Portland Press Herald – Page 3

Kushner’s latest cuts raise serious doubts about his strategy

Published earlier at The Huffington Post.

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.

Is it time to push the panic button? The estimable Ken Doctor, writing for the Nieman Journalism Lab, says yes, arguing that the latest round of cuts raise “new questions about its very viability in the year ahead.” Doctor may be right. But as I wrote at The Huffington Post earlier this year, I hope Doctor is wrong, given the promise of Kushner’s early moves.

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.

Can Aaron Kushner go the distance?

Aaron Kushner speaking in April 2013 at California State University, Fullerton.

This commentary was published earlier at The Huffington Post.

Has Orange County Register owner Aaron Kushner run into nothing more than a bit of turbulence from which he can recover? Or do the layoffs he announced last week show that his plan to resuscitate the newspaper business by hiring more journalists and doubling down on print is fundamentally flawed?

I hope it’s the former — not just because I’d like to see him prove everybody wrong (including me) about the future of news, but because I’m planning to include him in a book about a new breed of media moguls who are using their personal wealth and smarts to innovate their way toward a brighter future. (News of the layoffs was broken by Gustavo Arellano of OC Weekly, which has taken a jaundiced view of Kushner’s ownership.)

Trouble is, there have been hints previously that Kushner, 40, lacked the sheer financial firepower of Boston Globe owner John Henry or Washington Post owner Jeff Bezos. I’ll get to that in a moment. But first, a little background on what’s unfolding in Southern California.

Kushner, who bought the Register in 2012 for $50 million, was the most celebrated new newspaper owner in the country before he was eclipsed in August of last year by Bezos and Henry. “Can Aaron Kushner save the Orange County Register — and the newspaper industry?” asked the Columbia Journalism Review last May. As CJR’s Ryan Chittum explained it, Kushner’s vision was based on:

Lavish attention to the print product, including more pages and an upgrade in the quality of paper.
A move away from free or even reduced-price content online, with Internet users paying exactly the same fees as print subscribers.
An increase in the size of the newsroom staff, as he added 140 journalists to the 180 who were there when he bought the paper.

Nor was Kushner content with pumping up the Orange County Register. Last August he started a new daily, the Long Beach Register. He bought The Press-Enterprise of Riverside. And in his most audacious move yet, he announced plans to start a Los Angeles Register to compete with the Los Angeles Times, once among the best newspapers in the country and still formidable. (LA is also home to a second paper, the Los Angeles Daily News.)

Then, last week, came a significant setback. Not everyone agrees on the figures, but Ken Bensinger of the LA Times reported that Kushner laid off about 35 people at the Orange County Register and 39 at The Press-Enterprise. Register editor Ken Brusic and other top editors left. Rob Curley, who had overseen digital initiatives at papers at the Washington Post and the Las Vegas Sun, was promoted to the top position.

“We are evaluating our cost structure for the next leg of our journey in terms of covering Orange County and LA County,” Kushner told New York Times media columnist David Carr, who noted that Kushner plans to plunge ahead with his idea for a Los Angeles paper without adding any staff. Carr wrote:

By amortizing the costs of all the journalists he hired over a bigger market, he can achieve savings in terms of production while adding marginal readers and advertising.

He clearly sees himself as a smart entrepreneur making bold bets. I see a man on a wire, with millions of dollars and hundreds of jobs at stake.

As for past hints that Kushner may not be well-heeled enough to play the long game, you may recall that, several years ago, he tried to buy The Boston Globe. (The Globe’s then-owner, the New York Times Co., apparently showed no interest, and Kushner later struck out on a bid to purchase Maine’s Portland Press Herald.)

Before Kushner gave up on his Globe dream, though, Katherine Ozment wrote an in-depth profile of him for Boston magazine. Among other things, Ozment attempted to show precisely how Kushner had made a fortune in the greeting-card business, his major claim to fame up to that time. What she found was a haze of acquisitions, layoffs and charges (which Kushner denied) that he was late in paying artists, sales reps and the like.

Eventually Kushner left his company after some sort of falling-out with the investors, though he told Ozment he remained part of ownership. “I had a vision for the business, and they had a very different vision, and they controlled the working capital, so we decided to move on,” he said.

Despite that possible warning sign, it has to be noted that the Orange County Register remains a much more richly staffed paper today than when Kushner bought it. In a memo to his staff published by the blog LA Observed after the layoffs were announced, Kushner wrote that he now has 370 journalists — uh, make that “content team members” — covering Orange County and Los Angeles County, up from 198 a year and a half ago.

An optimistic take would be that Kushner got ahead of himself and is now retrenching, but not retreating. No doubt we’ll know a lot more as 2014 unfolds.

Photo (cc) by CSUF Photos and published under a Creative Commons license. Some rights reserved.

A new book, and an event for “The Wired City”

I wasn’t ready to announce this, but Mark Shanahan of The Boston Globe beat me to it. My next book will be about a new era of newspaper owners and how they are going about remaking their struggling businesses.

The book will focus on Amazon.com founder Jeff Bezos, who is in the process of buying The Washington Post; Red Sox principal owner John Henry, who’ll soon add the Globe to his holdings; and Aaron Kushner, a businessman who tried to buy the Globe and then Maine’s Portland Press Herald before reeling in the Orange County Register. It’s a logical next step in my research into new ways of paying for journalism.

The idea grew out of conversations with Steve Hull, an acquisitions editor at University Press of New England. We’d been trying to do business together for a couple of years, pitching possible projects back and forth. There’s no contract at the moment, but I expect to write the book for a yet-to-be-named new trade division of UPNE. No, I won’t tell you the working title, and I expect it will change long before the publication date — probably sometime in 2016.

