Kansas City Star Newspaper Plant – Invest a Lot to Learn a Little?

November 10, 2008 “Publisher Mark Zieman said the paper was looking into the possibility of selling, then leasing back the huge $200 million printing plant it began using a little over two years ago. ” -from Editor&Publisher

“Looking to the future I wish the Kansas City Star my best and thank them for taking us on a tour. I hope that their expanded capabilities in the new plant enhance the publication and its reach into the community.”

That’s what I wrote on September 24, 2007 after attending the International Newspaper Group annual conference held in Kansas City.  We were given a tour of this facility.  Very Impressive.  Very New. Very Clean. Very Modern.  But tell me what is the point of building a $200million dollar buggy whip factory?  When they gave us that tour, we were told that the presses were capable of printing and binding other periodicals besides newspapers.  What we apparently weren’t told was that no contracts for printing such things were ever signed.

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Cashflow Problems at Daily Planet, Clark Kent to Take Buyout!

“Superman’s weaknesses are well documented: Kryptonite. Magic. The evil genius of Lex Luthor and Brainiac. The imperilment of those closest to him. Bryan Singer. The risotto at Le Cirque (The calories! Soooo worth it, though). And all of these, except for the risotto, have been explored at great length—which, you might think, is why DC is sending him into space. But no, the truth is that the Big Blue Boy Scout is facing a more serious threat than any he’s seen in the 70 years since his debut. A threat that none of his yellow-star-derived powers can help him against. A threat that will seem painfully obvious once it has been pointed out.

I am speaking, of course, of the decline of print media.”  _from io9.com

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Are You Humiliating Your Newspaper Employees? Tis The Season!

There has been a noticeable increase in stories about the shitty jobs newspaper employees are being given in order to continue receiving their pay. Editor and Publisher reported this morning that Newark (NJ) Star-Ledger employees, “Reporter Jason Jett and Assistant Deputy Photo Editor Mitchell Seidel have been filing, sorting, and delivering mail for more than a week, according to sources”. Later this afternoon Westword Blogs reported that, “Staffers at the (Colorado newspaper) Longmont Times-Call recently received an internal e-mail inviting them to work as valets at a private Christmas party for the Lehman family, who own the paper”.

I’m sure the owners of the companies think they are doing a great thing for their employees. I can’t think of a better way for employees to generate revenue than manning mailrooms and parking cars. WTF!? How about parking your own car and paying your employees to do something they are trained to do?

Newspaper Industry Needs Outside Help, Concludes Closed Door Summit!!!

The newspaper industry is reaching “full-blown crisis” stage and will probably not be able to halt the slide without outside help, concluded the American Press Institute during a CLOSED DOOR “summit” conference held on Thursday. -from the api website

Ironically enough, “Turnaround specialist James Shein of the Kellogg School of Management at Northwestern University said one of the biggest hurdles to progress is “the industry’s senior leadership, including some people in this room…I am not sure you can take a look at your industry with fresh eyes.” 

I wanted to help and begged to be invited to this conference. They said no. So much for “outside help”.  This committee is set to meet again in six months.  Six months is an extremely long time for anyone.  let alone an industry in crisis.  How far will your revenue fall in six months?  What are you waiting for to happen in that six months?  I see no clear plan for action resulting from this first meeting.  Enjoy your Christmas parties!

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Newspapers do not need to get into the memorabilia business.

I figured it would only take a matter of time for some “authoritative” voice to validate the NEED for traditional printed newspapers by citing the DEMAND from November 5th.  In this recent article from Alan Mutter’s newspaper industry blog the argument is made that November 5th proved “that newspapers still matter”.

Platform Agnostic

The article goes on with an emotional plea for newspapers to focus on news stories that “touch the hearts and minds” of their readers, just like what happened on November 5th and September 11th.

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100 Year Old Newspaper Abandons Print

NEW YORK, Oct 28 (Reuters) – The Christian Science Monitor, started in 1908, will abandon its weekday print edition next year, choosing instead to put daily news on its free website and print a paper just once a week.  As of March 31, 2008, the Monday through Friday print circulation was 56,083 daily.

The Monitor gets a $10 million to $12 million annual subsidy from The Church of Christ Scientist that keeps it afloat.  The news source wants to end the subsidy by supporting itself with advertising on its website. It also is exploring becoming a national and international news provider to local U.S news outlets.

