Law 2 – The Digital Dozen Will Dominate

The next CEO is a big roll of the dice, as the gaming table shrinks. There’s little room for error. Pick the right new leader and the Times has improved its chances for survival; pick wrong and these key years of 2012-2014, as news crosses over into a mainly digital business, will be cited in the obit. AP faces a similar tension as it seeks a successor for long-time CEO Tom Curley. Dow Jones, cushioned by parent News Corp.’s better-lined pockets, too, is finalizing its CEO search. Put them together, and it’s a signal moment for American news media, as three top positions open themselves up to possibility, and imagination, simultaneously.

Takeaways:

It’s 12% of the the New York Times overall circulation revenue for the year. That puts the annual circulation number in positive territory — up 3% for the year, and a lively 8% for the fourth quarter — reversing the 2010 trend.

It’s $100 million less (about 186 M for New York Times itself) than the amount of digital advertising revenue for the year. So it’s important, but the digital ad number still is more decisive in making up for the print revenue decline. Despite 10% digital ad growth for the News Media group (without About properties), the NYT property still saw a 3% decline in ad revenue for the year. One more way to look at it: the Times took in $22 million less in advertising overall in 2011, so new digital circulation revenue exceeded that decline by 4X.

It’s 1.1% of the Times’ 33 million U.S. unique visitors, once we take out international buyers. That one percent seems like a tiny number, but it’s 34% of its print circulation. Anyhow, “total unique visitors” are getting to be close to an irrelevant number. Paid readers who also consume a majority or strong plurality of page views are the customers the Times’ care about.

It’s four times ousted CEO Janet Robinson’s good-bye payout. That’s small consolidation to outraged staffers, dealing with their own 1% issue.

It’s four times the dividend family members are hoping to see reinstated. The dividend paid out $20.8 million in 2008. Even they need to be kept happy to keep the Times out of public play, there are few new dollars to assuage them.

Consider how much revenue each of Google, Apple, Facebook, and Amazon earned from outside the U.S in the first three quarters of 2011:

Google: 54 percent
Apple: 54 percent
Facebook: 38 percent
Amazon: 46 percent

Forget “content wants to be free.” Now content wants a fee. And everyone from Time Inc to The New York Times to the Memphis Commercial Appeal to Hulu’s co-owners (Fox, Disney, and Comcast) see gold. They see another digital revenue stream, in addition to advertising or to cable subscription fees. Yet they are increasingly believing they’ve got to up the ante (and Hulu is raising new funds to buy original programming) to compete and to win those consumer dollars. News companies — at least one in ten U.S. daily newspapers and many consumer magazines — are rapidly embracing digital circulation revenue and All-Access. Yet results have been quite uneven. That makes sense: Consumers will pay for digital news, feature, and entertainment content, but they don’t want to overpay, and they’ll increasingly be forced to make choices. Buy this; let that go.

Today’s news that the Times Company is finally selling its New York Times Regional Newspaper Group holdings of 14 newspapers absolutely fits with the last week’s news of CEO Janet Robinson’s abrupt departure. Expect the new CEO, most likely from the outside to be focused on three A’s: audience, advertising and analytics. Arrange those three in a virtuous circle, and you have an efficient spinning of the new digital economy. That’s clearly what Time Inc has in mind as it hired Laura Lang from the ad world. The new CEO must also drive a faster kind of decision-making at the Times Company,