Following the completion of a long-anticipated deal to merge GateHouse Media with Gannett, GateHouse’s top two executives, Mike Reed and Kirk Davis, sent a confidential message to the troops, a copy of which was forwarded to me by a trusted source.
GateHouse and Gannett are the two largest newspaper publishers in the United States. By coming together, they have created a media colossus, albeit one whose decline continues apace. Reed and Davis’ message says in part:
We are incredibly proud of this team’s commitment to high-quality journalism and community leadership; this mission will remain at our core. The Gannett acquisition positions us as the leader in community journalism in the United States. In addition, we believe that together, we are well-positioned to address the profound changes our industry has faced in media consumption habits and advertising spend.
As you can see for yourself, the memo is mainly corporate boilerplate (and I don’t just mean the literal boilerplate on the second and third pages). For me, the main takeaway is that they say nice things about Gannett’s flagship, USA Today, which suggests that GateHouse — clearly the lead player despite being smaller than Gannett — isn’t going to mess around with Al Neuharth’s baby, at least not right away.
By the way, you’ll see a reference in the memo to BridgeTower Media, a name I was not familiar with. It turns out that’s the name for a GateHouse division that publishes B2B titles such as Massachusetts Lawyers Weekly.
The newspaper analyst Ken Doctor broke the news of the impending merger over the weekend. Keep an eye on the debt the combined company is taking on. Doctor estimates that it could be as high as $2 billion, which would seem to suggest further cuts ahead regardless of what kinds of cost efficiencies GateHouse-Gannett is able to achieve. As I wrote for WGBHNews.org two months ago, when it first became clear that the two companies would merge:
When a chain takes on debt to keep buying more properties and extracts revenues from its individual papers in order to satisfy shareholders, there is simply less money available for journalism than there would be with independent ownership.
I don’t think this was necessarily a terrible day for local journalism. MNG Enterprises, the hedge fund-owned chain formerly known as Digital First, was kept at bay, and that’s not nothing. But neither was it a good day. Committed local ownership is the key, and this merger moves us that much farther away from it.
It looked like a one-off last month when The Denver Post rebelled against its hedge-fund owner. In publishing an editorial and several commentaries denouncing Alden Global Capital as “vulture capitalists,” the Post’s journalists took what was seen by most observers as a courageous but futile stand.
But now the rebellion is starting to spread. And there is hope, however slight, that Digital First Media — the newspaper chain controlled by Alden — can somehow be pushed into doing the right thing. As CNN media reporter Brian Stelter writes, there were protests scheduled for today in Denver and New York City, the latter to take place outside Alden’s headquarters.
What’s happening matters nationally, and it matters locally. Digital First is one of our largest newspaper chains, controlling nearly 100 newspapers on both coasts and at points in between. Locally, Digital First operates The Sun of Lowell, the Sentinel & Enterprise of Fitchburg, and, since earlier this year, the Boston Herald. So intent is Digital First on cutting costs that it actually closed the Sentinel’s offices, switching to a “virtual newsroom,” which is apparently now acceptable corporate-speak for “no newsroom.”
The rebellion against Digital First got a boost last week when Ken Doctor, citing documents he had obtained, reported in the Nieman Journalism Lab that the company had run up a profit margin of 17 percent in the 12-month period that ended on June 30, 2017. The Lowell and Fitchburg papers were particularly lucrative, with a profit of 26 percent. The numbers were shocking, as they demonstrated that the papers are generating more than enough money to cover their communities if only it wasn’t being siphoned off by Alden principal Randall Smith to buy mansions in Palm Beach, Florida.
At the moment, there are no signs of protests coming to Massachusetts — but that could change. And Colorado continues to be a hotbed of unrest. In his latest, Doctor reports that former Post owner Dean Singleton, known as a brutal cost-cutter when he was at the height of his powers years ago, is so appalled by the cuts that he’s resigned as chair of the Post’s editorial board. “At the end of my career, I don’t want to be a part of it,” Singleton said. “The Post has been totally gutted of news coverage and of editorial coverage. That’s a fact.”
Several others also resigned, including editorial-page editor Chuck Plunkett, who was the force behind the Post’s anti-Alden Capital package last month. The reason: Ownership refused to let him write about another Digital First property in Colorado, the Daily Camera of Boulder, where editorial-page editor David Krieger was fired after he self-published a rant that criticized Alden. Doctor writes that the Camera might simply eliminate the editorial pages — which, I’m told, has become common practice at Digital First’s smaller papers. Back in Denver, some 55 Post journalists signed an open letter, saying they were “outraged” at the silencing of Plunkett.
