Pity the poor news publisher. Amid all the hoopla about wringing digital revenue from readers and tackling the tablet challenges before publishers, he’s faced with an uncomfortable fact: Print revenue is struggling to get back to 2009 levels, and that’s the year of the worst decline in modern history. In 2010, print ad revenue again slumped by high single digits compared to that awful ‘09, while print circulation revenue is now challenged to grow as well. Into 2011, some flavor of flattish-with-2010 is what we’re likely to see.

The only significant growth is coming from digital advertising — typically no more than 15-20 percent of newspaper companies’ overall ad revenue — and that’s not enough to turn the ship around. At best, that digital revenue is helping keep the ship afloat. Given slashing of costs over the last three years, these companies are profitable once again in the U.S. — in U.K., insiders say only one of the national quality dailies, the Telegraph, is profitable — but there’s little guarantee of future profits, given the trends.

That leaves the next stage in cost reduction: roll-up.

When MediaNews announced that long-time CEO and the company’s commander, Dean Singleton, was vacating his position (see “The Demise of Lean, Dean Singleton and the Rise of Private Equity“), we heard the first renewed public talk (see “The shakeup at MediaNews: Why it could be the leadup to a massive newspaper consolidation“) about roll-up. Behind the scenes, though, a number of forces have been pushing towards future consolidation of the American daily news publishing industry. Private equity owners — aiming toward as profitable an early exit as possible — are one pressure point. The debt restructuring done in the Great Recession, both in and out of bankruptcy, will come due for a number of companies in the next two to three years too. Consequently, by the end of 2011 we’re now likely to see the beginning of that roll-up — daily companies merging with each other and bigger ones buying smaller ones.

To be sure, there are both potential cost savings and money-making multiplications fueling the notion, though the former appears stronger at this point.

New Philadelphia Media Networks CEO Greg Osberg is high on the revenue potentials of company sharing — and down-the-road consolidation. His company — which includes the Philadelphia Inquirer, Philadelphia Daily News, and Philly.com — is beginning to roll out new digital products. Among them is Dealyo, a Groupon-like daily deal, and Osberg believes Dealyo could be a product picked up by other publishers.

The first publishers he has in mind are those who are beginning to form an informal network — those who now have a set of owners in common. There are two sets of these non-traditional newspaper company owners. One is made up of so-called-reluctant owners, or bankers who got equity for their debt in bankruptcies. The second is made up of the more activist hedge funds who’ve bought into the industry at low, low, buy-at-the-bottom prices, relieving some of those reluctant owners of their stakes.

The name you hear most in talking to publishers is that of Alden Global Capital, the company that became more prominent in the recent MediaNews shuffles. Alden, we believe, holds its largest stakes in MediaNews and Freedom, both in the neighborhood of 40 percent. It also holds stakes in the Journal Register Company, the Philadelphia Media Network, Tribune, Lee Enterprises, and Gannett, the U.S.’s largest daily newspaper company. JP Morgan Chase Capital is the other private equity owner most actively engaged with its new holdings — the largest institutional shareholder in Gannett at 9.4 percent of the company — pushing for new strategic solutions and more rapid company change.

“We’ve been encouraged by our owners to share,” Osberg recently told me, explaining how this informal network now works. “We want to come up with the best digital products. That’s what’s encouraging to me. We can come up with innovation. And this roll-up — when it’s not optional to do it — could be pretty exciting.”

Next up on Greg Osberg’s list: FYI Philly, a new regional portal, intended to provide a magnet for newspaper traffic in the greater Philly region. Significantly, it’s a joint initiative of four newspaper companies that have long been trying to kick the life out of each other in that area: the Philly papers, the Calkins papers, the Gannett papers, and the Journal Register properties. (Antitrust, you may wonder? “You know, newspapers are dying,” laughed another exec of one of the companies. “How can there be antitrust concerns?”)

So if we’re seeing unprecedented collaboration in Philly, where may we see actual roll-up? Let’s start with the caution, emphasized by one CEO in the thick of it, that actually getting deals done is painstaking, given valuation and ego.

That said, a MediaNews/Freedom Communications deal looms large. The deal would deliver just about the whole state of Colorado to the new company, with MediaNews’ Denver + Boulder + its new purchase of the Lehman group (which has been the largest family owned newspaper company in the state) combined with Freedom’s Colorado Springs paper. More importantly, it would deliver a bigger Southern California combo, of MediaNews’ dozen-plus mastheads pushed together with the Orange County Register — and put more of a squeeze on a Tribune-owned Los Angeles Times.

In a sense, the combo would be just an extension of the strategy that Dean Singleton used to build MediaNews from scratch: clustering. That’s where the newsonomics of the roll-up add up.

Once you’ve clustered — centralized to the max the administration, circulation, advertising, production, finance, and newsroom tasks of all of the adjacent properties you own, you look next door to other companies, for fresh cluster bait. (Wait a minute, wasn’t that the plot line in Aliens or The Blob?)

In addition to this super-clustering, there’s one other big benefit of merger: getting rid of one company’s corporate overhead. Savings here could amount to $20 million or more — annually — for the mid-sized companies in possible play. Direct roll-up in parts of the Northeast could well follow the same logic. John Paton’s Digital First push has re-energized the Journal Register Company — making it a better roll-ee. And who knows what kind of new company could grow out of the FYI Philly cooperation?

As we look at possible consolidation, check out those few metro areas with two (or more) remaining dailies. Sadly, there are so few. In the Twin Cities, the new, post-bankrupt, capital-owned Star Tribune shares the smaller market with post-bankrupt, capital-owned MediaNews’ St. Paul Pioneer Press. In south Florida, the Tribune’s post-bankrupt, capital-owned Sun Sentinel is still duking it out with McClatchy’s Miami Herald. In north Texas, McClatchy — still dancing on the eggshells of debt reduction — owns the Fort Worth Star-Telegram while Belo (debt-free and proud) owns the bigger Dallas Morning News. You can also play quite a parlor game with the Tribune’s newspaper holdings, in a hypothetical game of roll-up.

Yes, devils abound in the details, but the market logic pushes harder in those still competitive markets. What is that market logic? If you are a financial company, like an Alden or JP Morgan, you look at the newspaper industry and say, “Why are these guys different than everyone else?”

The newspaper industry is among the most splintered big industries in the nation, and the same is true across the U.K. and Europe. Newspapers have been profoundly local for centuries — the news and commerce of the town trumped all, and of course, you had to have feet on the street to provide it.

We saw, especially in the U.S., chains buying up local dailies over the past decades. Even the leader, Gannett, though can claim just more than 10 percent of the industry by circulation in the U.S. The banking industry has now shaken out to four big leaders, and similar consolidation can be seen across auto, packaged goods, homebuilding, and many other industries.

From a financial point of view, consolidation just makes sense, cutting out all of those redundant operating costs, through mega-clustering of geographically contiguous properties. Indeed, many redundancies have been cut over the years, some without much detriment to the news product we readers get. The logic of consolidation is oh-so-sensible, from that financial viewpoint — and to a limited extent, focuses the enterprise on the going-forward keys to the future, news/feature content and advertising. (Of course, there’s a big question of how much operational savings still exist in a pre-slashed world.)