ABC News Cancels Its Newspaper Subscription – FOREVER!

The New York Observer reported on October 24, 2008 that ABC News was canceling their magazine and newspaper subscriptions!  ABC News president David Westin announced cuts in administrative expenditures to better align their budget with the tough economic climate.  By saying the move was better for the environment, he pretty much put a nail in the coffin for never bringing the subscriptions back. Yikes!  Here is an excerpt from his statement:

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Wall Street Journal Reports Newark (NJ) Star-Ledger Losing 40% of Newsroom

40% or 151 of about 330 people took buyouts in the recent selling / panic fiasco at the newspaper.  This begs the question of.  “what will the content look like now that so many people are leaving”.  But more importantly, what were those people doing before they were let go?  I’d like to see a list of Names and Titles of people leaving.

From The Wall Street Journal:  The task now, Mr. Willse said, is to “figure out a way to make a good newspaper with a 40% smaller staff.”

Newspaper Revenue Model Severely Jeopardized – Current Economy Reveals Massive Flaws

Last week Sequoia Capital, the venture capital firm that funded Apple, Oracle, Cisco and Google, among others held a meeting and made a presentation to its portfolio companies about how to try to survive an economic downturn.  The attached presentation is quite in-depth and technical however it does a good job of highlighting the implications on future spending habits.

The implications from the presentation for newspaper publishers are troublesome.  We already know the print advertising model has been rapidly failing since the second quarter of 2006.  Now, the increased exposure and reliance of newspapers on internet advertising and internet advertising growth can become a deadly problem.

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Great Discussion About “Old” Editors Being Able to Manage The Newsrooms of Today

I’ll just post this now and build on it later. Article is from:

The Knight Digital Media Center is a partnership of the Annenberg School for Communication at the University of Southern California in Los Angeles and the University of California at Berkeley Graduate School of Journalism. The Center is funded by a grant from the John S. and James L. Knight Foundation.
Steven Smith departs and the question arises: Who should lead newspapers’ online transformation?

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Part 2-The Best News Reporting Story About The Housing Crisis is Not In a Newspaper

As noted in part one of this story: This American Life’s Alex Blumberg and NPR’s Adam Davidson—the two guys who reported the Giant Pool of Money episode—are back, this time in collaboration with National Public Radio’s Planet Money podcast. In this episode, they explain what happened this week, including what regulators could’ve done to prevent this financial crisis from happening in the first place. 

Once again, this is THE BEST news reporting going on regarding the housing crisis.  Did you watch CNBC last week?  Jim Cramer is in a panic

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As Predicted, The Star-Ledger and Truckers’ Union Come to an Agreement

As I reported on September 17th, the threat of sale was just that. This thing was getting signed no matter what. But what kills me, and the real news story here, are the statements issued by Donald Newhouse. In order to fix a problem, you must first admit that there is a problem, and I don’t get even a hint of that from him.

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Part 1-The Best News Reporting Story About The Housing Crisis is Not In a Newspaper

Don’t panic, but don’t change the channel either! We look high and low to find out what the heck is happening to the U.S. economy and how the mortgage crisis started. We look to our traditional news sources for information to use as guidance, to inform us, to make sound decisions, and to put our minds at ease. The broadcast news companies like CNN, and Fox news do a terrible job of this. Their reporting is frantic and seems to be interested only in generating eyeballs for the moment, as Neil Postman would say, “now this…” .

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Will The Newark Star-Ledger Close Newspaper in January? Doubtful

The Wall Street Journal reports that the Newark Star Ledger will shutter its operations on January 5th 2009. An agreement with the truck drivers’ union, Teamsters, is unlikely.

Publisher George Arwady states, “we still are far from an agreement with the Drivers’ union… the lack of progress makes it doubtful the two sides will reach an agreement by the Oct. 8 deadline”. The following mail notices will be sent out in accordance with Federal and New Jersey state law.

To: All Star-Ledger Employees
From: George Arwady
Date: September 16, 2008
Re: Update
As I have previously told you, there are three conditions that must be met in order for The Star-Ledger to remain in business under its current ownership. Although we are making progress toward meeting two of our three conditions (the Mailers have a ratification vote scheduled for September 22), we still are far from an agreement with the Drivers’ union.
Accordingly, since it is doubtful that the Drivers will ratify an agreement by October 8, 2008, we will be sending formal notices to all employees this week, as required by both federal and New Jersey law, advising you that the Company will be sold, or, failing that, that it will close operations on January 5, 2009.
It is most unfortunate that we have to send out this notice, but the Drivers have left us with no choice.
George Arwady, Publisher

Personally I feel that the Newspaper will not fold. The Newhouse organization just redesigned all of its newspaper websites (they share a common platform). NJ.com hosts all the Newhouse newspapers for New Jersey.