The uprising against Alden Capital demonstrates that there is still money in newspapers. In fact, though the technology-driven changes that have decimated newspaper revenues over the past 25 years are very real, they are only half the story. Debt-free newspapers that are rooted in the community, and that are not forced to ship their revenues off to greed-crazed owners, can still manage to turn a profit. And though virtually all newsrooms have shrunk in response to the changing economics of journalism, a 17 percent margin obviously requires a lot more blood on the floor than, say, a more modest goal of 5 to 10 percent.
The challenge is that corporate chain ownership, accompanied by unrealistic profit expectations, remains the prevailing business model in the newspaper business, notwithstanding a few wealthy owners who are trying to buck the tide. Locally, for example, more than 100 papers, including key dailies such as the Telegram & Gazette of Worcester, the Providence Journal, The MetroWest Daily News of Framingham, and The Patriot Ledger of Quincy, are owned by GateHouse Media, which is controlled by yet another hedge fund, Fortress Investment Group.
GateHouse has its own well-earned reputation for operating its newspapers on a shoestring. Unlike Digital First, though, GateHouse appears to be committed to staying in the newspaper business rather that choking out the last drop of value — which is why a lot of us thought GateHouse would be the lesser of two evils when Digital First emerged as a last-minute bidder for the Boston Herald. (As it turned out, Gatehouse won anyway: Digital First moved the Herald’s printing operation from The Boston Globe’s facility in Taunton to the Providence Journal.)
The only hope now is that outrage against Digital First will harm Alden Capital’s bottom line. Economic pressure combined with the emergence of civic-minded local buyers could provide these papers with a fresh start — as happened several years ago in Pittsfield, when Digital First sold the Berkshire Eagle (and several affiliated papers in Vermont) to a group of local business leaders.
If nothing else, the rebellion against Digital First should help educate the public that it doesn’t have to be this way. Run properly, newspapers can still make money while fulfilling their mission of holding government and other institutions to account. Getting the hedge funds out will not solve journalism’s long-term economic challenges. But it would be a welcome start.
Newspaper analyst Ken Doctor takes a look at The Boston Globe’s strategy of charging 99 cents a day for digital access and pronounces it promising. Indeed, at a time when advertising in print newspapers is on the decline and digital advertising seems unlikely ever to make up the difference, it seems clear that large regional newspapers like the Globe have got to persuade their audience to pick up a bigger share of the tab if they’re going to survive.
The article is well worth reading in full. Here are a few takeaways.
1. As Doctor notes, The New York Times now has more than 1 million digital-only subscribers. The Globe has just 65,000. That’s not a gap — it’s a chasm. Yet the Globe has proved to be the most successful regional paper in the country at selling digital subscriptions. Doctor attributes the difference to dramatically less interest in local and regional news than in national and international news.
Doctor adds: “The Globe, under editor Brian McGrory’s direction, produces a high volume of high-quality content each day.” True. Unfortunately, you can pick up the regional paper in nearly any city and find a lot less than what you’ll find in the Globe, which would make the dollar-a-day strategy a dubious proposition in most places.
2. Who exactly is paying 99 cents a day for the digital Globe? Not me. We’ve been subscribers since the 1980s. We currently receive the Sunday print edition, which gives us seven-day digital access. The price has crept up gradually, but we’re still paying just $19.96 a month. That works out to a little less than 66 cents a day.
My point is that the Globe does not have 65,000 readers paying 99 cents a day for digital access. Some percentage of them are paying less than that. Doctor does make it clear that there’s a transition in the works, but he doesn’t break down the numbers. Eventually, he adds, the Globe needs to hit 200,000 digital subscribers in order to claim success.
3. The big question, which Doctor doesn’t broach, is whether anyone under 40 is even interested in an aggregated news package, or if instead they’re content to get news from a variety of different sources such as Facebook or Apple News. By far the biggest challenge faced by the news business as we used to know it is not the shift from print to digital, but from reliance on a few branded news organizations to a cacophony mediated by tech companies.
In other words, what the Globe is doing may well work for older subscribers like me. But what happens when people in their 20s and 30s, whose main exposure to the Globe is through social sharing, enter their 40s and 50s? Are they going to change their news consumption habits? Probably not.