But wait, you say, newspaper companies have been local and balancers of financial and public service goals for centuries? Yes, but the cracks in that argument have been expanding for decades. The argument about how much chain ownership improved papers and how much it shortchanged them — both being true — now seems quaint. Those companies were run by newspaper people, in whose blood ran the notion of newspapers’ community roles.

The ownership of much of the business has profoundly changed. Even those companies with strong leadership committed to balancing profit and public service now find they have little room to maneuver. Staff cuts keep on coming at those companies, too, as bankers exert stronger behind-the-scenes influence.

It’s a new era of ownership, and one that everyone who cares about the news must now understand. Naivete is no longer in fashion.

Of course, it’s easy for non-daily newsies to decry such potential roll-ups as rearranging the worn leather armchairs in the fading men’s clubs of publishing. To the extent roll-ups focus mainly on cost reduction, they will be right. To the extent, as Greg Osberg evangelizes, these coming new entities create state-of-the-art digital innovation (not a strong suit so far), the story could turn out differently and unexpectedly.

Let’s remember that a lot of today’s moves will be aimed at reducing the costs of the physical business, as newspapers are still mainly physical business with real-world, on-the-ground liabilities (and assets) weighing them down.

By 2016, though, these companies will be mainly digital businesses. They may serve specific local and regional audiences, but as mainly digital business, their content production, technology enablement, telesales and customer service costs will become their main costs, and many of those can be more easily centralized and nationalized. How much editing should be done locally — witness the recent MediaNews/Newspaper Guild dust-up — is a key one that has a financial and a non-financial answer.

Today’s main costs — the physical, hard costs of page make-up, printing presses, trucks and distribution supervisors — will have greatly diminished. In that time — no more than five years out, I’d believe — the ownership structure of the news business, daily legacy and combinations only to be dreamt of, will look vastly different.

Great storylines both, but unfortunately more fiction than fact.

In fact, the new launch of the Reuters America product and Tribune Company’s embrace of it have more basic truths to tell us about fast the news marketplace is now beginning to change.

The deal itself is a straightforward one. Tribune is taking the newly announced Reuters America news service and halving its annual spend with AP. So that’s a twofer for Thomson Reuters. It takes in somewhere in the neighborhood of $4 million a year in new revenue, while depriving its direct competitor, the AP, of about the same sum. Tribune’s been spending close to $9 million a year with the AP, and now is cutting that ancestral baby in half.

It’s easy to read the deal as a big loss for AP. The newspaper-owned cooperative sees one of its main members defect to the competition, further wounding the AP budget, already subject to serial cuts, and raising new questions about the stability of the 164-year telegraph-birthed coop. And yet: it could have been worse.

AP’s been bracing for Tribune’s decision for a long time. Two years ago, Tribune, under the Zell regime, gave its first notice of cancellation, when cancellation then required two years’ notice. Since then, the parties have been negotiating, aiming for a new deal, with the current one ending Jan. 31. It’s been no secret that Tribune might bolt, though the dispatching of much of the Zell team from the Tribune Tower raised the question of what new direction the company might take in regards to AP.

Tribune could have decided to jettison AP altogether, but it didn’t. Seven Tribune papers will take AP Limited, a lesser AP service, while the Los Angeles Times will take the big package, AP Complete. Tribune Broadcasting, already getting significant content from CNN, will drop AP coverage entirely. So Tribune is halving its annual spend with AP, but it is keeping its membership and sounds genuinely to be in a testing phase, testing out the new Reuters relationships alongside the chance of a new romance with AP, if the old suitor can rise to the competition.

The Tribune deal is a significant crack in the foundation, but it’s not a clean break, which would have been far worse for AP. As CEO Tom Curley and the AP leadership aim to restructure and re-energize the company for the next digital age (its Digital Rights clearinghouse is the latest shot in that war), there’s now a still-heightened urgency to get it right. Get it right, and members stay. If not, we could see further defections that will raise the specter of whether AP will go the way of its northern cousin, CP. Just last month, Canadian Press passed from being a publisher-owned coop to a private, for-profit company, owned by three major publishers. Why? Two major Canadian publishers had left the CP, forcing a reshuffling.

If this all seems like a game of News Chess, it’s simply a recognition of the changing nature and economics of the business, says Gerry Kern, editor of the Tribune and VP/editorial for the Tribune Company.

“Sam Zell has nothing to do with this,” Kern tells me. “This was my project. I’ve been thinking about this for years.” Kern served as vp/news for Tribune 2004-2008, and he advocated “shared content.”  Even in pre-recession times, that made economic sense. Instead of each of the Tribune papers producing its own nation/world pages, why not do it once, create templated pages and have the papers use those templates. Then, each Tribune paper could use the labor savings to concentrate on the remaining strategic news priority of every daily (save the New York Times, the Wall Street Journal and USA Today) in the country: local news.

Media on Demand — MODs — was born. Now 40 staffers at the Chicago Tribune produce 240 modules a week for Tribune papers — and Tribune is starting to sell the modules to others, with Schurz Communcations its first client.

So here’s how shared content, budget cutbacks and the emerging potential of new content players come together in this deal.

Kern applied some metrics to the news offerings of the Tribune papers. At his Chicago Tribune, he computed a 60%/local news-40%/other percentage ratio.

Kern found that the Tribune company — through its foreign bureaus (20 staffers), its DC bureau (32), the entertainment/features/sports offerings of Tribune Media Services and its own McClatchy Tribune Wire — supplied three-quarters of the non-local content. That left a quarter of the 40%, or 10% of the total content, needing to be supplied by others.  (At the other seven Tribune papers, these percentages vary to some degree, but are in the same ballpark.)

So the question became: how valuable was the annual AP spend for what the papers need to do now, in print and online, and into the next couple of years? As of May, the Chicago Tribune says it essentially stopped running AP content, as a live test, seeing what it could substitute and what holes appeared. “We got zero calls from the public, and I don’t think many people in the newsroom noticed,” says Kern.  The experiment validated the theory that a wire reshuffling could work.

Enter aggressive Reuters, buoyed by its merger with Thomson in 2007, and under New York-based Reuters Media President Chris Ahearn’s leadership, a forward-grabbing news presence worldwide, with new models of syndication, flexible packaging and pricing and eye for a deal that might break loose the U.S. market, a market in which it’s long been a distant #2. Where Kern says AP told him it was unable to provide sufficient new models and staffing flexibility, Reuters said yes, resulting in the new deal. Among the details: Reuters content will be found in the Tribune’s MODs. Mix and match and mix.

