Internet Coupon Use Rising But Newspapers Still Main Source

BizReport

Newspapers are still the main source for coupons, according to new research from Borrell Associates. But, while online coupons currently represent just 5% of redemptions this year, they account for 20% of the value of all redeemed coupons.

Coupons are hot and consumers are actively seeking them out both online and in print. In fact, some consumers are now deciding where to purchase items based on the coupons offered and will even leave one store for another if tempted by coupons.

Why the surge in coupons? Not only are businesses using several routes - print, Internet and mobile - to bring offers to consumers, but the stigma attached to using coupons has dwindled along with the economy.

Borrell expects the rise in coupon use to continue and outlast the economic downturn, particularly as marketers begin to more fully understand their effect on shopping behavior and discover new ways to employ them.

While coupons in newspapers will continue to dominate - 70% of all coupons used come from Sunday circulars - Internet coupon use is expected to rise. According to the study, the Internet will account for about 9% of all coupons distributed during 2010, while newspapers will account for slightly less (68%) next year.

"Given this surge in the use of online coupon codes, it is not surprising to see a number of players jumping into that segment of the market," says the Borrell study, "What's on Sale?: Coupons and Sales Circulars move Online".

"Traditional distributors of circulars such as Valassis and Valpak are being joined online by media companies such as ShopLocal.com (Gannett), YourLI.com (radio group on Long Island) and Zip2Save (19 newspaper companies), to name a few. A plethora of pure-play Internet companies is also vying for a share of this sector as well."

Union Reaches Tentative Agreement With Boston Globe
Story from the Wall Street Journal

The Boston Globe late Tuesday reached a tentative agreement with its largest union on a package of wage and benefits cuts intended to curb deepening losses at New England's biggest daily and streamline it for sale.

Officials from the Globe and the Boston Newspaper Guild said the tentative agreement is similar in scope to the one Guild members rejected two weeks ago, but this one includes a smaller wage reduction of 5.94%, offset by steeper benefits cuts, likely to tilt the scales toward ratification.

Guild members will be briefed on details of the agreement at a general membership meeting scheduled for Wednesday, the Guild said in a statement, and a vote has been set for July 20.

"Our aim throughout our negotiations has been to achieve the necessary savings in a way that causes the least hardship for our employees. We're very pleased to have reached an agreement that accomplishes those goals," Globe publisher Steve Ainsley said in a statement.

The agreement is a breakthrough for the two sides, which have been locked in increasingly contentious talks since early April when Globe parent New York Times Co. threatened to close the paper if it couldn't get $20 million in concessions.

Two weeks ago, the Guild, which is responsible for half of the $20 million in concessions, voted against a proposal that called for an 8.4% wage reduction, furloughs, a pension freeze and the elimination of job guarantees, among other concessions. In response, Times Co. said it would impose a 23% pay cut for all Guild members to achieve the necessary savings.

But a meeting early last week that was to focus on implementing the 23% wage cut turned into a lengthy negotiation that continued throughout the week. The Globe said Tuesday the existing 23% pay cut will remain in effect until the Guild vote. But Guild members will receive a lump sum payment to partially compensate them for wages lost up to the ratification date. The Globe, in turn, will deduct the cost of those payments from payments due to the Guild's health plan.

An Awkward Obituary
Seattle was a two-newspaper town until one went down.
How do you cover your competitor's demise?
From Newsweek

The P-I had beaten the competition to the punch. The Seattle newspaper, known formally as the Post-Intelligencer, broke the story in 1988 that Sen. Brock Adams had been accused of sexually assaulting a congressional aide and family friend. The chase was on. The P-I's cross-town rival, The Seattle Times, countered with a three-year investigation, which found eight women who claimed to have been harassed by the senator. Adams, who denied the allegations, decided not to run again, the Times won a slew of awards—and the P-I nursed a grudge. Shortly after the story was published, reporters from both papers found themselves aboard the same flight—one of them armed with accolades, the other empty-handed. "A little bit of the enamel ground off my teeth on that flight," the P-I reporter said.