I don’t have much to offer on the meltdown of The New Republic except for a few inchoate thoughts. Many people have written many things, but it seems to me that the one essential read is Lloyd Grove’s piece in The Daily Beast. Now then:
1. Despite owner Chris Hughes’ excruciatingly awful behavior last week, it still isn’t clear to me why everyone resigned. When then-owner Marty Peretz fired editor Michael Kelly in 1997, mass resignations were threatened, but only one writer — media columnist William Powers — actually walked out the door. Kelly was an enormously popular, charismatic figure, but maybe the lack of solidarity was in recognition of how far he had dragged the supposedly liberal magazine to the right. Still, does no one want to see if there might be some positive aspects to Hughes’ plan?
2. And yet — if Hughes wants a digital media startup, why didn’t he just do it instead of buying TNR and turning it into something else? That makes no sense. And yet again — if Hughes is looking for the kind of print/online/events strategy that has transformed The Atlantic, as media-business analyst Ken Doctor argues, how could that possibly be a bad thing? I’d be the first to admit that I don’t like The Atlantic nearly as much as I did when it was a staid, Boston-based monthly. But it has managed to combine success, influence and seriousness, and that’s nothing to be scoffed at.
3. During Peretz’s long ownership, TNR was derided not just for its lack of diversity but for its hostility to any steps aimed at ensuring racial justice. I wrote for TNR twice. The first time, in 1998, was about the departure of Boston Globe columnists Patricia Smith and Mike Barnicle for fabricating, and Barnicle for plagiarizing as well. When I received the edited version of my piece, I saw that someone had inserted some harsh anti-affirmative action language. (The idea was that both Smith, an African-American, and Barnicle, an Irish-American, had been beneficiaries of some sort of affirmative-action mindset.) I was appalled, and fortunately was able to get the language removed before publication. But it showed what kind of thinking prevailed at TNR.
4. Among the former TNR editors lashing out at Hughes is Andrew Sullivan, who, among other things, once gave over the cover of the magazine to the authors of “The Bell Curve,” a racist tome that argued that black people just aren’t as intelligent as whites. Sullivan also published an infamous, falsehood-filled article by Betsy McCaughey that trashed the Clinton health plan and may have contributed to its defeat. Sullivan did far more harm to TNR than Hughes, but now he’s seen as a defender of tradition. (For more on the sins of TNR during the Peretz era, see Charlie Pierce.)
5. Probably the worst thing you can say about Hughes is that he decided to blow up The New Republic just as it was rediscovering its footing as a liberal journal. Editor Franklin Foer, by all accounts, was doing a fine job before Hughes fired him. But what is the role of a magazine like TNR in the digital age? The policy pieces in which it specialized are everywhere. Hughes could have kept it going as a small, money-losing journal, of course. But there was a time when TNR was an influential small, money-losing journal. Those days are long gone, as Ezra Klein notes at Vox. You can’t blame Hughes for wanting to try something different. If his behavior had been less reprehensible, maybe he could have brought his talented staff and contributors along for the ride.
On the East Coast, The Washington Post is in the midst of a revival that could return the storied newspaper to its former status as a serious competitor to The New York Times for national and international news. On the West Coast, the Orange County Register is rapidly sinking into the pit from which it had only recently crawled.
The two contrasting stories are told by the Columbia Journalism Review’s Michael Meyer, who writes about the Post in the early months of the Jeff Bezos era, and Gustavo Arellano of OC Weekly, who’s been all over Aaron Kushner since his arrival as the Register’s principal owner in 2012.
First the Post, which has been the subject of considerable fascination since Amazon founder Bezos announced last August (just a few days after John Henry said he would buy The Boston Globe) that he would purchase the paper from the Graham family for $250 million.
Bezos’ vision, as best as Meyer could discern (Bezos, as is his wont, did not give him an interview), is to leave the journalists alone and work on ways to expand the Post’s digital audience across a variety of platforms. Meyer describes a meeting that Bezos held in Seattle with executive editor Marty Baron and other top managers:
Baron says he came away from the weekend in Seattle with a clear sense of what the Post’s mission would be in the coming year: It had to have “a more expansive national vision” in order to achieve the ultimate goal of substantially growing its digital audience. Baron brought this directive back to the newsroom, and the editors set about building a plan for 2014, a year managing editor Kevin Merida dubbed “the year of ambition.” At one point in the budgeting process, Bezos even admonished the leadership for not thinking big enough. “I think that we had been in the mode of sort of watching our pennies,” Baron told me. “We were just being more cautious at the beginning so he came back with an indication that we should be more ambitious.”