What is Reuters America, and what is it offering Tribune, and now others, as it aims to benefit from newspapers’ occasional family squabbles with AP? The new product is plainly aimed to be a replacement for AP.  The new news service combines lots of elements to try to do that:

• Reuters says it is committing to staffing 103 U.S. cities, though at unspecified levels. The staffing will be a mix of full-timers and stringers. The offices will share daily budgets with Tribune (and future customers), and offers to do on-demand stories, maybe as many as two to three a day, as requested by clients.
• A beefed-up sports offering, intended to shore up a long-time Reuters deficiency in the U.S. market. Cricket and rugby coverage just doesn’t cut it here, so Reuters has partnered with Sports Direct, the Sports Xchange and SB Nation to pump up coverage.
• It’s adding The Wrap News for more entertainment content.
• It’s partnering with Pro-Am Examiner.com, harvesting the work of those contributors.

Kern believes the new service (plus the more limited AP offering) will fill up that 10% of newshole well, and will save the company a little money, the savings being a secondary objective to right-sizing the content, he says.

The proof, of course, will be in the execution. While Reuters’ 2900 journalists (about the same number as AP’s) is proficient at global and business news, it remains to be seen whether the new staffing will produce enough high-quality news with an American accent. It choice of partners, especially Examiner.com (roasted in many quarters for its treatment of writers and quality of its content) will raise a red flag.

Still, it will be an intriguing test. Beyond the immediate test, we’re seeing how flexible news content delivery is getting to be. Demand Media is selling content to USA Today and Hearst papers, while Reuters and Tribune buddy up to Examiner. Mix and match is the order of the day and un-bundling, just like what cable consumers are asking for, is happening. News companies, seemingly on the fly, are more and more becoming more discerning buyers, and sellers, witness Tribune’s new sales of its MODs products.

It’s content chaos, and in the new, heightened chaos that AP must regroup even quicker, as it plots its own way in the contemporary news wilderness.

We’ll all familiar with the chaos of the moment. Publishers and broadcasters, readers and viewers, search giants and software midgets — they all see that we’re on the verge of the next news and information revolution, as the built-out Internet really begins to power human access to content on an array of digital devices, anytime, anywhere. But it’s not just the media dealing with that revolution. The same chaos of choice that alternatively delights and befuddles envelops businesses as well.

For old-fashioned sellers of newspaper space and broadcast time, it’s been a fitful education, and a reminder that merchants don’t want to buy advertising — they want to find customers, as cheaply and efficiently as possible. The First Amendment didn’t tie merchants to media in a constitutional permanence; it just seemed that way.

Marketing spend — email marketing, social media commerce, search engine marketing and optimization, building and operation of brands’ own websites, events and conferences, among others — is increasing worldwide, while “advertising” stagnates, and that’s due mainly to the increase in digital, increasingly measurable, marketing alternatives for businesses of all kind.

Yet, it’s also clear that we’re at the beginning of this digital marketing revolution, with two numbers convincing me we’re maybe not even a tenth of the way there. I’ll call that the Newsonomics of eight-percent reach, and explain those eight percent in a moment.

Consider first the big picture of marketing spend. Chuck Richard, a fellow information industry analyst at Outsell, has done work showing that marketing ad spend in the U.S. now totals $368 billion, of which 32.5 percent is going to digital and 30.3 percent to print.

It decreased at the rate of only 4.5 percent in the recession-wracked 2009, and should rise about 4.2 percent this year. Spending on advertising alone was down 8.5 percent in 2009 and is forecast to be down 0.8 percent in 2010.

So against those numbers, let’s look at a couple of numbers.

Google reaches about eight percent of the small businesses in the country, estimates Click Z’s Gregg Stewart. That’s 1.5-2 million businesses who use Google’s ad services, contributing to its $27 billion annual revenue run rate. As Stewart points out, Google advertising is a convenience for many harried smaller merchants:

Local businesses face a multitude of challenges daily; servicing customers, generating sales, meeting payroll, and in effect doing what they “do” for a living. Basically, they’ve got their hand in everything and this rarely allows for deep specialization in any one specific facet of their business. Local businesses do not have the time required to research keywords, monitor results, and modify bids and ad creative along with all the additional complexity that is associated with SEM.

Look at that eight percent another way, of course, and we see 92 percent upside, a big opportunity to help merchants make sense of the chaos. Google — along with Yahoo, Yelp, Yellow Pages companies, AOL, and Microsoft — have been plumbing this territory, and so have newspaper companies and a trio of hungry online marketing services companies.

Now Google is making a couple of aggressive moves. It has announced Boost. It’s a product that is built on top of its local listings and Google Maps. Boost — there’s an ironic ambiguity to the name, in that it is intended to boost Google’s revenue and boost some money out of the pockets of local media — adds the ability to put ratings and reviews in place-based ads, and they are sold on a pay-for-performance basis, unlike an earlier similar offering. The Boost test is going forward in more than a dozen cities.

Secondly, Marissa Mayer, Google’s long-time maestro of the search business, is now in charge of the local business. That’s another signal of what an opportunity Google sees in local business, online and on mobile.

How much of the local business market do you think metro newspapers reach? Eight percent, estimates Mike Sacks, VP for operations at Tribune. That’s a number, give or take a couple of points, I’ve heard from other publishers as well. While that total is likely higher for smaller-circulation dailies, its small size is a reflection of the old way of selling, pre-chaos.

Newspapers worked the biggest local merchants for big contracts, concentrating on getting a relatively small number of checks from a small number of deep-pockets advertisers. Now, those advertisers — the likes of Best Buy, Target, and Macy’s — are increasingly going direct to their customers and using all manner of social and engagement media to find and upsell customers (“The Newsonomics of online marketing“).

So, newspaper companies, including Gannett, Hearst, and Tribune, most prominently, are re-strategizing. If the dollars from that eight percent are only half what they were 10 years ago, then we’d better get some revenue from the other 92 percent, they’re saying. They’re doing that three main ways:

• Retraining salesforces, and hiring more commissioned salespeople, to work the territories, selling not only space in their own papers and sites, but Yahoo inventory, Facebook placements, mobile messaging and more.
• Telesales: Think “boiler room” lite; more salespeople calling more prospects.
• Self-service: Sack’s Tribune is one of the companies using the Mediaspectrum platform to enable local merchants to place their own online or print ads. This Orlando Sentinel “Place an Ad” page shows what merchants can choose from. At the sister Sun-Sentinel, in Fort Lauderdale, Sacks says that more than a hundred new advertisers have been added in the year the service has been in place. “Every single cent is a new one…I’d like to see it grow ten-fold,” he says of the prospects of turning an experiment into a line of significant revenue. Sacks says average sized deals come in at about $1,000/$2,000 and also provide lead generation for upselling. Overall, Mediaspectrum’s self-service ad product is in place at almost 100 newspaper titles, including all of the Tribune’s papers (but not broadcast properties), UK’s Trinity Mirror chain, Morris Publications, the Columbus Dispatch, and the Washington Post. Most offer both online and print placements.

As we enter 2011, this new battle for local ad dollars is growing in strength, as merchants aim to make sense of the chaos of marketing choice. This exercise in chaos — and how sellers of marketing services do or don’t take advantage of it — affects more than just newspapers, of course. Locally, commercial broadcasters and Yellow Pages companies — the two other local media with substantial feet-on-the-street sales forces — are sensing the same opportunity to get to smaller businesses, as they, too, lose some of the bigger-business advertising they’ve long held.

