Today: Newsosaur Examines Star Parent McClatchy & Newspaper Woes

While Jimmy C‘s away, the mice will play…

I don’t know to what exotic locale vanquished former Star editor turned blogger Jim Fitzpatrick escaped to the past couple weeks. All I know is he wasn’t around to catch this little journalistic diddy that would have been smack up his alley. A column by a gent who goes by Newsosaur, the "Musings (and occasional urgent warnings) of a veteran media executive, who fears our news-gathering companies are stumbling to extinction."

The question at hand: "Will business model stabilize for newspapers?"

The departure point being the disastrous revenue falloff at McClatchy, parent company of the Kansas City Star.

"Quizzed by securities analysts last week about his company’s disappointing financial performance, the best McClatchy boss Gary Pruitt could say was that he hopes the newspaper “business model will stabilize” at some unspecified point in the future. But it will not," Newsosaur begins.

"And it had better not, if Pruitt intends to save what’s left of his newspapers, where relentless cost cutting has halved the headcount of his flagship Sacramento Bee to some 700 increasingly nervous souls in the last three years."

It may feel to Pruitt like the 19th inning of a bad Royals game, but don’t expect to win with a walkoff homer.

"Sorry, folks, but it is unrealistic to think the newspaper business model will stabilize, because we are in the midst of profound and fundamental changes in the way people get information – and marketers connect with them," Newsosaur continues. "The model cannot stabilize, either, because the traditional strengths of the newspaper business have been turned into liabilities in the new order of things.

"If Pruitt and his fellow publishers don’t intelligently de-stabilize their businesses to modernize them, they run the risk of seeing further deterioration of their once-formidable franchises. Like most other publishers, Pruitt already has lost a lot of ground: The market capitalization of his company, which peaked at $3.5 billion in 2006, now is less than $200 million."

Back up, take another look at those numbers, and it puts the tailspin of the last three years into perspective.

Newsosaur’s reasons why the newspaper biz isn’t about to stabilize are threefold.

  •  "Because people can acquire content from any number of sources on any number of platforms at the time and place they want, there is increasingly less utility in the print product, which necessarily is a static (and often out of date) aggregation of a small subset of all the news, information, entertainment and commercial content available in the ever-expanding digital universe. Despite the diminishing importance of the legacy product among most consumers, the newspaper industry still depends on print circulation and advertising to provide 90% of its revenues."
  •  "The proprietary production and delivery platforms that previously provided publishers with unrivaled market share and pricing power now represent unavoidably huge fixed costs that put them at a distinct competitive disadvantage to the proliferating digital platforms. Even though roughly 1 out of 3 newsroom jobs has been lost at American newspapers in the last decade, publishers still pay far more to produce content than most digital competitors. Sadly for those of us who treasure quality journalism, the high cost of producing original content has turned the medium’s most cherished competitive advantage into a liability from the standpoint of hard-eyed financial analysis. The same can be said for owning printing presses and large fleets of delivery trucks."

 

  • "While the monopoly or near-monopoly status historically enjoyed by publishers allowed them to charge formidable advertising rates for access to the substantial audiences they aggregated, the increasingly sophisticated digital media make it possible for advertisers to finely target their pitches to specific audiences – and sometimes even individuals – at a fraction of what they have to pay for a newspaper ad. While newspapers depend on selling un-targetable print ads at the rate of $12 (or more) per thousand in order to support their high fixed costs and double-digit profit aspirations, un-targeted banner ads can be bought by the fistful on the web for $1 per thousand – or less. With all due respect to the quality of the typical newspaper ad environment, it is hard to believe this differential pricing can be sustained over the long term."

Newsosaur’s bottom line:

"In light of the above, it is futile to merely ‘hope’ the newspaper business will stabilize. The hopelessness of hope is perhaps best illustrated by the fact that half of the industry’s revenue base vaporized in the last 5½ years while publishers were hoping for a different outcome. Barring a miracle, industry-wide ad sales, which were $49 billion in 2006, are unlikely to top $23 billion in 2011."

There is a way forward for newspapers, Newsosaur says.

Social media concepts, creating new digital products and platforms for delivering it (as opposed to just transferring print content to the Web), cutting back from seven day newspaper deliveries and charging less for ads. But it certainly won’t be easy.

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8 Responses to Today: Newsosaur Examines Star Parent McClatchy & Newspaper Woes

  1. Jim Fitzpatrick says:

    Good pick-up on this, Hearne…
    I was out of town for about a week and then on sabbatical for another week. (The boss said, “Take a week off and don’t check your e-mail or answer your phone.”)

    Yes, the situation is very grim for McClatchy. As I reported in June 2010 and then again last January, Morningstar, the independent investment and stock research company, has said this about McClatchy:

  2. smartman says:

    Problem Solved
    Look no further than the telco-cellphone biz for the answer.

    Offer product on a variety of electronic platforms and/or create a proprietary one that is leased on a monthly basis. Allow subscribers to tailor what news they want and when they want to get it all inside a fee based model.

    If somebody farts at the McDonald’s in your neighborhood and you want that info you should be able to get it.

    Reporters will work remotely in the field and will file real time stories from the scene of the crime.

    Grandma should get real time obit updates. She should have the ability to put in a list of names of friends and enemies and get a special alert when one of them croaks.