Meanwhile, I still have a current book to flog. I’ve got a few events coming up for “The Wired City” in the next month, including one at the Boston law firm of Prince Lobel this Thursday at 5:30 p.m. It’s free, and you can RSVP here. Cosponsors are the New England First Amendment Coalition and the New England chapter of the Society of Professional Journalists.

“The Wired City” was published by University of Massachusetts Press, an academic publisher I would recommend to anyone. I’ve had a great relationship with acquisitions editor Brian Halley, publicist Karen Fisk and company, and I can’t say enough good things about them.

Photo (cc) by Esther Vargas and published under a Creative Commons license. Some rights reserved.

Lisa DeSisto leaves Globe, heads north

Big news coming out of the Boston Globe today: Lisa DeSisto, chief advertising officer of Boston Globe Media and general manager of Boston.com, is leaving to become chief executive officer of MaineToday Media and publisher of the Portland Press Herald.

I worked with Lisa at the Phoenix back in the 1990s, and I think I can safely say that the Globe will miss her. Just recently, Lisa came up with the idea of launching an online radio station at Boston.com, RadioBDC, featuring several folks who had been laid off when the Phoenix sold WFNX Radio. WFNX continues online as well, and is formally relaunching on Oct. 31.

Here’s the announcement from Globe publisher Christopher Mayer:

I’d like to update everyone on a change in the leadership of the Globe. After 17 years, Lisa DeSisto will be leaving the Globe to become chief executive officer of MaineToday Media and the publisher of the Portland Press Herald. Lisa’s contributions to the Globe and Boston.com have been enormous, and she will be missed.

Fortunately, she has a strong team in place. Jason Kissell, Jane Bowman, and Tom Cole will report to me. Jason Kissell, vice president for advertising, will take on all advertising sales responsibilities, including digital advertising operations. Jane Bowman, executive director of advertising, will retain her business development responsibilities and add oversight of marketing and RadioBDC. Tom Cole, executive director of business development, will continue in the role of strategic planning and development for advertising.

Lisa will be with us for the next two weeks. During that time, she will help with the transition. Though we will miss her creativity, enthusiasm, and friendship, this is a great opportunity for her. Please join me in wishing her well in her new role.

And here is the MaineToday announcement.

What does Kushner’s Maine move mean for the Globe?

Aaron Kushner, the greeting-card mogul who’s been trying to buy the Boston Globe for the past year, is part of a group that is acquiring the Portland Press Herald and related properties, according to reports in the Press-Herald and the Globe.

So does the Kushner group see this as a first step toward its ultimate goal — or have the investors decided to focus their attention exclusively on Maine? Chris Harte, a former Press Herald president and a member of the investment group, won’t say, according to the Press Herald.

No one knows whether the New York Times Co. would sell the Globe or not. But certainly Janet Robinson’s sudden retirement as chief executive of the Times Co., followed quickly by the sale of 16 smaller papers, has sparked speculation that the Globe might be on the block.

I recently rounded up the long, rocky history of the Times Co. and the Globe for the Huffington Post.

A repulsive apology to hate-mongers in Maine

You absolutely cannot make this up: the Portland (Maine) Press Herald has published an apology for running a photo on Sept. 11 of Muslims praying. The photo, taken on Sept. 10, portrays Portland-area residents marking the end of Ramadan. Writes editor and publisher Richard Connor:

Many saw Saturday’s front-page story and photo regarding the local observance of the end of Ramadan as offensive, particularly on the day, September 11, when our nation and the world were paying tribute to those who died in the 9/11 terrorist attacks nine years ago.

This should be as controversial as publishing a recipe for apple pie. Don’t take my word for it. See the photo and accompanying story for yourself. (The audio slideshow above is part of the Web version of the story.)

I’m not sure I’ve ever seen a more shameful and repulsive message from a publisher than Connor’s. As Henry Blodget writes at Business Insider, “it really sounds like [what] is going on here is that the Portland Press Herald is agreeing with some readers that Muslim Americans should not be considered Americans. And if that’s what the paper believes, it should probably just come out and say so.”

The fear and hatred being directed toward American Muslims these days is truly terrifying. The folks who’ve whipped up hysteria over the Islamic center that has been proposed for a site near Ground Zero have much to answer for, whether they did it for ratings or political gain.

My concern is that we haven’t seen the worst of it yet. And if a newspaper publisher won’t stand up and be counted, then we have reached a new low.

Presenting the 13th annual Phoenix Muzzle Awards

Just in time for your Fourth of July celebrations, we present the 13th annual Muzzle Awards, published in the Phoenix newspapers of Boston, Portland and Providence.

Starting in 1998, I’ve been rounding up enemies of free speech and personal liberties in New England, based on news reports over the previous year. For the past several years my friend and occasional collaborator Harvey Silverglate has been writing a sidebar about free speech and the lack thereof on campus.

Yes, Sgt. James Crowley of the Cambridge Police Department makes the list for his failure to understand that you shouldn’t arrest someone who’s done nothing wrong other than mouth off to you in his own home. So does former Newton mayor David Cohen, who should not seek a second career as a newspaper editor. So does the MBTA, a hardy perennial.

But my personal favorite is the Portland Press Herald, whose editorial page came out in support of a proposal by the Falmouth Town Council to clamp down on the right of residents to speak out at council meetings. When the council itself unanimously voted against the proposal several weeks later, citing free-speech concerns, the newspaper found itself in the bizarre position of showing less regard for the First Amendment than elected officials.

On Friday at 9 p.m., I’ll join Dan Rea of WBZ Radio (AM 1030) to talk about the Muzzles and anything else that might come up.