Advertising agencies are in the midst of their own identity crises, as their value proposition to businesses is thrown into question, with the advances of pay-for-performance advertising and self-service overall.

The online-only players aren’t just the search giants. ReachLocal, Orange Soda, and Yodle are the companies you hear a lot about when you talk to local site general managers. They are all working the same turf, with ferocity. A recent visitor to the Yodle “sales pit” came away with the impression of “how well trained these guys are” and how their state-of-the-art customer relations management system qualified prospects well.

That 92-percent “open” market — maybe 23 million businesses — tells us how early we are in this digital marketing movement. Commerce change is one thing. For those who care about the news, the big thing to watch is whether those dollars, as they move digitally, move to companies that produce news, distribute news — or have nothing to do with news.

1)     Is 100 the new 10? Until recently, valiant start-ups from Voice of San Diego to Minn Post to California Watch birthed themselves with two handfuls of people, more or less. A couple of million in raised money, and a couple of years of running room, and these start-ups started to define a new era of online-only metro journalism. Now, though ambitions have quickly grown. Just in recent works, “100” seems to be the new rallying cry. The National Journal has re-launched, hiring 100 new staffers, while Bloomberg Government’s done the same, on its way toward 300. Not to be outdone, NPR launched its Impact of Government state coverage project, announcing 100 staff positions, though its funding for sustaining those positions hasn’t yet been arranged. “Public media” advocate Bill Kling has called for 100 news staffers in each of four cities (“Public Media $100 Million Plan: 100 Journalists Per City,”), with funding targeted for mid-next year.

Why the 100? Given the scale of reporting loss of 6000-plus daily newsroom reporting positions within the last three years, there’s a quickening acknowledgment that onesie-twosie additions may be like spit in the ocean. Overall, it’s a scale argument, and for Bloomberg, National Journal and others, the wider notion is that you have to create a substantial product to have a sustainable long-term business model.

2)     Doesn’t the Juan Williams contretremps emphasize how much NPR  has become a news player? National Public Radio has been around for 40 years, but only recently has it been considered a player, a national player mentioned along with the Big Four commercial broadcasters, the Times, the Post and the Journal? Its journalism has merited inclusion for longer, but it’s the higher public profile it has taken on that has made the difference. That’s due to pushes both at NPR itself, since Vivian Schiller took over as CEO two years ago, and at the bigger metro stations that are rapidly assuming a digital news role, from San Francisco to Chicago to Boston. NPR’s iPad and other digital plays also display which league it intends to play in.

So when NPR offered itself as giant piñata for the eager right with its mishandling of the Juan Williams episode, it was far bigger news than it would have been even three or five years ago.

NPR (and New York Times) contributor David Brooks put it well last week: “…the damaging thing to me is, NPR has really worked hard over the past 10, 20 years to become a straight-down-the-middle network. I’m not sure they always were decades ago. But now they really are. And now, because of this unfortunate episode, they begin to get some ideological baggage again. And that is damaging.”

3)     Hasn’t the recent Tribune saga seemed like a vintage Western? You know,  horrible things happen to a little hamlet. The bad guys pillage and plunder.  Then, somehow, it’s morning, and the bullies are gone. The village people come slowly out into the sunlight, first unbelieving that the yoke has been lifted. Then they celebrate and gradually become more vocal, loudly celebrating the end of villainy. That’s what’s happened as we see the specter of Chicago Tribune editor Gerry Kern filing a workplace harassment complaint after Lee Abrams’ racy e-mail antics, then following up with editorials condemning the former owners for what they’ve done to the Trib.  Throughout the Sam Zell melodrama, we’ve tended to forget that the Tribune company still houses many decent folk, good journalists yearning to breathe free. The last week was a reminder of that; let’s hope it’s not Prague spring. How long will it take for Sam Zell’s clown car to empty out?

4) Isn’t the Seattle Times/KING TV newly announced ad network a smart, regional ad play?

The Times has built out a good local, blog network, but hasn’t monetized it — for itself or its blog partners — well. The intention of the new Times/KING-TV network is to do that, and more. At best, it combines the best of ad selling smarts know-how, print, TV and online, and recognizes how community blogs are additive, both to audience development and to revenue. The keys, in Seattle and elsewhere: connect up the bigger network to state-of-the art targeting tools and analytics.

The fruits of these networks may be small pickins’ at the beginning, but over time, they offer newfound abilities to geo-target on a massive scale, and to sell a range of marketing services, not just space or time.

5) Is there a new 10% for engagement philosophy emerging? Steve Buttry’s TBD engagement staff numbers four five, more than 10% of its staff. California Watch, the one-year investigative start-up, counts two among its more than a dozen staffers. The big notion: look for ways to actively engage readers — California Watch’s recent lead-in-toys testing clinic is a good example — and not as an after-thought, but as part of the journalism. It’s an old concept — the seeds of Jay Rosen’s “public journalism” of the ’90s made digitally new. Dailies have been many engagement forays, here and there. The interesting thing is whether an engagement tithing ratio emerges in the new world.

6) With the latest circulation reports showing another 5% drop in daily, isn’t the next shoe to drop the impact of the iPad and its Android cousins on those numbers in 2011? There will be lots of tablets under the Christmas tree this season. Expect to see further flight from print among those tablet news readers. News publishers would love to sell readers subscriptions for tablet access, and we see the national players like the Journal and the Times positioning themselves well to do that. Yet, there are a couple of big obstacles. The first is how and how well Apple and other players will let publishers interact directly with those print customers — commerce, data, pricing and more. The word in the industry: Apple’s announcement of its terms of engagement is imminent. The second, big issue for non-national daily publishers; creating and sustaining a tablet product that’s worthy of the medium and one that readers will feel is fair to pay for.

Those circ reports point to a new issue; circulation revenue is headed south, down in single digits across the industry. It had been headed north, unevenly, over the last couple of year. That’s because the pricing up of print subscriptions and single copies more than made up for the loss in numbers of copies sold. That’s no longer true, marking the year as one in which both circulation revenue and advertising revenue are in decline.

7) Will the cats of newspaper industry be successfully herded? After pouring millions into his Alesia project, Rupert Murdoch gave the retreat order to his would-be Roman warriors, killing the tablet-oriented paid news portal initiative. Though his News Corp is the biggest news company in the world, it still a little less than six percent of the business, by revenue. News is among the most splintered of industries, and that makes getting a critical mass of news suppliers agreed on anything quite difficult. Next up in the effort is the AP-led “rights consortium.” As much as it is an assertion of rights, it is as much about a new drive to capture significant sums of new revenue through smarter application of content-tracking technology. Expect the consortium or new company to go forward by December with double-digit funding in the millions. Of course, News Corp is unlikely to play, while the New York Times and Gannett may chart their own separate paths. Finally, NAA (Newspaper Association of America) task forces have been meeting to try to get industry consensus in two areas:  1) mobile formatting and ad standards; and 2) e-preprints, trying to transition that Sunday circular revenue online.

