Archive for February, 2010

Lots of numbers, most of them bad

Friday, February 26th, 2010

Medill Reports presents a roundup of advertising spending for newspapers and magazines from 2009, including a couple of graphs and, as anyone who’s paying attention could tell you, it’s not a pleasant sight.

On the deep end, according to Nielsen figures, local Sunday newspaper supplements show a 45 percent drop in ad revenue. Business-to-business magazines show a 33 percent plunge, and local magazines sank 24 percent. (Sunday supplements and local magazines. This is why we have time to write this blog.)

The bright spots were a 32.2 percent jump for Spanish-language cable television and a 15 percent gain for cable television. FSI coupons were up 12 percent.

In a trend that extends to 2006 at least, overall U.S. advertising spending was down 9 percent for the year last year. In 2008, U.S. ad spending fell 2.6 percent.

Future is later but still dim for McClatchy

Wednesday, February 24th, 2010

Financial analysts polled by Reuters are not optimistic about the McClatchy Company’s future despite the breathing room the newspaper publisher has made for itself by restructuring its debt through bond sales. One gives the company 18 months to two years to figure out how to make enough revenue online to sustain itself.

Things looked better in January when the company announced “encouraging fourth-quarter results,” Reuters says. Then the company put off its next major debt payment until 2013 by agreeing to higher interest rates.

“But McClatchy’s swaps have retraced all of January’s strengthening and are now 157 basis points wider than when its refinancing was announced, at about 1016 basis points as of Tuesday, according to data from Markit,” the Reuters report says.

“‘I think the market is smart enough to know that there are some fundamental issues here and what they’ve done is basically delayed the inevitable,’ said Shelly Lombard, analyst at independent research service Gimme Credit.”

“Despite the fact that McClatchy’s online revenues are growing rapidly, they are still a small portion of its overall business and are not expanding quickly enough to replace newspaper revenue, she said.

“On the positive side, Lombard said she does not expect McClatchy to run into problems for at least 18 months and probably two years, and investors can collect their coupons until then.”

G.D. Gearino, a former business editor at McClatchy’s News & Observer in Raleigh, provides a good explanation of  McClatchy’s bond swap on his blog. He also points out that deep in the financial statements we find that “the new bonds, unlike the previous ones, are backed by McClatchy’s assets. Bondholders will be on equal footing with the banks.  And one of those assets, of course, is The News & Observer.”

We saw the Reuters report mentioned on the Fitz & Jen blog at Editor & Publisher, where, in their daily market roundup, they point out that on Tuesday McClatchy “took the sector’s biggest hit percentage wise with its shares off 5.7 percent to $5.12. Reuters reported that credit default swaps for MNI indicate the market is nervous about the company.”

Writing on newspaper industry’s wall is clear

Tuesday, February 23rd, 2010

A new count by Media Daily News says the newspaper industry has lost 105,000 jobs in the last decade, as the “rise of the Internet began lowering the curtain on the golden age of print.”

Based on records kept by the U.S. Census Bureau and Department of Labor and tallies by various industry watchers, total employment in the newspaper publishing business has declined from 414,000 in 2001 to 309,000 at the end of 2009, a 25.4 percent drop over the course of eight years,” the report says.

Job cuts in newsrooms accelerated last year as “publishers finally decided they had cut other business functions to the bone, and reluctantly began cutting costs in the newsroom.”

The obvious conclusion: “if 2010-2011 doesn’t bring a big rebound in newspapers’ fortunes, coming years may see the quality and quantity of journalism suffer noticeably.”

Miami Herald puts tip jar back under the counter

Monday, February 22nd, 2010

The Miami Herald announced over the weekend it was ending a program begun in December in which it asked readers to donate to the newspaper.

“After evaluating two months of response, we’ve decided to end the program,” Elissa Vanaver, a company vice president and assistant to the publisher, said in the newspaper’s report. She would not say how much money the effort had raised.