Among the more perplexing moves (to me at least) that the Post has made under Bezos has been to cut deals with more than 100 daily papers across the country so that paid subscribers to those papers would receive free digital access to the Post as well. Locally, the papers include the Portland Press Herald as well as Digital First Media’s papers, such as The Sun of Lowell, The Berkshire Eagle and the New Haven Register.
Journalistically, it’s a good deal for subscribers, since they get free access to a high-quality national news source. But no money changes hands. So how is it any better for the Post than simply offering a free advertiser-supported website, as it did until instituting a metered paywall last year? Meyer tells me by email that “the reason they are doing this is for customer data. A logged in, regular user is a lot more data rich than someone who just happens across your site from time to time.” He adds:
Data is the key difference between this program and just having a free website. And another key difference to my mind is psychological. The readers of partner newspapers feel like they’re being given something that would otherwise not be free. This adds value in terms of how they view their subscriptions to their home newspapers. And also adds value in terms of how they view the Post’s content. My guess is they will use the service more as a result.
And as Meyer writes in his story, “Anyone interested in seeing how consumer data might be used in the hands of Jeff Bezos can go to Amazon.com and watch the company’s algorithms try to predict their desires.”
The story Gustavo Arellano tells about Aaron Kushner and the Orange County Register has become well-known in recent weeks, in large measure because of Arellano’s own coverage in the OC Weekly. Kushner has spent 2014 rapidly dismantling what he spent 2012 and 2013 building up.
As I wrote recently in The Huffington Post, it makes no sense to invest in growth unless you have enough money to wait and see how it plays out, which is clearly the case with Bezos at the Post and Henry at the Globe — and which now is clearly not the case with Kushner and the Register.
The Orange County meltdown was also the subject of an unusually nasty blog post earlier this month by Clay Shirky, who criticized Ryan Chittum of the CJR and Ken Doctor of Newsonomics and the Nieman Journalism Lab for overlooking the weaknesses in Kushner’s expansion. (Chittum and Doctor wrote detailed, thoughtful responses, and I’ve linked to both of them in the comments of a piece I wrote about the kerfuffle for WGBHNews.org.)
Arellano has gotten hold of some internal documents that make it clear that Kushner’s expansionary dreams were doomed from the start. He also paints a picture of a poisoned newsroom and offers lots of anonymous quotes to back it up.
“I wouldn’t say I got hoodwinked,” he quotes one former staff member as saying, “but it’s just another lesson of life: If it’s too good to be true, it is.”
I recently criticized Arellano for his overreliance on anonymous quotes, although I freely concede that I used them regularly when I was covering the media for The Boston Phoenix in the 1990s and the early ’00s. This time, he includes a clear explanation of why almost none of his sources would go on the record: fear of “reprisal or the endangerment of their buyout, which included a nondisclosure clause.” Given that, I think the story is stronger with the quotes than without.
In retrospect, it seems obvious Kushner set himself up for failure, like a Jenga tower depending on every precariously placed block. He installed himself as publisher despite having no previous newspaper experience. A hard paywall — his most controversial move — was erected to force readers to buy the print edition in an era when online content is king. To justify that, Kushner plunged into a hiring binge that saw the Register sign up hundreds of employees even though it didn’t have the revenue to pay them. To fund his vision, the sales department was tasked with selling all those points despite an industry-wide decline in print advertising during the past decade.
It’s a sad, ugly moment for a tale that began so optimistically. As for whether this will prove to be the end of the story — well, it sure looks that way, although Kushner insists he’s merely slowed down. After two years of hiring binges and layoffs, the launch and virtual folding of the Long Beach Register, and the inexplicably odd decision to start a Los Angeles Register to compete with the mighty Times, Kushner is clearly down to his last chance — if that.
Five years ago Clay Shirky wrote an eloquent blog post titled “Newspapers and Thinking the Unthinkable.” His essential argument was that we were only at the very beginning of trying to figure out new models for journalism following the cataclysmic changes wrought by the Internet — like Europeans in the decades immediately following the invention of Gutenberg’s press. Along with a subsequent talk he gave at Harvard’s Shorenstein Center, Shirky helped me frame the ideas that form the foundation of “The Wired City,” my book about online community journalism.