8.0) Speaking of Apple, and Amazon, where will the feds surface as the new news marketplaces take shape? While publishers wait for the white smoke to waft from Cupertino on Apple’s “offer” for news subscriptions, we’ve got to wonder if and how the “we-want-to-help,” newly activist federal agencies will act. The FTC, the FCC and the Department of Justice all have shown concerns about concentrations of power around commerce and news, and about the lessening supply line of news itself.  In that both Apple and Amazon, each with a huge installed customer base, can exercise a new chokehold over news commerce, we may see new inquiries.

9) Won’t we recall the New York Times local news partnerships as one of the most noteworthy initiatives of 2010? The Times finally inked its deal with Texas Tribune, and that gives it new marketing in the biggest cities of America’s second biggest state. Add in the Bay Area (Bay Citizen) and Chicago (Chicago News Cooperative), with plans to sign more deals in 2011, and you can see the big city, big brother strategy assuming a significant footprint. At its current output – three+ pages of print news a week in each market – it offers only a patina of regional coverage. It’s foundational, though, setting into motion a business that boosts print advertising and circulation revenue, digital potential and feeds regional journalists and journalism.

Imagine tablet products, for instance, that are both national and local (the New York Times’ Press Engine tablet platform should enable that) and imagine new partners from local daily papers to public radio stations to new start-ups. The Times isn’t the only one in this game: Reuters, the Wall Street Journal, Bloomberg and even Comcast Sports and are all moving forward with various local partnership products, as the new national/local news business gets re-knit together.

In LA, the Times has drawn criticism for lending its nameplate to advertisers while in Washington, the Post lost a blogger who violated its uncertain guidelines. Welcome to the new pressures — and opportunities — of news brand management.

Important Details: For centuries, newspapers have acted on their birthright to call out the excesses, foibles and miscues of government. In Los Angeles last week, the tables were turned.

All five members of the Los Angeles County Board of Supervisors  formally censured the Los Angeles Times for running a four-page ad for Universal Studio’s King Kong attraction, an ad section that carried the nameplate of the Times across its front and wrapped around the Times’ LATExtra, the newspaper’s breaking news section.  The elected officials’ protest letter was addressed to Sam Zell, chairman of the Tribune Company, which is now in its 17th month of bankruptcy, with a vote by creditors on the latest reorganization plan due on August 6th.

The protest letter didn’t mince words, urging the Times “stop selling its front pages to advertisers, especially in such an offensive and alarming manner. The cost of this distasteful practice to the people of Los Angeles County is far greater than any short-term gains by the Tribune Company….Today’s mock section makes a mockery of the paper’s mission.”

Times Publisher Eddy Hartenstein responded by article the evening of the protest, saying, “The Universal Studios Hollywood ad wrapping Thursday’s LATExtra section met our advertising guidelines, including a large, red ‘advertisement’ notification on top of the page.  Our readers understand the ad-supported economic model of our business, which allows us to provide the outstanding journalism they rely upon 24/7.”

Meanwhile, across the country, the Washington Post struggled with a brand problem of a different kind, as editor Marcus Brauchli quickly accepted the resignation of Dave Weigel, a Post staff blogger of three month’s tenure, whose private online comments about some members of the country’s conservative movement — the beat he’d covered for the Post — became public.

Post ombudsman Andrew Alexander, after talking to a number of staffers at the Post, concluded that standards were vague: “Like readers, some in The Post’s newsroom are perplexed. Internal guidelines say reporters should not “offer personal opinions on a blog in a way that would not be acceptable in the newspaper.” But they also are encouraged to blog with attitude and “voice,” which seems incompatible with neutrality”.

Implications: Welcome to brand management — quite unfamiliar terrain traditionally for newspaper companies — in the age of blurring boundaries. Many large companies consciously focus on brand management, its protection, its meaning and its extension as a key part of business strategy and operations. For newspaper companies, it’s traditionally been more of an unexamined given. The brand, exemplified by that old Black Letter type nameplate, has implied a commitment to public and community service, to being fair, to getting it right, and avoiding any perception of influence by the powerful, whether public official, company CEO or advertiser.

That long-standing position is now threatened by several forces, and Outsell believes the news industry’s mettle is being tested, as it is forced to address what news brands really mean in the digital age.

When the Fourth Estate is criticized by one of the first three, it’s a reversal of form, one made possible by the declining financial and political clout of newspapers, particularly metro newspapers. Weakened, newspapers both leave themselves open to attack — and to doing foolish things that trifle with the continuing value of their legendary brands. The LA Times, back to the Staples Center ad debacle of 1999 through the innovative ups and downs of the Zell era, has seen more than its share of controversy, but it’s far from alone. All newspaper companies face unprecedented pressures to blur the lines, as ad revenue becomes harder and harder to get.

Outsell believes that in the coming digital decade, news brand management will become more important than ever. Since the internet age dawned, news publishers have thought of the print product and the dot.com. Now in the age of the smartphone, iPad and TVs becoming monitors, those news brands that endure and prosper will be ones that master ubiquity. That means that those brands, merrily crossing and re-crossing platforms, become even more important identifiers, stamps of recognition — and one would hope, trust — as digital ubiquity both complicates and simplifies our information worlds.

Finally, Outsell believes that the re-envisioning of news brand is essential. Take the Post’s contretemps. The Post’s instinct in hiring Weigel to bring a fresh voice to conservative movement coverage was on the money. It extended the Post’s franchise, putting more valuable-to-the-reader content under its brand. In its seemingly contradictory directions to its staff, the Post displayed its uncertain footing in the new terrain, an uncertainty shared almost universally in the trade. As Kate Phillips pointed out in a New York Time blog post, Weigel could have gotten a lesser penalty and continued to add value to the Post. Instead, faced with an affront to its credibility, the Post made an either/or decision and his work was gone.

There is a middle way, and it is fast emerging among newspaper companies. It’s the big tent approach to amassing more valuable-to-readers content under a community news brand — and at lower cost. Down the street from the Post, its new competition, TBD.com, formally launching in the fall, has already signed up 82 local blogs for its TBD Community Network, and daily newspaper brethren from the Seattle Times to the Miami Herald to several Hearst papers are taking a similar approach. It’s possible to aggregate lots of useful news and opinion content, at pricepoints from low to high, and let readers know that the content is coming from partner sites — not from the newspaper itself. Readers are smart, and with a clear news site disclosure, they’ll be more flexible about differing standards of staff and non-staff content.

The Washington Post Company has been much in the news recently, but not because of its flagship paper. It’s making news around its other holdings. It has shed Newsweek, staunching a $30 million annual bleed. More importantly to the company’s finances, its Kaplan “subsidiary” has been much in the spotlight, under investigation by the feds, along with other for-profit educators, for fraud around student loans.  Those inquiries have rocked The Washington Post Co.’s share price, sending it to a year-to-date low.

