in New Orleans, Advance is translating its Michigan strategy in ground that may not be as fertile.

    The long game of day cuts makes sense. Yes, by 2016, many more papers will be dropping days of the week - Monday as the little toe of daily publishing? - but most look at such day cuts as part of a longer-term strategy. Paywalls. Pleasing mobile experiences. Greater diversification beyond traditional advertising. All of these strategies provide a path to that elusive new sustainable news business model.

    Advance - in what I hope is not a rush to nowhere - seems to believe in time travel. For T-P readers and employees - as well as those at the three overlooked Alabama dailies, in Michigan, in Harrisburg, and in Syracuse - it's going to be much more than a bumpy ride.

    We're left then with the big question: Why?

    Based on relatively small, and early, Michigan evidence, Advance believes its strategy is scalable and transportable. It - and the industry - will certainly see the test unfold. Yet in the face of print ad decline, and the missing piece of digital circulation, it has set boulders in front of its new path. Today, even with a 11 percent - more or less - profit difference, is not tomorrow.

    In addition to rolling the dice, maybe Advance, seeing the disappearing ink of newspapers on the wall, is simply minimizing its downside risk. If you believe print is dying ever more quickly, then make major cuts now, leaving less exposure to further print downturn in the next three years. That's not a strategy you'd want to yell from the rooftops - but it's one that we may see playing out on the ground.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 28 11:47 PM | Link | Comment!
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Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.