* The Star-Ledger
* Times of Trenton
* Jersey Journal
* Hunterdon Democrat
* Somerset Reporter
* Suburban News
* Independent Press
* Warren Reporter
* Horse News
* Gloucester County Times
* Today’s Sunbeam, Salem
* Bridgeton News

I think the truckers union will come to an agreement before the October 8th deadline. The incentive to retain their jobs is greater than the opportunity of striking and having to find other union work in the current economic climate.

If there is no agreement, expect Newhouse to run The Star-Ledger through their NJ.com website and “sell” the print product to a non union buyer. The printed product will continue under a non-union enterprise.

What Is A Newspaper’s Greatest Asset?

I have been contemplating this a lot for the past couple of months now.  In light of all the changes in information delivery, what is a newspaper organization’s greatest asset?  What differentiates it from other forms of information delivery?  What does a newspaper do that Google can’t do?  That CNN can’t do?  That news aggregators can’t do? That the internet alone can’t do?

Newspapers deliver a physical product to people’s homes and businesses.  And not only that, the product is invited into the home or office by the subscriber.  No one else can do this.

The big problem for newspapers is that although they hold this monopoly, they haven’t evolved their product to serve their customers, hence the migration online – away from print.

The Daily Sentinel in Grand Junction Colorado has a unique spin on this conundrum.   Instead of innovating their newspaper, they decided to offer a delivery service to anyone in their newspaper distribution area.

The Sentinel Express operates by using existing trucks and delivery logistics to deliver packages overnight.  The courier service is almost 3 times as cheap as using DHL, Fed Ex, or UPS.

I like this kind of out-of-the-box thinking, however you are now moving further away from your core competency.   I wonder if that’s what parent company COX thought too, because they announced last week they are selling the newspaper.

Valleywag’s take on “how newspapers botched the web”

http://valleywag.com/5039619/5-ways-the-newspapers-botched-the-web

Their list of 5 bombs in chronological order:

  1. Viewtron
  2. New Century Networks
  3. Real Cities
  4. Abuzz
  5. Classified Ventures

I think this list should have been titled, “we intentionally picked 5 losers to make newspapers look stupid”.  They could have just as easily written about 5  ways developers botched the web.  Hmm…  Here is a list of 25 of the worst.

Who exactly is the Star Ledger planning on selling the newspaper to?

I did a little digging to see how much one would have to pony up for buying The Star-Ledger should they decide to go ahead with their plan on October 1st. I have come to the conclusion that the paper is unsellable in its current business format, check out the links below.

So why would anyone buy this failing newspaper? I suspect a company would only be looking to absorb the intellectual property into their own organization. Everything else, the capital equipment, the people, the business contracts,.. all down the tubes.

I’ve said it once, and i’ll say it again, “if all the Star Ledger does is lay off 200 workers, the paper will fail”. The company needs a major replacement of leadership. How in gods name does the biggest and most powerful newspaper in the state of New Jersey go bankrupt?  I’ll tell you how, failure of planning, severe lack of innovation, and a total disregard for their customer’s needs.  

Having said that, potential suitors include but are not limited to: 

  • Gannett owns a few papers in the state and prints in NJ and upstate NY. I suppose they would be the top contender. I don’t think shareholders would be pleased with a newspaper company purchase right now though.
  • Followed by the New York Daily News with operations in Jersey City.
  • Followed by Sam Zell, because he is pretty unpredictable (which is probably a good thing right now). Hey Sam if you are reading this, email me. I have a really great newspaper business model idea and I think you are just the guy to try it out.
  • Then there is the outside chance Mr. Newhouse sells it to himself, gets rid of all his union problems and does something truly innovative. Be the first Major newspaper to go completely online.
    • If Samuel Irving Newhouse Jr. figures the company is a complete wash anyway, why not turn it into a grand experiment?
    • It could be a litmus test for the 27 other newspapers he owns through Advance Publications

NEW YORK TIMES :WANT to buy a newspaper company? No? You’re in good companyREAD MORE

WSJ Saving Money By Not Giving Me A Paper?