The Post’s case has also refocused public attention on how much the company is dependent on Kaplan revenues. Those revenues now amount to 62 percent of revenues, and 67 percent of profits. It became clear to even those who hadn’t been watching closely that the Post was more an education company than a newspaper one, though the family ownership of the Grahams clearly intend to use that positioning to protect and sustain the flagship paper.

The Post case is not an isolated one. Fewer news companies are, well, “news” companies in the way we used to think of them. More news operations find themselves within larger enterprises these days, and I believe that will be a continuing trend. It could be good for journalism — buffering news operations in times of changing business models — or it could be bad for journalism, as companies whose values don’t include the “without fear or favor” gene increasingly house journalists. That push and pull will play out dramatically over the next five years.

Let’s look, though, at the changing newsonomics of the companies that own large news enterprises.

Here’s a chart of selected companies, showing what approximate (revenue definitions vary significantly company to company) percentage of their overall annual revenues are derived from news:

News Corp.: 19 percent (newspapers and information services); 31 percent (newspapers and broadcast)
Gannett: 94.3 percent (newspapers and broadcast)
New York Times: 93 percent (newspapers and broadcast)
Washington Post: 21 percent (newspapers and broadcast)
Thomson Reuters: 2.3 percent (Media segment)
Bloomberg: <15 percent (non-terminal media businesses)
AP: 100 percent (newspapers and broadcast)
McClatchy: 100 percent (newspapers and broadcast)
Disney (ABC News): <14 percent (broadcast)
Guardian Media Group: 46 percent (newspapers)

The non-news revenues may be a surprise, but here’s one further fact to ponder: News, over the past several years, has continued to decline in its percentage contribution to most diversified companies. Given all the trends we know, it will continue to do so. Movies, cable, satellite, and even broadcasting all have challenges, structural and cyclical, but overall are all doing better than print and text revenues.

News Corp., the largest company by news revenue in the world with publications on three continents, is a great example. After all, although it is eponymously named, it is not really a “news company.” With only one in five of its overall dollars coming directly from traditional news, it’s much more dependent on the success of the latest Ben Stiller comedy or the fortunes of a blockbuster than on the digital advertising growth of The Wall Street Journal or the paid-content successes — or failures — of The Times of London. These matter, of course, but let’s consider the context.

In February, I wrote about the “Avatar Advantage” that News Corp.’s Wall Street Journal held in its increasingly head-to-head battle with The New York Times. At that point, Avatar had brought in $2 billion in gross receipts for News Corp., whose 20th Century Fox produced and distributed the movie. Now that number has grown by $750 million, to $2.75 billion in total. News Corp. shares that revenue with lots of hands, but what it keeps will make an impressive difference to its bottom line — and to what it can pour into The Wall Street Journal, as CEO Rupert Murdoch desires.

Compare that financial flexibility with the Times, and it’s night and day. The Times Co.’s total 2009 revenues: $2.4 billion, less than Avatar itself has produced. The Times is all but a newspaper pure play, deriving about 5.5 percent of its revenue from non-news Internet businesses, like About.com, after shedding TV and radio stations and its share of the Boston Red Sox.

It may be a one-of-a-kind pure play, in that it is the leading standalone news site and reaches vast audiences globally. Yet its pure-play nature can feel like a noose, which was tightening in the depth of the recession and only feels a lot looser now. The Times’ planned paid-content metering system, for instance, is a nervous-making strategy for a company with relatively little margin of error. Compare that to the revenue trajectories that News Corp.’s London papers may see after their paywalls have been in place for a year. Whatever the results, they’ll have de minimis impact to News Corp. fortunes.

Likewise, McClatchy — another newspaper pure play, like MediaNews, A.H. Belo, Lee, and a few others — is now betting wholly on newspapers and their torturous transition to digital.

While Gannett is heavily dependent on print newspapers, in the U.S. and UK, it has been benefited by the 13 percent of its revenues that come from broadcast. Broadcast revenues — buoyed by Olympics and election-year advertising — were up 18.6 percent for the first half of 2010, while newspapers were down 6.5 percent for Gannett. Broadcast may be a largely mature medium, too, but for the print news companies that haven’t jettisoned properties gained in an earlier foray into broadcast diversification, it has provided some balm. In addition to Gannett, Tribune,  MediaGeneral and Scripps are among those holding on to broadcast properties.

For the bigger companies, the consequences are more nuanced. I call these large, now globally oriented (in news coverage, in audience reach and, coming, in advertising sales) The Digital Dozen, twelve-plus companies that are trying to harness the real scale value of digital distribution.

The Digital Dozen’s Thomson Reuters is a great example. Until 2007, Reuters was a standalone, a 160-year-old information and news services company news service struggling with its own business models in this changing world. Its three-year old merger with financial services giant Thomson now provides a greater insulation of its news operations, even as those operations contribute less than a tenth of TR’s annual revenue. That kind of insulation can be a good thing, both as TR figures out how to better synergize its news and business lines (a complex work-in-progress) and to allow investment in news products and staffing, [clarification added] even as news revenues find tough sledding. Meanwhile, its main competitor, AP, may have a strong commercial business (broadcast and print) worldwide — but it’s a news business, with no other revenue lines to provide breathing room.

National broadcast news, too, has seen rapid change, and much staff reduction in the past few years. GE, one behemoth of a diversified company, is turning over the NBC News operation to another giant, Comcast. ABC News is found within the major entertainment conglomerate Disney.

Meanwhile, Bloomberg — getting more than eight out of 10 of its dollars via the terminal rental business — is moving aggressively to build a greater news brand; witness the Business Week acquisition, and its push into government news coverage, formally announcing the hiring of 100 journalists for its Bloomberg Government new business unit. Non-news revenue — largely meaning non-advertising dependence — is what may increasingly separate “news” companies going forward. So we see the Guardian Media Group selling off its regional newspapers to focus, as its annual report proudly announces, on “a strong portfolio [of non-news companies and investments] to support our journalism.]

Journalism must be fed — but inky hands will be doing less and less of the feeding.

It’s easy to get lost in the current era of Big Man in Town Journalism. Zell. Singleton, Murdoch. Tierney. Harte. So much of the recent drama in newspaper ownership change has been driven by personality, as keep-it-in-road, rationale profit-seeking companies turn up their noses at the prospects of buying newspaper companies. It takes an outsized ego, an outsized wallet (your own maybe, but preferably someone else’s) and a perhaps outlandish optimism to grab onto the horns of the bull and take off for a wild ride.

One current installment of that drama is playing out in Long Island, home of once-proud Newsday, a paper that innovated ahead of its day and then saw its fortunes cascade through the Times Mirror and Tribune funhouses. As Sam Zell stares down his first balloon debt payment, Newsday’s hit the block, and an unusually crowded one it is. Isn’t it great to see a bidding war for a newspaper company? It is highly enjoyable, if unique to market circumstance. With Murdoch’s Post and Mort Zuckerman’s New York Daily News in lethal competition, both have a hard time imagining the other getting Newsday and using it as cudgel in the war.