And so it has gone, for more than 100 years. Whether trading scoops on the construction of the city's landmark Space Needle or entering into a bidding war to see who would be first to summit Mount St. Helens to cover its 1980 eruption, Seattle's two newspapers have battled tirelessly—and, in the words of one local media veteran, "bitterly"—for journalistic preeminence. The combat ceased in mid-March, when declining circulation, plummeting ad sales and a failure to find a buyer led the P-I's parent company, the Hearst Corp., to stop printing the paper. The victor dutifully wrote the obituary of the vanquished. But the intense rivalry made it a tricky assignment. Imagine Barack Obama writing John McCain's life story, or Goldman Sachs presiding at Lehman Brothers' funeral.

Many of Seattle's journalists had worked at both papers, creating conflicts of interest in covering the story. And there were emotional entanglements. "There are people in this newsroom who have spouses who lost their job at the P-I," says Eric Pryne, a Times reporter assigned to the obit, who has been with his paper since the 1970s. "Anytime you see journalists lose their jobs at another institution, there's a lot of sadness." Local blogs crackled with complaints that the Times had given the story short shrift. And some P-I staffers were peeved that the Times highlighted a strike that prevented the P-I from publishing on the historic occasion of FDR's reelection to a second presidential term. (A month after the election, Roosevelt's son-in-law was named publisher of the paper, and the president's daughter came aboard, editing the women's pages.) "The P-I was an icon of the city, even for people not into news," says Eli Sanders, who covered the story for The Stranger, a local alternative weekly. "So the Times had to be careful not to seem like they were dancing on that grave."

The story may be tricky, but it's becoming increasingly familiar. The Rocky Mountain News closed in February, leaving The Denver Post to pick up the pieces. Chicago, Detroit and Honolulu are all two-newspaper towns on the verge of losing one. As many as a quarter of all newspaper jobs will be lost by the end of 2009, according to the American Society of Newspaper Editors. Last week, Sen. Ben Cardin of Maryland introduced the Newspaper Revitalization Act, a bill that would give newspapers a nonprofit status similar to that awarded to public-broadcasting stations. And Attorney General Eric Holder has hinted that he may be willing to tweak antitrust policy if it would help preserve the industry. But for now, the economic slump, an aging readership, and an explosion of free journalism online has newspapers heading for the morgue—thereby spiking the kinds of stories made possible by fierce competition.

Of course, the competitive juices don't dry up just because the doors are closing. Just ask Hal Bernton, a Times reporter who called in sick so he could organize a memorial rally in support of P-I staffers. "We've been so competitive for so many years," says Bernton. "It's hard to realize that we're all print journalists, so all our jobs are at risk." But most of the P-I team stayed away, preferring to gather around their city desk and sip a little bourbon.

The P-I lives on as a Web site, and a dramatically scaled-down staff is carrying the fight forward online. (Hearst has prohibited the remaining employees from speaking to the media, though a corporate spokesman called the competitor's coverage "thoughtful.") Over at the Times, the ink was barely dry on the obit before the victor began cashing in. On March 17, the day the P-I ceased publication, David Boardman, executive editor of the Times, sent out a welcome to his rival's 100,000-plus subscribers, who woke that morning to find the Times on their driveways. "Thank you for reading The Seattle Times," he wrote. "We know that many of your families had decades-long loyalty to the P-I, and that you've lost a familiar friend. As with any new relationship, we know this will take some time.

More Bad News At USA Today
As Originally Posted at the Wall Street Journal

USA Today President and Publisher Craig Moon announced his sudden retirement Tuesday, leaving the country's largest newspaper with its top two jobs unfilled during perhaps the most difficult stretch in its 27-year history. He also said the newspaper has lost about 100,000 subscribers just from the slowdown in travel.

Mr. Moon said in an interview that the slowdown has resulted in a reduction of more than 7% in the number of copies of USA Today distributed through partnerships with hotel chains such as Marriott, which account for more than half of its circulation.