The weekend edition of The Wall Street Journal has been removed from my student subscription.  For Shame.  Now what will I read my son?  Just because we can put a newspaper on a computer and cell phone does not mean we want to consume it that way all the time.

metaprinter reading the wall street journal to his son

From: The Wall Street Journal
Date: 2008/7/29
Subject: Important Information about your Subscription
To: [address deleted]

As a student subscriber, you have been receiving The Wall Street Journal Weekend Edition as part of your subscription. Students across the country have told us that the Monday – Friday editions of The Journal work best with their academic schedules and needs. Based on this feedback, we have adjusted your subscription to deliver only Monday through Friday, effective Saturday, August 2.

You can continue to access all of the articles and features found in the Weekend Edition through the Online Journal at WSJ.com – included in your student subscription to The Journal.

If you would like to continue to receive print copies of the Weekend Edition, please click on this link and complete the online form.

Thank you for being a valued subscriber of The Journal.

 

UPDATE 9-1-2008

One phone call is all it took to request Saturday delivery.  I’m back in the game.

A Sigmoid Curve in action – The Newspaper Industry

sigmoid curve

During growth, and certainly maturity, companies must make the effort to innovate to avoid the decline phase of their business life span.  Most newspapers have failed to do this and are now attempting to innovate while in steep decline.

sigmoid with new product

The timing of new product launches must come well before the old product decline phase so that declining revenues and new product revenue growth offset each other.

Rupert Murdoch Withdraws Newsday Offer

Newsday is reportedly worth about 400 million dollars.  Murdoch was willing to pay 580 million dollars.The Daily News is also offering 580 million dollars. Cablevision is offering 650 million dollars. It is only because these companies have a local interest in the market that they are willing to pay above the 400 million dollar mark for a floundering newspaper.

How Is It That McClatchy CEO Gary Pruitt Is Still Employed?

I recently received my Presstime Magazine from NAA. In it, the Newspaper Association of America announced their new incoming Chairman would be Gary Pruitt. Gary is the CEO of The McClatchy Co. As reported on Yahoo finance,

Its newspapers include The Miami Herald, The Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City Star, The Charlotte Observer, and The (Raleigh) News & Observer. As of December 31, 2007, the company owned 30 daily       newspapers and approximately 50 non dailies located in 29 markets.”

A $100 stake in MNI purchased on April 23, 2005 would today be worth $12.40. This represents an 87.6% decline in shareholder value. Here is how other newspaper publishers have fared during that same time span:

  • NYT -40.3%
  • WPO  -19.6%
  • GCI    -64.2%
  • BLC -45.9%
  • SSP  -14.1%
  • MEG -77.4%
  • GHS -77.0%
  • JRN -62.8%

In his bio, Mr. Pruitt has been CEO of MNI since 1996. From then until 2005 he increased shareholder value almost 600% But the times have changed. The paradigm has shifted. McClatchy needs a new LEADER, someone with a new skill set to lead and inspire in this new media landscape. For him to be the choice for NAA Chairman speaks volumes about how out of touch and lost that organization has become. I wanted so much for someone from forward thinking organizations such as Scripps or Washington Post to be the next chairperson. Oh boy. Where is the innovation? How is your organization adapting to the market expectations?

Nobody came to Nexpo 2008

Editor & Publisher referred to the event as “The Big Empty”. This type of morbid humor is usually one of the indicators of flagging hope in one’s profession.

Newspapers & Technology conducted a survey asking members whether they would be attending Nexpo. They reported in March 2008 that for the first time in their history, more people said they were NOT going than going.

Philip M. Stone reporting on FollowTheMedia.com says, “Vendors seemingly were standing around talking to one another more than they were to prospects”. The number of attendees is estimated here at 450.

Columbia Journalism Review puts the registered attendees at 609 however they mention that they “would be surprised if even that many had shown up on the floor”.

Previous NEXPO Attendance figures are ridiculously hard to get, but here’s what I found.  Submit corrections with a cited source please.

Year__Attendance__Location

  • 2001__6580___Chicago
  • 2002__2300___New Orleans
  • 2003__2818___Vegas
  • 2004__3100___DC
  • 2005__2800___Dallas
  • 2007__2088___Orlando
  • 2008___609___DC
  • 2007 Mid Year Media Review Stocks In Review

    $100 stake purchased on June 21st 2007 and its value today February 22nd 2008:

    MNI McClatchy- $38.40 representing a 61.6% decline.