The weapon for each in that case is, of course, cost reduction — a relentless streaming of cost in all departments — ad, circ, production and printing and finance, not to speak of how newsroom synergies might be achieved. It’s the other bidder in this case — currently the high one — that I think paints a more interesting picture of what the local “press” may become.

Cablevision (CVC) has offered $70 million more than either Mort or Rupert, currently at $650 million, $150 million above its original offer. With Rupert and Sam increasingly better buddies (formally on AP board and informally, we can only guess), I would have put my money on that deal (and agree with Alan Mutter’s notion of a potential Murdoch/Zell endgame, here). But $70 million is quite a differential, and for now, Rupert is saying he isn’t going up. Further the potential of FCC review of his increasingly entangling NYC-area cross-ownership (the Post, WWOR-TV and WNYW-TV, Dow Jones and Newsday) would at least slow down and bring uncertainty to the deal. Sam Zell’s bankers don’t like uncertainty.

So that may leave us with a new attempt at….synergy. In fact, it could turn the emergent idea of Triple Play — TV cable service, Internet service, local phone service — into a Home Run, adding “newspaper” to the diamond.

In this new synergistic interpretation, we’d observe what new owners would see as complementary in combining Cable News — including News12 Interactive.com (its cringe-worthy tagline — “only in cable not on phone company tv or anywhere else”; you need a password to get in unless you are a local cable subscriber) — with Newsday. It’s been done before you say, and you’re right. In fact, Cablevision and Newsday themselves jointly produced a one-hour cable news program years ago. But it was too early and didn’t pencil out. It’s been done elsewhere as well, with mixed results.

What’s changing now, I think, is that the time is coming back around to do it right and to make it pay. Is it a “TV-centric” time, as someone close to the Dolan family, who control Cablevision, said? TV-centric misses the point. It’s more video-forward than TV-centric. News video is now here to stay. More than half of the US population has watched video within the last month; already in Britain, that number is now more than 90%. We’re getting used to seeing video first, on our time, time-shifted, Apple TV-enabled, and through the Internet. The much-maligned pre-rolls and their children, “in-video” ads, are still highly sought after and fetching $25-35 CPMs, on average. We do like to watch.

Look at most newspaper sites, and you see dabbling. The AP Online Video Network is so far populated on about 1800 sites, newspaper and broadcast. On too many, though, it’s relegated downpage, and seems like an after-thought.

So what happens, in this new, coming age of convergence — in which easily watchable video marries quick-read text and always-on opinion — if you combine the resources of a Newsday and a Cablevision, which, too, counts hundreds of journalists in its newsrooms that span from northern New Jersey to southern Connecticut.

There’s no doubt that web newsies want the best coverage in one place — words and pictures. There’s no doubt that if some bright-eyed market entrant were to start a news-gathering and ad-selling operation, she’d do it as a single operation, not as separate “TV” and “newspaper” businesses.

That of course is the challenge of synergy. Combining existing staffs and hierarchies, with their skills and skills deficits, is in reality much harder than a white-board exercise. But someone is going to make it work, and Cablevision may be the next to try.

What does synergy mean?

I called Phil Balboni, the man who created New England Cable News, a Cablevision-like operation. Balboni, who has won accolades for his operation, recently left NECN to found Global News Ventures, an international news start-up to watch.

I think Cablevision and Newsday make a fit here… Video can populate the Newsday website. There is a substantial upside. It stresses the overall proposition that Cablevision has invested in the community.

My sense is that there is lots of potential around putting a strong local newspaper together with local cable news. Balboni ranks those synergies in this order:

1. Joint ad sales.
2. Synergistic news-gathering and production.
3. Monetizing cable-produced news video through Newsday’s site.

There is lots for newspaper people to chew over in this kind of deal. Adding the Dolans to the Zells, Singletons, Murdochs and Tierneys brings with it all the same concerns about what Big Man in Town journalism looks like. The Dolans have been true cable innovators in New York and have also been much in the news themselves for years, as they’ve bought into local sports franchises (Knicks, Rangers, Madison Square Garden) and tried to lead a management buyout of their public company.

For newspeople though — wondering whether a newspaperman like Murdoch or a swaggering non-news outsider like Zell — it’s just one conundrum on a long list. Who’s going to come up with a formula to save a critical mass of journalism jobs and right the sinking ship?

1) With Clay Shirky and Nick Carr duking it out (“Does the Internet Make Your Smarter or Dumber“) in the Wall Street Journal, isn’t it the right thing for both of them to do to donate their brains to science? Not immediately, of course, but down the digital road.

2) Are print newspapers better understanding the aging niche they serve? Breaking news today from L.A. Times publicity: “L.A. Times to Bring Back its TV Guide.” Back from the dead of 2007, one of many TV tabs to meet its demise, the new one will be punched up, up to 44 pages from 28, and replete with 24-hour daily grid listings, puzzles galore, and a dedicated sports programming page. Hard to imagine anyone under 30 (40?) using a TV tab instead of the cable guide. Next up: LARGE print TV tabs — and obits.

3) Who will be first through door #3? We’ve now seen a return to small profitability at newspaper companies, while YOY revenues continue to disappoint. Yes, the rate of loss is slowing, but they are still losing revenue, unlike other media. So the cutting isn’t yet over. And these companies, which must remain profitable to satisfy new owners and more-vigilant lenders, have three choices of what to do with any positive cash flowing. #1 Pay down debt. Big issue for those (other than Belo and Scripps, which emerged debtless as their companies divided) companies who know that the tough road ahead simply won’t sustain much debt service. #2 Increase profit. Yes, no one’s really happy to be in single digits. #3 Invest in product. That’s a tough one, given the pressures of debt and profit. One big question here: Will they invest in the next generation of mobile products, and the different skill sets necessary to create and produce them?

4) How patient will the Angelo Gordons, the new lords of publishing, be? They like the return to profitability, but are deeply concerned about those bad 2009 comparisons. (Newspaper overall advertising was down 9.7%, with online advertising showing growth of 4.9%, a little less than overall online ad growth.) Question they are asking: Is there a sustainable, profitable future here, future meaning 2-5 years, and, so far, they are unsure of the answer.

5) Are we beginning to see the Last Man Standing strategy play out in the U.S.’s biggest cities? The New York Times is planning on building out 10-15 regional editions, on the model of its Chicago (partnered with the Chicago News Cooperative) and Bay Area (partnered with Bay Area Citizen) models. Now the Wall Street Journal is renewing its previously announced regional forays, into Chicago, L.A. and perhaps other places. WSJ CEO Les Hinton noted this week that “we’ve done focus groups and see a growing antipathy among high-end readers, towards what’s happened to their local newspapers.” One publisher’s nightmare is another’s opportunity.

I call this the Last Man Standing strategy, with the Times and the Journal parsing out national/local, print/digital editions — and learning how to sell targeted local ads better. We may well be headed into a world where those with the newsprint habit will maintain their habit, but like a smoker, cut down on it. So, get one print edition delivered, which at least seems to cover national and local, rather than two. Greener solution, and one that the iPad Era will probably hasten. That new world could include some print at the top — Journal and Times — and at the bottom, my smaller community daily or weekly.