The 59-year-old executive, who spent 23 years at parent company Gannett Co. and the last six as publisher of USA Today, has overseen a publication that has come under increasing economic pressure. Gannett expects ad revenue to fall by as much as 35% in the first quarter, Chief Financial Officer Gracia Martore said at an investor conference in March. Gannett executives also had said at the conference they were bracing for a significant circulation hit.

The 59-year-old Mr. Moon, who spent 23 years at Gannett, at an event last spring in Los Angeles.

The 1.3 million daily copies distributed at hotels in the six months ending Sept. 28 accounted for more than half of USA Today's average weekday circulation of 2.3 million, according to the Audit Bureau of Circulations. ABC releases figures for the six months ending in March at the end of April.

Mr. Moon said he decided to leave USA Today to explore investment opportunities in the media industry, where "values are way down." He said he did not view his departure as an escape from a sinking industry, adding in USA Today "you still have the workings of a successful business."

Mr. Moon's departure expands the void at the top of the paper following the recent resignation of editor Kenneth Paulson, whose replacement has not been named. John Hillkirk is serving as Mr. Paulson's interim replacement.

Gannett said it hasn't decided on a successor for Mr. Moon.

The move was largely unexpected within Gannett. USA Today founder Al Neuharth, who still writes a weekly column for the paper, said he found out in a call Tuesday morning from Mr. Moon and Gannett Chief Executive Craig Dubow. "It would be unfair to say I expected that news," Mr. Neuharth said. "But things happen. People retire."

Mr. Moon isn't walking away empty-handed. Gannett in its 2008 proxy statement valued Mr. Moon's pension at $3.3 million as of Dec. 31, 2007.

Sun-Times Media Files Chapter 11
As Originally Posted at the Wall Street Journal

The cash-strapped publisher of the Chicago Sun-Times on Tuesday filed for protection from creditors and said it may seek to sell "substantially all" of its assets, becoming the fifth newspaper company since December to tip into Chapter 11.

Sun-Times Media Group Inc. faces a crushing tax claim stemming from the former ownership of press baron Conrad Black. Its bankruptcy-court filing values its assets at less than the $510 million claim, which won't be wiped out in the proceedings. But with Sun-Times in Chapter 11, the tax claim won't carry over to potential new owners, a factor that was a primary motivation for the bankruptcy filing, said Jeremy L. Halbreich, chairman and interim chief executive.

Sun-Times follows Tribune Co., the Star Tribune in Minneapolis, the parent company of the two Philadelphia dailies and Journal Register Co. into bankruptcy court.

In addition to the Chicago Sun-Times, the 17th-largest newspaper in the country, Sun-Times publishes dozens of smaller daily and weekly papers in the Chicago suburbs.

Both of Chicago's major dailies are now operating under bankruptcy-law protection. Chicago Tribune publisher Tribune Co. filed in December. The Tribune has an average weekday circulation of 516,000 copies, compared to more than 313,000 copies for the Chicago Sun-Times.

Unlike the other newspaper companies in Chapter 11, Sun-Times isn't burdened with debt. Its problem is operating losses for each of the past six years, including a $344 million loss in 2008.

Sun-Times said it is "at risk of running out of cash quickly" unless it receives relief from its obligations. As of Sept. 30, Sun-Times had less than $100 million in cash and cash equivalents, according to regulatory filings.

The company hired investment bank Rothschild Inc. to help it sell assets, but it isn't clear how many potential buyers will emerge.

Sun-Times canceled an auction of the company last year when it found few takers. Mr. Halbreich said suitors in the prior auction were wary of investing in Sun-Times while the Internal Revenue Service claim hung over its head.

Sun-Times blamed its weakened financial condition in part on legacy issues related to Mr. Black, the Canadian businessman who controlled the company then known as Hollinger International Inc. Mr. Black and other executives were convicted in 2007 for their role in bilking the company out of millions of dollars.