Now Shirky has written a rant. In “Nostalgia and Newspapers,” posted on Tuesday, the New York University professor and author wants us to know that we’re not getting it fast enough — that print is dead, and anything that diverts us from the hard work of figuring out what’s next is a dangerous distraction. His targets range from Aaron Kushner and his alleged apologists to journalism-school professors who are supposedly letting their students get away with thinking that print can somehow be saved.
As always, Shirky offers a lot to think about, as he did at a recent panel discussion at WGBH. I don’t take issue with the overarching arguments he makes in “Nostalgia and Newspapers.” But I do want to offer a countervailing view on some of the particulars.
1. Good journalism schools are not print-centric: Shirky writes that he “exploded” when he was recently asked by an NYU student, in front of the class, “So how do we save print?” I assume Shirky is exaggerating his reaction for effect. It wasn’t a terrible question, and in any case there was no reason for him to embarrass a student in front of her classmates. I’m sure he didn’t.
More important, Shirky takes the view that students haven’t given up on print because no one had given it to them straight until he came along to tell them otherwise. He writes that he told the students that “print was in terminal decline and that everyone in the class needed to understand this if they were thinking of journalism as a major or a profession.” And he attributed their nostalgic views to “Adults lying to them.”
Now, I find it hard to believe that Shirky’s take on the decline of print was novel to journalism students at a progressive institution like NYU. And from what I’ve seen from my own small perch within academia, all of us are looking well beyond print. In the new issue of Nieman Reports, Jon Marcus surveys changes in journalism education (including the media innovation program for graduate students headed by my Northeastern colleague Jeff Howe that will begin this fall). Citing a recent survey by Poynter, Marcus writes that, in many cases, j-schools are actually ahead of professional newsrooms in pushing for digital change:
A recent Poynter survey — which some argue demonstrates that educators are outpacing editors in their approaches to digital innovation — underlines the divide between j-schools and newsrooms. Educators are more likely than professional journalists to believe it’s important for journalism graduates to have multimedia skills, for instance, according to the survey Poynter released in April. They are more likely to think it’s crucial for j-school grads to understand HTML and other computer languages, and how to shoot and edit video and photos, record audio, tell stories with visuals, and write for different platforms.
Could we be doing better? No doubt. But we’re already doing a lot.
2. Aaron Kushner might have been on to something. OK, I’m pushing it here. There’s no doubt that Kushner’s moves after he bought the Orange County Register in 2012 have blown up in his face — the hiring spree, the launching of new daily newspapers in Long Beach and Los Angeles, the emphasis on print. Earlier this month, it all seemed to be coming to a very bad end, though Kushner himself says he simply needs time to retrench.
But Kushner’s ideas may not have been entirely beyond the realm of reality. Over the past several decades, great newspapers have been laid low by debt-addled chains trying to squeeze every last drop of profit out of them. This long-term disinvestment has had at least as harmful an effect on the news business as the Internet-driven loss of advertising revenues. Yes, Kushner’s love of print seems — well, odd, although it’s also true that newspapers continue to derive most of their shrinking advertising revenues from print. But investing in growth, even without a clear plan (or, rather, even with an ever-changing plan), strikes me as exactly what we ought to hope news(paper) companies will do. After all, that’s what Jeff Bezos is doing at The Washington Post and John Henry at The Boston Globe. And that’s not to say there won’t be layoffs and downsizing along the way.
Shirky also mocks Ryan Chittum of the Columbia Journalism Review and Ken Doctor, a newspaper analyst and blogger who writes for the Nieman Journalism Lab, writing that they “wrote puff pieces for Kushner, because they couldn’t bear to treat him like the snake-oil salesman he is.” (Shirky does concede that Chittum offered some qualifications.)
Chittum recently disagreed with me merely for writing that he had “hailed their [Kushner’s and his business partner Eric Spitz’s] print-centric approach.” It will be interesting to see whether and how he and Doctor respond to Shirky. I’ll be watching. Chittum has already posted this.
In any case, I hardly think it was “terrible” (Shirky’s description) for Chittum and Doctor to play down their doubts given that Kushner, a smart, seemingly well-funded outsider, claimed to have a better way.