6) When will most dailies create reasonable iPad editions? The big guys have jumped ahead — once again (my piece over at Nieman explores the topic more thoroughly, “The Newsonomics of tablet ad readiness,”) , but regional newspaper companies may get into the fray before the end of year. Verve Wireless has been the main go-to company for dailies going up on the smartphone. Verve tells me that it’s recently added the Blackberry to its iPhone application, and is now moving on to Android. Then: iPad. So, with the ability to save on centralized tech development, some companies may be waiting on Verve. Big question: How good will the Verve product be?

7) How much of your news site’s traffic is coming from social media? At Netgain, 2010, Scribd’s Tammy Nam said that the site was now deriving 50% of its traffic from social network sites. Now that’s a lot higher than news sites, which tell me they’ve seen anywhere from five to 20% of their traffic coming from Facebook, Twitter and others. Social Media Optimization is something all sites now need to focus on.

In the crazy-quilt world of new syndication, might we see the Los Angeles Times re-join its erstwhile partner the Washington Post in a new combo with surging Bloomberg, East Coast, West Coast, and all around the business world? The Times has never been comfortable, pre- or post-Zell as part of the Tribune empire, and bankruptcy (if ever resolved) may lead to its exit.

9) Won’t iPad revenue be an unexpected growth line for some publishers in 2010? A handful of news companies got out of the starting gate quickly, including Reuters with three beginning apps. Reuters’ Alisa Bowen, senior vice president and head of consumer publishing, tells me that she expects “that advertising on the iPad will grow to 50% of our total mobile ad revenue before the end of the year.  This is 50% based on dollar value, not number of campaigns or impressions, obviously, so we are seeing not only a rapid growth, but an impressive yield for the premium user experience.” Curiously, Reuters is also seeing good traffic from iPad browsers, not just its apps: “We’ve seen some very stunning analysis in recent days about the web browsing traffic on iPads, which is ramping at a substantial pace.”

Dean Singleton bit the bitter bullet last week. After
staving off bankruptcy for all of 2009, telling MediaNews execs that the
company would not need to take that route, the company succumbed. MediaNews
is following Morris into bankruptcy, both taking the neater, pre-packaged route,
allowing quicker movement through the courts and, importantly, a continuity of
leadership.

Put together the long list of bankruptcies – Star-Tribune,
Tribune, Philadelphia Media Holdings, Journal Register, Sun-Times Group, Freedom,
Morris, MediaNews and some smaller ones – and you’ve got quite a chunk of
America’s dailies. With MediaNews – publisher of 55 dailies – joining the
second-largest US news publisher Tribune, industry guesses now turn to whether Lee, McClatchy
and Gannett can get to the other side, without a game board stop on the banko square.
 

That other side, of course, is murky itself, but expect it
to include more newspaper combos. Singleton, just as he was about to wheel his
hard-built company into court, told the Wall Street Journal that he wanted to
be the “aggressor” in the merger of newspaper properties. That’s an unlikely
statement from most CEOs taking their companies into bankruptcies, but it’s
pure Singleton irrepressibility [Excellent piece
by MediaNews alum Martin Langeveld on MediaNews’ spirited 25-year rise at
Nieman Lab]. After all, he and MediaNews president Jody Lodovic are set to
emerge from the bankruptcy maintaining their management of the company (through a special class of stock) and with a 20% ownership stake, as other equity shareholders
– including now-estranged, ex-partner Hearst, Skiffing off in its own direction, get nothing.

So imagine:

• In the Twin Cities, the bankers who now own the
  Star Tribune decide to throw in their lot with Dean. After all, he’s a
  newspaper guy, and they’re not. Sure they’ve hired
  a new publisher with intriguing cred, but do they really have the appetite for
  a long-term turnaround?
• In L.A., Tribune’s soon-to-be-owners similarly
  may have little interest in staying the course. Maybe a L.A. combination, involving the Times around
  lowered-cost, higher-efficiency publishing  – Singleton’s once and future trademark – is the way to go.

Anti-Trust, you say. Dean can find good attorneys to make
the case that it’s hard to see how bankrupt entities can dominate a
market! 

For most of these companies, bankruptcy is just a re-set, a
way of buying some more time, as new managers or old ones try to come up with a
new strategy. Most of these companies bet on the come, taking on big debt, at
what turned out to be an imprudent time. Sure, Sam Zell’s move was laughable on
the face of it.  The well-meaning
Philly and Twin Cities gambits were both cases of misunderstanding the bargains
the marketplace offered up. These weren’t distressed properties in a good
industry; they were distressed properties in a distressed and distressing
industry. For all, large debt is now seen as the anchor holding them back from a
fresh start.

The economics are fairly straightforward.

Recall a year ago when company after company had fallen into
a recession-ravaged operating unprofitability? Major staff, newsprint and
operating cost-cutting, and the easing of recession, got them back into the black,
month-to-month, many barely so. Yet debt service, once made possible by good
cash flows from existing and newly acquired properties, has become a major
barrier. Going-forward, within the new reality of the print-based news
business, it’s proven widely unsustainable to both maintain a large enough
business presence and pay off the debt. MediaNews will emerge with $165M in
debt, one-sixth of what it had on the books in December, producing a debt service
that seems much more doable.  So,
even in 2010, the bankruptcies continue.

Given the harrowing last year publishers experienced – a
fifth of their business has disappeared in a single year, with little
likelihood of much of it coming back – 2010 feels
a bit better than 2009. Yes, it’s hard to know how accurate the feeling is.

Yes, this could be a plateau. Knocked down a couple of
notches, but standing tall on solid ground, dailies could move forward. Or it
could feel like a safe plateau and really be a ledge, a landing place offering
temporary comfort.

That’s the vantage point, partly obscured by rock and clouds
(the last visibility on budgeting was sighted around 2005, I think) as dailies
make a slew of vital decisions that will determine their fate. Call it the Fog of Media War. There’s precious
little wiggle room left, as publishers make such fundamental calls as:

• Erect a paid content wall or not;
• Bet on the tablet as the saving grace of the
  time, and decide what that bet means they have to do;
• Throw in their lot deeper with the winners of
  the first-round news and ad aggregation, Google and Yahoo, or play them off
  against the Apples, Sonys, Comcasts, Bloombergs and others making next-round
  digital business moves;
• Consort with Journalism Online, or Skiff, or
  Microsoft, and/or re-direct the original consortium, AP
• Re-consider the basics, and economics, of
  content creation, as AOL-Demand-Helium-Associated Content-Examiner models upend
  long-established notions of professional journalism creation.
  

As 2010 rolls out, that’s just the top of my list of the
real decisions that are in front of daily execs, in or out of bankruptcy. Tough
decisions, and ones better assessed from a broad Far West plateau on a
cloudless day, than on a ledge in the thick of a passing storm that’s left many
clouds on the horizon.