New Hollywood Sequel: Aaron Kushner's L.A. Register
Why, I asked, Aaron Kushner, is he announcing the new L.A. Register as we’re winding down toward the end of the year? Given that the big questions about it — when will it launch, how will it be staffed — are as yet unannounced, why put the news out now?
“We were ready to do it.”
In the 17 months since Kushner bought the Orange County Register, he has defied the rest of the industry’s strategy. While almost everyone else has retrenched, he’s expanded. First, he multiplied the size of his newsroom and his print products in home Orange County. In July, he announced the Long Beach Register, moving into a city of a near half-million, adjacent to the Register’s home territory. Then, earlier this month, he closed on the acquisition of the Riverside Press-Enterprise, buying the struggling paper from A.H. Belo for $27.2M.
Mouths were flapping at all of the activity, and wider questions about the depth of Aaron Kushner’s pockets, and his ability to stay the course on what is self-acknowledged to be a long-time strategy.
Those mouths are now agape.
Yesterday, Kushner told his Santa Ana-based troops to pack light. The Register was moving into Los Angeles County. Some would be going on the expedition; others would stay put. Plans are being laid in real time.
We can interpret the new expansionist strategies in two — seemingly radically different — ways.
Number one: The Register’s model of local content/product focus, its one-price-fits-all, $364-a-year paywall, its unique merchant-focused and membership-enhancing strategies (“The Newsonomics of Aaron Kushner’s Virtuous Circles“) is working. It is working so well in fact, it’s time to apply it more widely and exploit the whole of the U.S.’s second biggest metro market.
Number two: While the reader-focused content plan is well-intentioned it has run into the hard realities of print publishing. Though up in circulation revenue, it is down both in print advertising (in mid single digits) and in digital advertising, where its hard paywall has diminished traffic by 40%. The L.A. Register move then is intended to spread the high costs — which got a further $10-12M investment this year — across a wider geography. The L.A. Register is a scale play, largely using the resources already invested in to find new profitable revenue.
Or perhaps, we’re over-thinking it. Maybe it’s a poker game, anteing up and bluffing. Maybe it is the audacity of audacity.
As the Long Beach Register (with a new Sunday edition added in November) and the L.A. Register, Freedom is moving on two competitors. Neither of their owners plans to be in the newspaper business for long.
The Tribune Company got close to peddling the Los Angeles Times in mid-year, then pulled back, announced a mid-2014 spin-off of the Times and its seven other dailies. (Coverage of the Tribune sale moves here.) MediaNews’ Los Angeles News Group and its nine daily papers, including the now-competitive Long Beach Press-Telegram and bigger Daily News, is owned by the California Newspapers Partnership (CNP). The majority owner of CNP is the MediaNews Group, which is largely controlled by Alden Global Capital. Alden has stayed the course, as its Digital First Media CEO John Paton has successfully managed the properties through digital ad gain, print loss and much other change. Yet, Alden, as an investor, wants out sooner than later.
Consolidation is the name of the gain in all flat-to-receding industries, witness what’s going on this year in both local broadcast and cable mergers. In the Southland, we have all the ingredients of a roll-up. Three newspaper companies (Tribune, Freedom, MediaNews) have exited bankruptcy. Print advertising is dropping at a rate of 9% a year for 2012-2014 nationally. Orange County and Riverside have already been rolled up. Kushner adds neighboring San Bernardino to the Register’s market area.
The L.A. Register announcement, whatever the depth of its products, can be interpreted as a new shot in that roll-up battle, saying this to Tribune and LANG: Maybe, it’s time to sell sooner than later. Would Kushner still want to buy the L.A. Times (and if necessary, the other seven papers)? Yes, in a word, he says. “Our perspective on the Tribune has not changed.”
As to the new L.A. Register, here’s what Kushner will detail:
- It will cover the county of Los Angeles, a region of 10 million people. (Compare that to 3 million in its home Orange County, and 460,000 in neighboring Long Beach).
- It will set up satellite offices for its staff in L.A. County, accommodating journalists and ad salespeople.