Post-publication updates. After this commentary was published at WGBH News on Wednesday, the reactions, as expected, started rolling in. First up: Chittum, who apologized for his F-bomb, though not the sentiment behind it.
by the way, apologies to @cshirky for the f u thing. the “lying” line in that nasty piece, but that’s no excuse. #breathe
A week after Aaron Kushner announced major cuts at the Orange County Register and its affiliated papers, it sounds like the wheels may be coming off. In an interview with Larry Mantle of Southern California Public Radio, Kushner kept insisting that the cuts were nothing but a temporary setback, saying:
To continue to invest and grow over the long term, we have to align our cost structure with what we now know we can achieve in revenue growth. Doing so will not be easy and will impact all of us, but it is necessary to ensure a strong and healthy future for our newspapers.
But Mantle was having none of it. He pressed Kushner on the all-but-closing of the start-up Long Beach Register and asked him if he expected his newest paper, the Los Angeles Register, to compete seriously with the Los Angeles Times. Kushner’s answers might best be described as on message to a fault, leading to this testy exchange near the end:
Mantle: I have to say, if I worked for you, hearing your description and the lack of specifics, I’d be very nervous about the future.
Kushner: Any other questions?
Meanwhile, Gustavo Arellano, editor of the OC Weekly, an alternative paper that has been so dubious of Kushner’s plans that it even has a blog category called “OC Register Death Watch,” posted a scorcher on Monday, reporting that the Register’s staff is all but fleeing toward the exits. Arellano quotes a “longtimer” as saying of Kushner, “He’s lost the newsroom. No one has any faith in him at all. People want to get the hell out while they can.”
(An aside: If everything is truly coming apart, why did the “longtimer” think it was necessary to remain anonymous? And why did Arellano go ahead and quote him anyway? Look, I’ve been there and done that. And there’s no reason to think the quote doesn’t reflect the genuine sentiment of the newsroom. But I’m more skeptical of anonymous quotes these days than I used to be, and I think readers are too.)
I continue to hope that Kushner and his business partner, Eric Spitz, can right their leaking ship. But the simplest explanation for what is happening is that Kushner never had a real plan — he simply thought that all he had to do was spend lavishly and readers and advertisers would flock to his side.
Newspaper analyst Ken Doctor, whom I would characterize as a sympathetic Kushner observer up until now, weighed in with a devastating piece last week. I linked to it then, and here it is again. I recommend it highly.
If you’re going to make an audacious bet on the future of newspapers, as Aaron Kushner did with the Orange County Register, then it stands to reason that you should have enough money in the bank to be able to wait and see how it plays out.
Kushner, unfortunately, is now slashing costs at his newspapers almost as quickly as he built them up. On Tuesday, Kushner announced that Register employees would be required to take unpaid two-week furloughs during June and July. Other cuts were announced as well. The most significant: buyouts for up to 100 employees; and one of Kushner’s startup dailies, the Long Beach Register, will more or less be folded into another, the Los Angeles Register.
Those cuts follow the elimination of some 70 jobs at the OC Register and the Press-Enterprise of Riverside in January — cuts that came not long after a year when Kushner’s papers, in a celebrated hiring spree, added 170 jobs.
In 2013 Kushner and his business partner, Eric Spitz, were the toast of the newspaper industry. In the Columbia Journalism Review, Ryan Chittum hailed their print-centric approach and hypothesized that being able to scoop up the Register debt-free might enable them to succeed where others — including Tribune Co. and the Journal Register Co. — had failed. “Kushner,” Chittum wrote, “had the benefit of buying Register parent Freedom Communications out of bankruptcy — after newspaper valuations had already fallen 90 percent in some cases.”
Spitz, in a cocksure interview last October with Lauren Indvik of Mashable, mocked his competitors for giving their journalism away online, insisting that he and Kushner had a better idea.
“The key decisions they made — and they were the worst decisions anyone has made in my memory — they made 20 years or so ago. They took their core product, the news, and priced it at free,” Spitz told Indvik, adding: “I think 20 years later the amount of revenue you can derive from advertising is less than they thought. But the bigger problem they created is telling your customer that your product has no value.”
Unfortunately for Spitz and Kushner, there are few signs that their strategy of pumping up their print editions (even improving the paper stock) while walling off their digital content behind relatively inflexible paywalls has paid off.