Shortly after initiating the program, in which credit card forms linked at the bottom of articles on MiamiHerald.com and ElNuevoHerald.com enabled donations,  Executive Editor Anders Gyllenhaal said it had “elicited an encouraging steam of gifts, ranging from $2 to $55.”

Vanaver said when the program was launched in December and again this past weekend that The Herald has no plans to charge for content online. The newspaper does charge $2.99 for mobile applications that deliver sports content, its report said.

Targeted TV commericals advance in testing

Saturday, February 20th, 2010

Almost a third fewer TV commercials were skipped in a test of targeted ads conducted by the cable giant Comcast in Baltimore last year, Ad Week says. The ability to aim commercial spots at specific households “creates billions of dollars in the TV marketplace per year,” one official said.

The test used technology developed by Invidi to deliver “different ads within the same cable network commercial breaks to different household groupings, based on segmentation data provided by data-management firm Experian,” the report says. Viewers fast-forwarded through 32 percent fewer commercials.

“It was 65 percent more efficient to buy an addressable spot to reach the advertiser’s true audience, even factoring into the calculation a premium for the seller,” said Michael Kubin, an executive vice president with Invidi. And that efficiency, he said, “on a national basis creates billions of dollars in the TV marketplace per year.”

Kubin said this second test of the system proves it works and indicates that the next step is to bring it to the marketplace.

Chuck Ross of TV Week calls the test results “nothing short of phenomenal” and his headline writer calls the test a “game changer.”

Newspaper pre-prints the next victim of online?

Thursday, February 18th, 2010

Two surveys suggest that newspapers’ pre-print inserts could go the way of classified advertising as online coupons grow in popularity, says Media Daily News.

Coupons.com —  which allows consumers to find coupons they want and print them out at home, download them to mobile devices, or transfer them to stores’ loyalty card accounts — says its digital coupon business grew 170 percent in 2009 compared to 2008, in terms of the volume of savings.

Meanwhile, a white paper released by the Newspaper Association of America and Kannon Consulting says newspaper inserts are in trouble, with big retailers like Sears demanding double-digit rate cuts and the CMO of J.C. Penney’s expressing concern that prepaid inserts don’t reach as many younger consumers. Media Daily News quotes from an analysis of the months-old proprietary white paper by the Poynter Institute’s Rick Edmonds.

The report, says Edmonds,  “warned that inserts, which account for half of retail advertising, are ‘under siege.’ The industry, notoriously pokey in providing return-on-investment metrics or in facilitating ease of placement, needs to tone up its act in a hurry, the report suggests.”

A Scarborough Research report last August said about 7 percent of U.S. households get their coupons from Web sites and about 8 percent get them via text messages or e-mail. In December, a report said spending on newspaper inserts was up 11.2 percent for the year.

In November, The News & Observer’s VP for Display Advertising cited a focus on selling pre-prints as one factor in the decision to discontinue publication of the company’s bi-monthly lifestyle magazine.

Down is the new “up”

Thursday, February 18th, 2010

A couple of “less bad is good” stories today:

Monthly magazines’ latest quarterly decline in ad pages, at 5.7 percent, is “not the same as a gain but a much smaller loss than the double-digit plunges that have been seen since the third quarter of 2008,” Advertising Age says. Ad pages fell in 94 monthlies this quarter and grew in 59, according to the Media Industry Newsletter.

Total revenue for Lee Enterprises fell just 9.2 percent in January compared with a year ago — the first single-digit percentage decline since 2008, and the fifth consecutive month in which the year-over-year revenue comparison moderated, according to Editor & Publisher.

Continued rough sledding ahead for newspapers

Monday, February 15th, 2010

A look at fourth-quarter 2009 financial results from five of the 10 publicly owned U.S. newspaper companies that have reported so far shows that “it’s clear the industry as a whole is still in deep trouble, with no strong indication that better days are ahead,” says a Nieman Journalism Lab report.

