Slaughtering the Cash Cows a Bit Too Early
New Post: Christian Science Monitor Flipping the Switch
For an industry already on a ventilator, today's FAS-FAX numbers just steal more breath.
The double-digit declines — the Atlanta Journal Constitution at 13.6% daily, the Dallas Morning News at 9.2% daily and the critical-listed Newark Star-Ledger down 10.4% daily — shouldn't be a surprise, but they are surprising in their magnitude.
Recall that newspaper CEOs have been saying for a couple of years now that circ declines should plateau soon, as they've pruned out-state and other costlier, and less-attractive-to-advertiser circulation. The story they've told themselves, and us, is that the print business was stabilizing.
In fact, the circulation decline is going the other way — deepening. Down 4.6% daily and 4.8% Sunday, these are new lows and a trend further downward from the largely 2.5-3.5% declines we've seen over the last four years.
Let's connect the dots.
One big reason the numbers are declining is the product itself. In the last year, we've seen unprecedented cuts in the product — and the customers are noticing. It looks like the amount of newsprint is down about 10-15%; some in stories, some in ads. Trusted bylines have disappeared overnight. Readers notice, and talk to their friends, and they're saying: it's not the newspaper it used to be. When the subscription notices come, they're a little less likely to be acted upon.
In a sense, newspapers have been slaughtering the cash cows — print revenues still drive more than 85% of the business — a bit too fast. No doubt, what we're talking about big picture is the transition of the business from print to digital. What today's numbers show is that the movement is accelerating, an acceleration caused both by larger forces (younger readers preferring online, the new green revolution) and by publishers' own cost-cutting. The continuing crunch issue in that: readers online are still worth no more than a dime compared to the dollar in print. So while slashing print costs is a necessity, it is robbing print revenue at the same time. It's an ungainly process, and once started is hard to manage. In fact, it could be like a runaway train, which once dispatched, takes on a velocity of its own. If you're the CEO of such a company, you may feel more like you're a passenger along for the ride, than the engineer in control.
Today's numbers, of course, predate the financial meltdown and now all-bit-official recession. Consumers are shell-shocked, reeling from paper losses on real estate and retirement accounts and fearful of job loss or reduction. We've seen ad spend forecasts decline almost weekly, and we can guess that the next FAS-FAX will be hurt further by these consumer fears.
Otherwise, the data shows a mostly familiar story:
- National papers are doing better than metros. The Wall Street Journal and USAToday are both flat, the New York Times down 3.5%. We've seen this trend, more or less, for four years now.
- Community dailies are doing better than metros. Check out the Jen and Fitz list. It's heavy on these dailies that have both better community connection and less commoditized content. Same trend as last four years as well.
- Yes, overall audience, now measured by industry's Scarborough combined report, is growing. However, flagging online growth numbers — largely because of the reliance on classified bundling — show that taking advantage of this new combined audience is an early-stage, slow-moving, work-in-progress.
- New blood does not equal turnaround. Despite Brian Tierney's spirited, take-it-to-the community campaign in Philly, the Inquirer's down another 11% daily. In Minneapolis, on-the-brink Avista suffered another 4% daily decline. Tribune, with its raft of changes (though most of the redesigns occurred at the end of the reporting period), took losses, including 7.75% at the Chicago Tribune.
- Sunday's as hard hit as daily. The big ad day was down another 5%. That will translate into still less of a mass market, and less print revenue in 2009.
Well, maybe we can blame a little-bitty part of today's announced swoon on broadcasters. Newspaper people have long liked to joke how their morning papers served as both tip sheets and often actual reportage for broadcasters. Rip 'n read. Now ABC News is adding injury to insult, cancelling all print subs. So to whatever extent ABC staff (and local broadcasters) are using newspapers these days, they'll take the content — for free — off the web, like apparently almost everyone else. The memo:
As of December 1, we will cancel all subscriptions (newspaper and magazine) for executives and production employees and move them to on-line. This change will have the added benefit of helping the environment. If there are particular circumstances where you believe this will materially impair your ability to get your work done, you should make your case to your executive producer or supervisor by November 15th.