According to the Alliance for Audited Media, paid circulation at the Orange County Register for the six months ending Sept. 30, 2011, before Kushner and Spitz took charge, averaged 283,997 on Sundays and 172,942 Monday through Saturday. The sale took place in July 2012. That September, paid circulation actually rose, to 301,576 on Sundays and 175,851 the rest of the week. But in September 2013 it dropped below pre-Kushner levels, to 274,737 on Sundays and 162,894 the other six days. (I am excluding what AAM refers to as “branded editions” — mainly regional weeklies published by the Register. The numbers combine print and paid digital circulation, which, in the case of the Register, is negligible.)
Kushner is a Boston-area native who made his money in the greeting-card business. Before his move to Southern California, he tried to buy The Boston Globe and, later, nearly closed a deal to purchase the Portland Press Herald of Maine. So it’s interesting to note that Red Sox principal owner John Henry, who eventually won the sweepstakes for the Globe, has taken a very different approach from Kushner, sinking money into an online-only vertical covering innovation and technology as well as repositioning the paper’s venerable free Boston.com site as a “younger, voicier, edgier” complement to the Globe. Soon the Globe is expected to unveil an ambitious website covering the Catholic Church in the hopes of attracting a national and international audience.
Perhaps the most important difference between Henry and Kushner, though, is the depth of their pockets. There are limits to Kushner’s wealth, and those limits are becoming apparent as he attempts to make his newspaper mini-empire profitable. Henry, a billionaire investor, can afford to take the long view. In that respect, he is more like Amazon.com founder Jeff Bezos, who announced that he would buy the Washington Post just days after Henry said he would acquire the Globe.
Ryan Chittum, in his CJR piece, called Kushner’s approach “the most interesting — and important — experiment in journalism right now.” It would be easy and facile to make too much of Kushner’s woes. He may simply have gotten ahead of himself, and is now buying the time he needs to make sense of what he is building. Then again, if Ken Doctor is right, the end of this particular newspaper story may be in sight.
The end may be near for one of the most widely watched experiments in local journalism.
Early today, Ken Doctor reported at the Nieman Journalism Lab that Digital First Media was pulling the plug on Project Thunderdome, an initiative to provide national and international content to the company’s 75 daily newspapers and other publications and websites. Soon, Doctor added, Digital First’s papers are likely to be sold.
Judging from the reaction on Twitter, the news came as a shock, with many offering their condolences and best wishes to the top-notch digital news innovators who are leaving — including Jim Brady, Robyn Tomlin and Steve Buttry. But for someone who has been watching the Digital First story play out in New Haven for the past five years, what happened today was more a disappointment than a surprise.
I first visited the New Haven Register, a regional daily, in 2009. I was interviewing people for what would become “The Wired City,” a book centered on the New Haven Independent, a nonprofit online-only news site that represents an alternative to the broken advertising-based model that has traditionally supported local journalism. The Register’s corporate chain owner, the Journal Register Co., was in bankruptcy. The paper itself seemed listless and without direction.
Two years later, everything had changed. Journal Register had emerged from bankruptcy and hired a colorful, hard-driving chief executive, John Paton, whose oft-stated philosophy for turning around the newspaper business — “digital first” — became the name of his blog and, eventually, of his expanded empire, formed by the union of Journal Register and MediaNews, the latter best known for its ownership of the Denver Post.
Just before Labor Day in 2011, Matt DeRienzo — then a 35-year-old rising star who had just been put in charge of all of Journal Register’s Connecticut publications, including the New Haven Register — sat down with me and outlined his plans. His predecessor had refused my requests for an interview; DeRienzo, by contrast, had tracked me down because he’d heard I was writing a book. It seemed that a new era of openness and progress had begun.
The openness was for real. The progress, though, proved elusive. For a while, John Paton was the most celebrated newspaper executive in the country, the subject of flattering profiles in the The New York Times, the Columbia Journalism Review and elsewhere. Media reporters were charmed by his blunt profanity, as when he described a presentation he gave to Journal Register managerial employees. “They were like, ‘Who’s the fat guy in the front telling us that we’re broken? Who the fuck is he?'” Paton told the CJR.
In 2012, though, Journal Register declared bankruptcy again — a necessary step, Paton said, as it was the only way he could get costs such as long-term building leases and pension obligations under control. After Journal Register emerged from bankruptcy in 2013, Paton’s moment in the national spotlight seemed to have passed, as media observers turned their attention to a new breed of media moguls like Amazon.com founder Jeff Bezos (who bought The Washington Post), Red Sox principal owner John Henry (who bought The Boston Globe), greeting-card executive Aaron Kushner (who acquired the Orange County Register) and eBay founder Pierre Omidyar (who launched a new venture called First Look Media).
