Final thoughts on the whole newspaper thing

According to new research from the Pew Research Center for People and the Press, only 33% of Americans say they will miss reading their daily newspaper “a lot” when if it closes. While I believe that most people don’t think they’ll miss having a local newspaper, I suspect some of that response is skewed by a general and pervasive low opinion of “the media.” However, when their daily newspaper actually does go dark, I believe a lot of people will be thinking of the line by Joni Mitchell: “Dont it always seem to go, that you don’t know what you’ve got ’til it’s gone.”

I think for some of the Americans surveyed by Pew, it won’t be long before they’ll discover whether or not, in reality, they’ll miss their local daily newspaper. Some analysts say we could see many of them die during the next year. (However, some of their “assets,” like their brands and circulation lists, could live on under new ownership and in new formats.)

In the past couple of days, I’ve learned a lot about local daily newspapers, specifically the Gannett-owned Tennessean. My rant on Tuesday about Gannett executives deciding to scale back coverage of local sports led to several conversations with individuals who know more about the economics of daily newspapers — and especially, the Tennessean — than I will ever care to know. According to my tutors, there seems to be a business logic — at least on the surface (I’ll explain the hidden risk in a moment) — for the decision to slash the budget related to sending reporters on the road with University of Tennessee and Vanderbilt basketball teams and with the city’s NHL hockey team, the Nashville Predators.

The logic goes something like this: While local sports coverage draws lots of readership to the paper and eyeballs to the website, it’s not the kind of readers and eyeballs that the 800-pound gorillas of newspaper advertising are trying to reach.

In the old days before people quit purchasing automobiles, car dealerships and tire companies advertised in the sports section. But check out who advertises in there these days: establishments that are euphemistically called “men’s clubs.” Again, sports coverage by local newspapers has a lot of readers, but more and more of them (us) are reading that coverage online. While they can generate significant revenue for our “eyeballs,” there’s probably not enough revenue to justify the daily newspaper-overhead type of coverage that appears there.

But, fear not, there are still advertisers who want to advertise in the Tennessean, and those advertisers actually have the statistical data to justify their continued use of newspapers. You know those pre-printed “circulars” in the Sunday newspaper? The revenues from those inserts are perhaps the most profitable business at the Tennessean these days, according to a media buyer in Nashville. I know, I know: you grab the whole stack of those advertising inserts and throw them in the garbage recycling bin. But somebody out there actually pulls them out and studies them carefully and uses those coupons methodically. In other words, that type of product advertising works wonderfully for certain types of retail marketers who have access to co-op advertising budgets. And because they involve the redemption of coupons or the purchase of specific discounted merchandise, there is an ROI formula that large retail advertisers can utilize that make such advertising expenditures as easy to track as a search ad.

Coupons are to newspapers what click-throughs are to Google, it seems.

I was told that the Tennessean “makes money” — but different people told me everything from “very profitable” to “break-even.” They all agreed, however, that its margins are “not what they used to be.” “The Tennessean is the only local “mass medium” left,” I was told. Its reach is still greater than the local news on the three TV stations combined.

But its reach is declining. Significantly. It’s not just you who doesn’t get the paper delivered anymore. And that’s a major problem. You see, the Tennessean’s only appeal to those retail advertisers is its ability to get those Sunday circulars into the hands of the largest number of residents of the region at the lowest possible price. In other words, as a business, the Tennessean is a delivery service and the role of the newspaper’s “content” is to serve as a wrapper that will help get into your home all those Target and Kroger and Walgreens and Radio Shack circulars.

Remember when I said the decision to ratchet back sports coverage had, “on its surface,” some business logic. I believe (none of my tutors bought my theory, however) that Gannett executives are misguided in judging the importance of sports coverage in terms of the value of the advertising appearing in the sports section. I believe the real value of the sports coverage is getting those circulars and coupons into the house on Sunday morning. Take away in-depth sports coverage and when the time comes around to renew the coupon-deliverying Sunday newspaper, the Mr. of the household will become a “no” vote.

Will the Tennessean actually die? Well, if the circulation falls far enough, perhaps it could. But for now, the experts tell me the Tennessean — and Gannett — are going to survive because Gannett is not burdened by the heavy debt threatening others in the industry. In fact, newspapers in markets the size of Nashville — “mid” markets, as newspapers go — are probably performing better than papers in larger cities. The recession and classifieds-crushing Craigslist and movie listings on our iPhones and an array of other web-based factors and ankle biting freebie newspapers all are making it seem like newspapers are dying a thousand deaths.

One thing seems certain: the value of Gannett and similar newspaper-heavy media companies will never rise to the value they once appeared to have. At some point in the future, the shareholders will likely determine the value of the individual newspapers in a chain are worth more than the sum of those newspapers.

At some point, the chains may break up and attempt to sell those papers like professional sports franchises, the hope being that there are enough individuals with big wallets and big egos who want to own their hometown’s daily newspaper because they think it will be more profitable if it carries more local sports coverage.

Little will change except who is delivering the Sunday circulars.

  • Rex, great post, and I totally agree about the paper being a wrapper for inserts of deals at local retailers; yes, they are pretty ineffective in terms of reach and environmental impact. However, when a reader has in his or her mind that they are ready to make a considered purchase, like a laptop computer, the inserts are simpler and faster for sorting out the option and mapping in your mind which stores you’ll visit. Most of these readers would have already done their research via the Web on the features and brands of most interest to them. Then that beautiful photo and blaring dollar-off price offer in the insert is wonderful for getting them out of bed and on their journey to the store(s).

    And regarding dropping sports coverage travel, it may be too late for newspapers, but I’ve long wondered why they have created info-dashboards as a lively, and cheap, alternative to text & photos from reporters and photographers. The tools exist now in the ad agency world for data dashboards to monitor sentiment and other metrics around their clients’ brands coming from the media, blogosphere and Twitterverse. And, since sports teams, and star players, are ‘brands’, why wouldn’t a newspaper run dashboards like this on their Web sites and then publish regular capsule summaries of the data stream in the paper? It seems to me this kind of automated coverage could bring new advertisers to sports interested in the younger, data-hungry sports fans.

  • The newspapers are failing fast in most cases because they didn’t adapt to the information age… they chose to fight against the current for too long. The music industry is having the same problem. Trying to fight the current is counter-productive. I have a client who sells newspaper classifieds advertising all over the country through his website and has done so for about 11 years. He is seeing a slow down nationwide and has moved his business in a different direction because of it. Those who adapt grow stronger.

    Honestly the newspaper is a failing medium and we all know it. People will get their news (which is just data) on their mobile, their tv and the Internet. Also because of the green movement who the hell wants to kill that many trees just to get some info you can get from other sources. Papers will need to phase out the medium and go digital. They will need to be agile in their resource usage and they will need to do investigative reporting on things people care about. If they don’t investigate and do actual reporting on interesting subjects (ie.. be a watchdog) then people will grow tired of them and they will seamlessly be replaced by independent writers and smaller organizations who only have an online presence.