What Are They Thinking? Jim Moroney’s Digital-Reaching Dallas Morning News
Jim Moroney’s newspaper once dominated Dallas as only a monopoly daily can. After beating its rival Dallas Times Herald, then a Times-Mirror–owned property, to a bloody pulp, forcing the paper’s closing in 1991, The Dallas Morning News was the kind of paper that threw off tens of millions in profits. The paper had a swagger built for Texas. Its journalism was muscular and ambitious, its newsroom staff of 600 considered top drawer. In 1999, The Columbia Journalism Review put the Morning News in distinguished company, naming it among the top five dailies in the country, alongside The New York Times, The Wall Street Journal, The Los Angeles Times and The Washington Post.
Its parent company, the family-dominated A.H. Belo, smartly invested in local TV, beginning in 1950 and building in the ’80s and ’90s, eventually owning a network of 20 stations across the U.S., and made a few far-flung newspaper purchases, in Riverside and in Providence.
Today, A.H. Belo is back down to being the Dallas-centric company it was at birth in 1885. After splitting its TV stations from its papers in 2008, it smartly sold off the Belo TV group to Gannett last year, for $1.5 billion. Over the last 12 months, it convinced erstwhile Orange County Register publisher Aaron Kushner to scrape together $27.2 million of other people’s money to buy the Riverside Press Enterprise and the new Fortress Investment-backed New Media/Gatehouse chain to buy The Providence Journal for $46 million.
Today, the Morning News’ strut, though much reduced, still has a small skip in it. And the reason is a series of start-up investments and strategic acquisitions the company believes will leverage its core business—convening an audience, and selling that audience to companies that need to reach them—to create new (digital) revenue streams.
Publisher Jim Moroney is one of the few top newspaper executives publicly painting an optimistic picture of the future of his company. He’s the first to tell you that he doesn’t yet have the business survival plan for metro newspapers figured out. Yet, his belief in the power of deep, experienced local news is unwavering. Testament to that: the Morning News newsroom still counts about 300 among its staff. Sure, that’s down from a height of about 600, butit still ranks among the few robust newsrooms in the country. Moroney’s quest: conserve that capacity amid the battering of unending disruption.
Moroney—believing that it’s journalistic content that is the heart of the current and futurebusiness—has protected that newsroom far better than most metro owners. In San Jose, the once-proud Mercury News, which topped at more than 400 journalists, is down to about 100. In Orlando, it’s down to 125 from a top of 350, as successions of Tribune management have wielded the knife and new Tribune C.E.O. Jack Griffin tries to re-energize the cauterized company.
In Dallas, Jim Moroney is madly investing in the digital future. He bought three small local firms just since the first of the year, all digital marketing companies. That makes eight companies, in total, that he’s bought or started up in the last three years, all built to attract local merchant dollars.
Acknowledging that his vision is still only hazily in focus, Jim Moroney offers one of the frankest assessments of today’s local newspaper company status. It is one that informs the whole newspaper landscape and such deals as the imminent big sale of Digital First Media’s 75 daily newspapers, possibly to one of two big private equity companies.
“When I talk to people in the industry, they talk about revenues flattening out,” he told me recently. “I ask them who believes you are going to be able to grow paid print, other than with massive discounts. They all accept the notion that print—the number of copies you sell is going down, whatever that rate, it is just going down.
“If that’s true, then basically everything that is driven off that print volume, is in some kind of decline.”
Moroney’s analysis is as straightforward as his Texas drawl. Anyone can tell you print advertising is in an apparent death spiral (having dropped about eight percent per year for metros for each of the last three years, with a forecast of the same for 2015). Moroney smartly puts it in a wider context: It’s not print advertising that’s the problem. It’s everything to do with print.
When Moroney talks about the problem of the print-centric local news(paper) company, he readily ticks off the dependencies:
· Print advertising, accounting for half or a little less of total income;
· Sunday preprints, that package of Macy’s to Best Buy circulars stuffed into the paper. They’ve held up relatively well, but advertisers continue to cut back the number they place in Sunday papers.