Although Digital First’s deepening woes may have escaped national attention, there were signs in New Haven that not all was well. Some positive steps were taken. The print edition was redesigned. The Register website was the beneficiary of a chain-wide refurbishing. Nasty, racist online comments were brought under control, and the newsroom embraced social media. But larger improvements were harder to accomplish.
Among the goals Matt DeRienzo had talked about was moving the paper out of its headquarters, a hulking former shirt factory near Interstate 95, and opening a smaller office in the downtown. In 2012, the Register shut down its printing presses and outsourced the work to the Hartford Courant. The second part of that process never came, though. Just last week, the New Haven Independent reported that the Register had backed away from moving to a former downtown mall facing New Haven Green. Two months earlier, according to the Independent, the Register and Digital First’s other Connecticut publications laid off 10 people.
Neither development should be described as a death knell. The downtown move is reportedly still in the works. And the 10 layoffs were at least partly offset by the creation of six new digitally focused positions. But rather than boldly moving forward, the paper appears to be spinning its wheels. And now — or soon — it may be for sale.
One of the biggest problems Digital First faces is its corporate structure. Can for-profit local journalism truly be reinvented by a national chain whose majority owner — Alden Global Capital — is a hedge fund? People who invest in hedge funds are not generally known for their deep and abiding affection for the idea that quality journalism is essential to democratic self-goverance. Rather, they want their money back — and then some. Preferably as quickly as possible.
No matter how smart, hard-working and well-intentioned John Paton, Jim Brady, Matt DeRienzo et al. may be, the Digital First experiment was probably destined to end this way, as chain ownership generally does. I wish for a good outcome, especially in New Haven. Maybe some civic-minded business leaders will buy the paper and keep DeRienzo as editor. And maybe we’ll all come to understand that the best way to reinvent local journalism is at the local level, by people who are rooted in and care about their community.
Ken Doctor’s analysis of the “newsonomics” of The Boston Globe’s pending sale continues to yield rich insights. One part I find particularly interesting is his estimate that the Globe’s natural ceiling for digital subscriptions is probably in the vicinity of 105,000. It’s currently 28,000.
(As I’ve explained before, the auditors also give the Globe credit for seven-day print subscribers who access BostonGlobe.com at least once a week, which means the paper currently reports having 50,000 digital subscribers.)
The Globe charges about $15 a month for digital subscriptions, with or without home delivery of the Sunday print edition. Yes, there are a lot of discounts in there, but just as a quick math exercise, let’s pretend there aren’t. So:
105,000 x $15 x 12 months = $18.9 million per year
If you figure an average of $100,000 in pay and benefits per employee, that adds up to 189 people — about half of the paper’s 365 journalists.
I’m leaving out a lot of expenses (including, most significantly, non-newsroom employees), but I’m also leaving out other revenue sources — mainly seven-day print circulation, print and online advertising, and commercial printing of other newspapers, including the Boston Herald, currently issuing daily predictions of the Globe’s imminent demise.
It also seems to me that one underexploited opportunity is online advertising at BostonGlobe.com. Yes, it’s nice to give paying customers a clean, uncluttered reading experience. But surely there could be a few more ads without devolving into flashing banners, pop-up windows and stuff floating across the page. I like ads. “Ads are content,” as Howard Owens says. They contribute to a sense of community and vitality.
Globe spokeswoman Ellen Clegg recently told me that the Globe’s total number of unique monthly visitors is 7.5 million — 6 million at the free Boston.com site and 1.5 million at BostonGlobe.com. I would think you could sell a decent amount of advertising to an online audience of 1.5 million. Currently, though, when you read articles you can often find white space where an ad ought to be.
One caution is the Globe’s new policy of limiting social sharing on BostonGlobe.com and cutting the amount of Globe content on Boston.com. Editor Brian McGrory has said that the goal is to boost digital subscriptions. The danger is that the restrictions:
may fail to turn all but a tiny handful non-subscribers into paying customers;
may hurt Boston.com’s traffic by making the site less enticing; and
may (actually, will) reduce unpaid traffic to BostonGlobe.com, thus making it a less desirable platform for advertisers.
Fortunately, the restrictions can be tightened or eased depending on whether or not they are working as intended.