    You pop in your car at 5:00 with auto traffic updates that tell you whether your normal route home is the quickest. Be able to place a grocery order that is automatically charged to a debit/credit card so you just pull up at HyVee, show ID and drive away. Your car will talk to your newspaper device and you will know where to get the cheapest gas on your current route based on your preference of brand(s)

    The new model can’t just be about news. It has to be about SERVICE. Fuck all the apps and downloads. You won’t need a separate cellphone, tablet, GPS, etc.

    The newspaper of the future must become your butler. Programmed by you but still intuitive enough to become invaluable and indispensible in your day to day life.

    Just the data mining that could be reaped and sold to advertisers is worth TRILLIONS

    If the industry doesn’t adopt this model either Apple or Microsoft will and at that point it becomes game, set, match.

    There won’t be a KC Star or Times Picayune. It’ll be the Fitz Times or the Hearne Gazette. All the news that’s fit to print will still be available but in a style and form that adapts to your wants, needs and interests.

  3. Jim Fitzpatrick says:

    Fitz Times vs. Hearne Gazette
    We’ll slug it out, Smartman.

  4. chuck says:

    Great pic of the Fitz, I’m reachin for my lighter.
    “Grandma should get real time obit updates. She should have the ability to put in a list of names of friends and enemies and get a special alert when one of them croaks.”

    That is hilarious, but true.

    I have read everyone’s suggestions, and I am afraid that they are ALL for naught.

    McClatchey’s only hope, for ANY future in the print business, is to furlough ALL of their employees and funnel whats left of their huge wads of cash to Mullah Omar, or Mahmoud Ahmadinejad, or some other Islamic despot, with the ability to bring a Nuclear EMP to the US knocking out all digital communications. Then START THE PRESSES!!!!

    TONY BOTELLO: *reading this comment* “Mom!!!! Come down here and read this!! What does this mean??? Mom!!!”

    TONY’S MOM: *Tony’s mom, wiping her hands with dish cloth, comes down the stairs* “What Tony, Jesus, what?”

    TONY BOTELLO: *Read this Dbag’s comment, what does it mean?”

    TONY’S MOM: *reading* “It means you would actually have to get a job.”

    TONY: “I knew it!! A dead tree media terrorist plot!!! That fuckin Mike Hendricks!!”

    TONY’S MOM: “Very implausible.”

    TONY: “Whaddya mean?”

    TONY’S MOM: “Implausible, you know, like the idea of you ever getting a real job.”

    TONY: “Whew! Oh, ok, thanks mom.”

    TONY’S MOM: *looking around at the detritus and chaos of the basement*

    TONY: “Don’t start mom, I’m busy.”

    TONY’S MOM: *starts up basement stairs* ” (Sighs) Could ya at least fix the leaf blower before next month?”

    TONY: “All over it mom.”

  5. bschloz says:

    Fast Market
    $1.65 for MNI –call option on some maniac picking up the pieces…maybe a Buffet or a Slim. Doubt it though.
    Eat them peas—– As Sprint gets marked down to $3.

    Incredible inflection pt in U.S. History…..Confidence hits 30 year low.
    Fed comes out and announces 0% interest until Summer 2013
    WTF?–Unprecedented and disturbing, placing a 24 month date on this type of Outlook.
    Banks are free falling again … dramatic price action in MS GS BAC C JPM AIG… while they parade the CEO’s out to tell us how the market has it all wrong. Dick Bove banking guru says he is 100% cash…but if he was buying stocks he would buy $BAC…..now that’s conviction!
    Thought we just saw this movie…a real tear jerker indeed.

  6. NOT REALLY says:

    Oh, it’s not as grim as you might think at The Star these days. Why don’t you call them up and ask them why? A lot of things have changed in the three years since Hearne got canned and Fitz “retired,” but there’s not much point in explaining what’s going on there if you’re unwilling to listen.

    If they only listened to you they’d be a website-only right now. Good thing they don’t bother.

  7. MEH says:

    Let Hearne have his fun. mcclatchy may not be around in 5 years but the star almost certainly will be. people see the futility of blogging where all it is is what other people said. like this post!

    ask around about project 2015.

  8. chuck says:

    Hearne, don’t be afraid, we love u
    Criticism perfects your imaginary identity.

    And, it perfects our idea of you.

    Embrace it.

    Seek it.

    Suffer, then realize, there was no one suffering.

    Things change.

    Don’t be afraid.

    Everyone wants you to succeed, not just monetarily, but in a etherially, transcendental way. A way, that indeed, gives us faith. Gives us, your best honest shot at the truth.

    With no diss at al, you have accomplished so very much. You are a tour de force, a catalyst who is reckoned with in an oblique, ad hoc way, here in KC.

    If your stories achieve traction, then there is an ad hoc response.

    Fuck that shit, GO TO WORK!!

    Ride the cusp of a new vehicle.

    You love cars. this, this moment, this time, this opportunity, is a light speed race to a new idea of journalism.

    Its just my opinion, but as I have heard people look back on their lives, they always whine about the “good o’le days”.

    Thats cool, we all do that.

    Hearne, this IS the “Good O’le Days”, get off of your ass and work this thing.

    Seriously, get up in the fuckin morning and bust your ass.

    Cue the excuses…

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