· The Sunday supplement. USA Weekend just shut its door, after absorbing almost $30 million in losses over the last three years, leaving 600 papers without it. Parade, its sibling, just cut back the number of its copies to 22 million from 32 million. Lost in the shuffle: those magazines’ payments to newspapers for carriage.
· Subscriber revenue. The audience is moving digital and the truth is that the print-only reader is a segment in inevitable decline. It may last a long time, as Baby Boomer-preferring print readers live on, but Moroney notes, “volume is hurt finally by pricing.” In other words, the small single-digit increases in price-raised circulation revenue seem to be already ebbing away, and circulation revenue could again turn negative, year over year.
· Even the innovation in-sourcing strategies of publishers like the Morning News, the Minneapolis Star Tribune and Advance’s Oregonian take hits as print declines universally. In the Dallas-Fort Worth Metroplex, the Morning News took over much of the printing, production and distribution work of the McClatchy-owned Fort Worth Star Telegram three yearsago. The Star-Telegram saved money by outsourcing; the Morning News made money by in-sourcing. The print decline effect here: as the Star-Telegram’s print circ winds down, so does the Morning News’ in-sourcing revenue, which is based on volume.
How big a problem is this overall print decline?
Let’s consider the mountain of change still ahead of the Morning News’ digital transformation. Today, with all its investment and digital focus, it can count only 12 percent of its total revenue as being digital; 20 percent of all its ad revenue is digital. Fully 88 percent of the Morning News’ revenue is tied to print—and it’s a digital leader.
Add it all up, and it’s a once-in-a-lifetime Kahuna wave from print to digital, its reach and impact near total, though playing out over years.
Which brings Moroney to his major point, one that, unbelievably, is contrarian in age when too many daily publishers’ major strategy is managing decline.
“How do you deal with all of that, to create a sustainable business model? You have to have growth.”
It’s a message he keeps on trying to get across, as he talks to his peers, who live in an industry that largely hasn’t seen revenue growth since 2007. It’s about finding up in a long-down world (“The Newspaper Industry $1.4 Billion Money Hole?”)
“As an industry, we’ve got barrels of whoop ass left,” he optimistically told his skeptical peers at the sedate non-whoop-ass-inclined Newspaper Association of America annual conference two years ago. Unlike many of those peers, he’s been out there whooping ass, launching three new marketing companies and buying those five local marketing-oriented ones, as well. The goal: get digital much faster.
That future is all about the serving the tens of thousands of merchants in the Dallas-Fort Worth area better. “It’s all about selling marketing messages— which we sold for so long so profitably through a single channel, the paper—through more channels of marketing.”
“Marketing services” is the name for this sales initiative, and we can see it playing out in newspaper companies from Gannett to Tribune to fast-growing New Media Investment Group. His Dallas-centric initiative, though, appears to be the most ambitious in the country.
Moroney’s short-hand explanation of marketing services is asking business owners: “Would you like fries with that shake?”
It’s the menu offered merchants on which Moroney has been focused, as he’s started up, bought and integrated businesses. Speakeasy notably works the metro terrain of social and content marketing, while CrowdSource applies the strengths of the Morning News to the area events business. The newer acquisitions—in marketing automation, search engine marketing and digital optimization—further fill out the portfolio.
Significantly, Moroney hasn’t yet found a congenial digital reader revenue strategy. He’s whiffed twice at that, and says he’ll take a third swing there at some point.
Moroney is trying to do everything he can to get digital faster. When longtime editor Bob Mong recently decided to retire, the Morning News hired its editor from outside its newsroom for the first time in 35 years. New editor Mike Wilson is a newspaper guy, with 30 years of experience, including a managing editor job at the Tampa Bay Times, but significantly spent the last year of his career starting up Nate Silver’s FiveThirtyEight launch at ESPN.
In the end, Moroney’s quest may seem quixotic, against long odds. Maybe it’s a Texas thing, or maybe it’s a family thing; James Moroney III is the great-grandson of Belo builder George Dealey. His family company once generated annual profits as high as $178 million in 1999. Compare that to the Belo’s latest results, through 2014’s third quarter: $2.3 million in profits from continuing operations. That’s indeed humbling, but it may not be the end of this Texas tale.
First published at Capital New York
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