    JRN Journal Communications- $57.70 representing a 42.3% decline.

    BLC Belo Corp.- $76.80 representing a 23.2% decline.

    JRC Journal Register Company- $28.40 representing a 71.6% decline.

    MEG Media General Inc.- $56.20 representing a 43.8% decline.

    MDP Meredith Corp.- $73 representing a 27% decline.

    MHP The McGraw-Hill Companies Inc.- $59.30 representing a 40.7% decline.

    LEE Lee Enterprises Inc.- $56.40 representing a 43.6% decline.

    NYT New York Times Company- $75.60 representing a 24.4% decline.

    GCI Gannett Co. Inc.- $58.90 representing a 41.1% decline.

    WPO Washington Post Co.- $94.9 representing a 5.1% decline.

    WPO seems to have been the best bet here. Ironically, the company now generate most of its revenue from operations OTHER than from the Washington Post newspaper revenues. Additionally, the stock was up about 12% at one point in this time frame. With financial analysts and economists predicting a terrible 2nd quarter this year, it will be interesting to see where these stocks move by June 21st of this year.

    Why Did The Afternoon Cincinnati Post Go Out Of Business? Uh… Yeah.

    Ohio. The Cincinnati Post was printed and distributed there and in neighboring Kentucky for over one hundred and twenty six years.   The peak circulation saw some 275,000 papers being printed daily. But that circulation figure is from 1961 , so I ask you. What the hell was the paper doing from then till now to lose circulation? My answer is this, “Everything it could”.  Cruising around the net and speaking to people, this story is played off like the Post is just another Internet casualty.  The fact is that this paper was operating under multiple pressures giving it a high mortality rate compared to other newspapers.

    I believe the Cincinnati Post went out of print circulation because the publication’s business strategy no longer made it useful to readers. The flaws break down as such:  First, the paper was an afternoon edition putting it in direct competition with all other forms of news dissemination at a time in the day when people are not accustomed to reading papers.  Indeed there exist only 614 afternoon papers in America.(NYT)  Second, the paper was a joint effort between Gannett and E.W. Scripps, meaning no one entity cared enough about the product as a whole.  When responsibility is spread too thin, there is no accountability.  Also, the joint operating agreement between these two publishers ended on December 31 of 2007 and that is when the print version was terminated.  They knew three years ago the paper would fold.  Finally, there were two papers operating in Cincinnati and that is just an untenable situation these days. One paper is enough in a city that small.

    Other afternoon papers beware this fate.  Innovate and stay relevant!

    Free Newspaper Metro International Losing Money… Go Figure

    Global newspaper, Metro International issued a warning that it will lose 18million dollars in 3rd quarter 2007 versus 9million from the same time last year.

    I can’t comment on their worldwide operations, but I see what they are doing in NYC and it is not difficult to see why they are losing money there. First off it is one of the most competitive newspaper markets in the nation paid or otherwise. Second, their content is homogeneous. It is almost all AP newswire stories. AMNY at least gets to siphon content off Tribune and Newsday. Lastly, Metro’s website is not as widely read as the AMNY website. According to Alexa, metro’s 3month reach is .000355% compared to amny’s at .0026%

    I think metro should pull out of the New York Market. They have no competitive advantage over the other papers serving this area. What value are they providing that market? Perhaps they should expand in the Asian or African markets?

    My Computer Does Not Take Cash Or Checks

    Here is an interesting statistic which I believe highlights people’s acceptance of online media. According to a recent NewsWeek article, the number of checks Americans have written has fallen from 50 billion checks in 1995 to 36.6 billion checks in 2003. At the same time, the number of electronic payments rose from 15 billion transactions to 44 billion transactions.

    To me, this signals a rapidly growing acceptance of internet usage for more than entertainment purposes. People are more and more comfortable using their computers to conduct business transactions. People, older people, are getting more comfortable with this thing called the internet, they are figuring out this new medium and their fears are fading. People are getting comfortable releasing their financial and personal information into the nebulous ether of the internet. Do you remember all the places where you’ve left your data? I sure don’t. I find this pretty amazing considering the fact that identity theft is one of the most common crimes, or maybe that is why?

    Either way, time spent online is rising rapidly and that is not good news, no pun intended, for traditional print media.