News Industry Calls on New Talent to Reverse Downturn
Important Details: Change is in the air among US newspaper companies as they face the latest sobering realities of the day. Last week’s news that the NAA (Newspaper Association of America) reported the most severe ad decline since 1950 served as a shocking reminder as to how bad things have become. In 2007, total ad revenue dropped, year over year, 7.9% to $45.3 billion. That drop occurred despite a 2007 online ad increase of 18.8% to $3.2 billion.
Such declines are unprecedented, formed by structural changes in readership and in advertising, and now by a cyclical economic downturn in the US economy of the kind that has always impacted consumer-oriented advertising. If the declines are without precedent, so are the changes now being experienced at daily newspaper companies, changes that bring non-newspaper industry people into the companies’ top echelons. Examples of this include:
- In the last two years, two major dailies — the Philadelphia Inquirer and the Minneapolis Star-Tribune — have been bought by non-newspaper groups. In the Philadelphia case, a local business consortium headed by marketer Brian Tierney won the papers in a McClatchy auction. In Minneapolis, private equity group, Avista Capital Holdings, decided to launch itself into the daily industry by buying the paper as McClatchy scaled back yet further
- In Chicago, Sam Zell, who has made several fortunes in real estate and in buying distressed properties in general, showed more interest and tenacity in taking control of the storied Tribune company, finally taking it private at the end of 2007. He’s brought in a cadre of non-newspaper consultants to streamline the business.
- The New York Times recently capitulated to private equity pressure, granting two new board seats to representatives of the Harbinger/Firebrand investment groups, which have upped their ownership in the company to just under 20%.
- In Denver, MediaNews, the fastest-growing daily newspaper company of the last couple of years, shook up its executive suite, demoting its COO and adding two outsiders. Oliver Knowlton, a Time Inc. veteran who worked on web strategy, will become president of MediaNews Interactive while Mark Winkler, former general manager of Comcast’s advertising-sales division (Spotlight), will become executive vice president and chief marketing and sales officer, a new position. Said Jody Lodovic, MediaNews’ president: “This structure will enable us to make decisions quicker and to be more focused.”
Implications: In any industry, outsiders moving in draws notice. The newspaper industry has been particularly insular, its vertical integration and lack of partnering skills having turned out to be a great disadvantage as the internet has ravaged traditional business models. Outsell believes that it is long overdue for the industry to look outside itself, whether companies do that of their own volition or because of public market forces.
The addition of outsiders to the fold though is no panacea. As a recent New York Times column by David Carr recently pointed out, new owners Zell, Tierney and Avista’s Chris Harte are all struggling in their attempt to turn around their companies, surprised at the ferocity of the forces of marketplace change. The times call for fresh thinking and fresh business models — as well as financing to provide more time for journalism companies to transform themselves. While the financing is in question — few investors of any kind want to bet on these companies — Outsell believes that companies need to focus on missing executive toolsets within their own ranks as they look for talent. The top ones, needed immediately, are:
- Business development skills: “Business development” was a practically unheard-of term, pre-web. While it’s been haphazardly applied to internet businesses, it needs to be applied to whole company thinking and reach-out.
- Marketing: Another highly under-developed area, often just an extension of circulation sales. Newspapers have amazing brands, but have leveraged them poorly and now must move quickly as the equity drains out of their value.
- Syndication: It’s no surprise that an insular industry used to direct distribution to customers should be so poor at syndication. But in the evolving world, it’s all about syndication — the mating and matching of editorial and advertising content across several distribution platforms and tens of thousands of customer contact points.
- Big picture thinking: Newspapers got in their current fix by thinking small, as others thought big around them. Now the task is simply re-imagination of journalism in our times.
Changing the people at the top of the industry is one thing; attending to its long-overdue skill needs is a key to success.