- It will be a seven-day-a-week product, available by single copy (convenience stores+) and home delivery, using contractors who are often delivering multiple products. Printing could be done at one of the three Register plants (Santa Ana, Anaheim, Riverside) or at a different location.
What we don’t know is the big question: How is the news for the nation’s largest county — with twice the population of Chicagoland’s Cook County — going to be produced?
In Long Beach, as Freedom announced the new edition there, it said it would add 20 newsroom staffers for a five-day-a-week edition. That put reality behind the kind of reader — and advertiser — competition it could create.
Kushner says the next stage of planning is one of “resource allocation” and won’t say how much resource might be added to the overall allocation. It’s clear it won’t involve anything like a replicating of the Register’s own newsroom size of 380. “We already have a great team,” explains Kushner.
Indeed, the expansion and enthusiasm in the Register newsroom stands out in a industry experiencing a half-decade of loss. It sounds like that newsroom is going to be stretched, with fundamental questions being how much and where.
We have good clues to the nature of the L.A. Register, borrowed from what we’ve seen in Long Beach. As the paper charges for print and digital access from day one, it knows it needs “heft,” and Kushner promises the L.A. Register will have that. Like most in the industry from Tribune, Digital First and Gannett (witness the USA Today insert strategy just announced), publishers are finding ways to maximize the efficiency of national news, both for print and digital. The Register is already doing that in Long Beach, adding its Orange County-produced national coverage “heft” to the L.B. Register.
Then, consider areas like sports and business. The Register already covers major sports in L.A., as well as Orange County, so expect that same kind of cost-effective produce-once, distribute-many strategy there. In business, some of that sports thinking applies, but new coverage will be needed if the L.A. Register can claim to be an L.A. newspaper.
The big question: local news. Kushner says that his team will figure out how to cover schools, prep sports, and city councils. Consider that there are 88 separate cities in L.A. County and a myriad of educational entities. Of course, local is about a lot more than old-fashioned institutional coverage, and you can see that breadth of coverage in the O.C. Register.
How exactly will the L.A. Register offer similar local depth and breadth? It seems unlikely that it can, or will. The bet looks like it can do enough to take away some paying readers and some paying advertisers from its competitors. OC Register Editor Ken Brusic may need the largest white board in Orange County to plan out the L.A. invasion. Do too little, and the marketplace will respond with a yawn. Do too much, and risk a Napoleonic collapse by spreading the troops too far and too thinly. Be careful with those supply lines.
Kushner says one other differentiator is the paper’s once-thought-to-be-vestigial, libertarian-like editorial stance. The Hoiles family, which bought the paper in 1935, sold a majority 40% interest in 2004 and lost it all in the 2009-2010 bankruptcy, took pride in that libertarian editorial page, one that stood out among dailies. That political position — which Kushner explains as “We believe in free markets and we believe in the personal freedoms to live our lives.” — is one he cites as a “completely different political perspective” as compared with the more traditional Times. In addition, he cites the truism long-held by critics of the Times: It’s a great, or once-great newspaper, more focused on the globe, the nation, sports and Hollywood than it is on local news. Of its more than 500 or so newsroom people, less than 200 are focused on local news. That’s the opportunity competitors, like public radio station KPCC, have increasingly perceived (“The Death and Life of California News“).
The greater L.A. area, with its multiplicity of jurisdiction and diversity of population should require hundreds to cover it well; no one can afford that now, given the economics of the business.
Unless the L.A. Register foray is funded with significant new staff to cover what is truly L.A. local, it will borrow less from the lessons of the Orange County editorial investment, or even that in Long Beach, and more from other “clustering” strategies other publishers have tried over time. It may make waves in the Southland, but how big will the waves be? Indeed, the L.A. Register could be a game-changer, but is more likely, given what we know today, to be more of a nibbler on the Southern California news landscape. The 2014 Pac-Man action will provide new entertainment of its own.
Related articles:
Freedom Buys the Riverside Press-Enterprise
The Newsonomics of Aaron Kushner’s Virtuous Circles
The Death and Life of California News
The Newsonomics of Outrageous Confidence