The report says that in Q4 2009 the industry “saw its 14th consecutive advertising revenue decline; the last nine of those quarters were double-digit declines.” And nothing indicates that January, typically a bad month for revenue, is looking any better.

The report examines the five publishers individually: Gannett, New York Times Co., Lee Enterprises, Media General and McClatchy Co.

At McClatchy, it finds strong online revenue growth comparatively, but scoffs at CEO Gary Pruitt’s claim that expectations of revenue declines in the low- to mid-teens percentage range in January indicate a recovery. “In other words, McClatchy expects the Q4 decline of 20.5 percent to be followed in Q1 2010 by a decline of somewhat less than 15 percent, and considers that to be an ‘improving advertising trend.'”

In another problem area, “Besides nearly $2 billion in long-term debt, McClatchy also disclosed that at year-end, its pension plans were underfunded by $494 million in the ‘qualified’ plan (their standard defined benefit plan, which is frozen), and another $100 million in the non-qualified supplemental executive-level plan. This accumulation of future obligations makes McClatchy one of the most-leveraged publishers out there.”

McClatchy sticking to top-down approach

Thursday, February 11th, 2010

McClatchy Company is looking to the leadership that steered the newspaper publisher nearly into bankruptcy to figure out the way forward as part of a task force to “strengthen newsrooms, modernize how we work, make the most of resources and consider how we can work together more effectively,” a memo distributed Wednesday says.

The task force of 10 editors and publishers is to review newsroom strategies over the next several months, beginning with “deep interviews with all McClatchy editors over the next two weeks.” The team’s work is to be completed in time for 2011 planning.

The task force will be chaired by Anders Gyllenhaal, executive editor of The Miami Herald (formerly of The News & Observer in Raleigh); and include Rick Thames, executive editor of The Charlotte Observer; Melanie Sill, executive editor of The Sacramento Bee (also a former N&O executive editor);  Stan Tiner, executive editor of the Sun Herald in Biloxi, Mississippi; Pat Dougherty, executive editor of the Anchorage Daily News; Mark Zieman, publisher of The Kansas City Star; Mi-Ai Parrish, publisher of The Idaho Statesman; Eric Johnston, publisher of The Modesto Bee; Brian Kirlik, vice president for affiliate services at McClatchy Interactive (based in Raleigh); and Washington bureau chief John Walcott.

McClatchyNext is a blog that calls itself “a shared discussion for McClatchy journalists and others to talk about the way ahead for journalism, news companies and people who care about them” started by former VP for News Howard Weaver.

Here’s a piece of a discussion about top-down vs. bottom-up management styles from McClatchyNext:

“McClatchy is looking for a new way to do business and all the answers are already here, in house, waiting to be utilized to their fullest.  By tweaking management styles to a bottom-up approach and looking to the people in the field, doing the work, we will find the answers we need to be an even better company and be leaders in the newspaper industry of tomorrow.”

“People in the field, doing the work” — like publishers and editors.

McClatchy’s Pruitt: online ad model working

Wednesday, February 10th, 2010

McClatchy CEO Gary Pruitt said Tuesday that deriving online revenue from advertising is working just fine and there’s no reason to move toward paywalls, according to Editor & Publisher’s account of the speech.

Pruitt gave the keynote address at the Borrell Associates Local Online Advertising Conference in New York City.

Pruitt is also OK with aggregators like Google and Yahoo, because they send plenty of traffic — 20 percent, he said — to McClatchy newspapers’ sites.

In fact, McClatchy credits its success in building online revenue to its alignments with several different Internet players including Yahoo, Cars.com and CareerBuilder,” E&P says. “Pruitt told the Borrell conference that online revenue in 2009 accounted for 16 percent of total revenue — up from 11 percent in 2008.”

“We are very comfortable with free content supported by advertising,” Pruitt said. “We don’t view it as fatally flawed. That said, if we could make ad revenue with paid products we would.”