Mr. Black, now in federal prison in Florida, is listed as a creditor in Sun-Times's Chapter 11 case, as the company has advanced legal fees and expenses to Mr. Black related to pending civil lawsuits. Alex Bourelly, an attorney at Baker Botts representing Mr. Black, declined to comment on how those claims are likely to be treated in bankruptcy court. The company has paid out about $118 million in connection with legal fees and costs for Mr. Black and other former company officers and directors.

Sun-Times said it expects its advertising revenue to decline roughly 30% throughout 2009. That follows an 18% drop in print ad revenue during last year's fourth quarter.

The Sun-Times bankruptcy-court documents list assets valued at $479 million as of Nov. 7, 2008, and $801 million in debts.

San Diego Union-Tribune Finds Discount Buyer
As Originally Posted to The Wall Street Journal

A California private-equity firm clinched a deal -- at a rock-bottom price -- to buy the San Diego Union-Tribune newspaper, one of the few large dailies that have found a buyer as industry profits sag.

Platinum Equity, a Beverly Hills firm specializing in distressed deals, is leading the acquisition of the Union-Tribune, which was put up for sale in July by closely held Copley Press Inc. David Black, owner of the Akron Beacon Journal and a string of Canadian papers, also is part of the buying group.

The Union-Tribune is the country's 23rd-largest newspaper, with weekday circulation of nearly 270,000.

The deal price wasn't disclosed, but a person familiar with the matter said it was less than $50 million, a price largely driven by the Copley Press real estate, which includes the complex housing the Union-Tribune and another facility. The value of the assets -- even amid a downtrodden real-estate market -- gives the buyers some cushion against the struggling newspaper, according to people familiar with the matter.

The fire-sale price reflects the dried-up market for big newspapers. A number of papers have been put up for sale in the last year, but bankers say suitors are staying on the sidelines while it is hard to predict when advertising declines will hit bottom. E.W. Scripps Co. recently closed the Rocky Mountain News and Hearst Corp. this week ended the print edition of its Seattle Post-Intelligencer after the papers attracted no serious offers.

There are growing calls to ease regulations limiting newspaper consolidation so papers can seek merger partners. Attorney General Eric Holder told reporters Wednesday he was open to re-examining the policies.

The Union-Tribune attracted several suitors, including Ronald Burkle's investment firm Yucaipa Cos. and newspaper publishers MediaNews Group Inc. and Tribune Co. Several buyers said they were dissuaded by the paper's rapidly declining profits.

The Union-Tribune deal is a startling turnaround for its controlling Copley family. The paper generated about $100 million in cash flow in 2004, according to people familiar with the paper's finances, meaning the Union-Tribune could have been worth $1 billion based on valuations at the time. Now, the paper is close to break-even, these people say, as it has been battered by the collapse of newspaper classifieds.

In an interview, Mr. Black said he is "a big believer in newspapers, as is Platinum Equity" and that the Union-Tribune's location, readership and Web site made it an attractive property.

Mr. Black said he will have to cut costs to help offset the bleak newspaper revenue outlook. "In this case the paper hasn't had [cuts] as of the sale process and a whole lot of other papers have," Mr. Black said. "There's some catch-up there."

Star-Ledger, L.A. Times Slice Costs Further

Two more large dailies will absorb significant staff reductions as the newspaper industry continues to downsize as revenues decline.

The Star-Ledger of Newark, N.J., on Tuesday neared completion of cost-cutting measures that will stave off a sale or closure of New Jersey's largest newspaper. Meanwhile, Los Angeles Times employees were being told about likely staff reductions, the latest of several rounds of cuts at the paper since the start of the year.

The union representing the Star-Ledger's truck drivers was expected late Tuesday night to ratify a new contract, an outcome that would fulfill the publisher's third and final condition for survival beyond this year. In July the Newhouse family, which owns the Star-Ledger along with more than two dozen newspapers and the Condé Nast magazine company, said it would sell the paper unless it secured concessions from two unions and unless 200 people -- more than a quarter of its nonunionized full-time staff -- accepted buyouts.

The paper's mailers' union last month ratified a new agreement, and more than enough staffers have applied for the buyout. But just weeks ago the paper and its drivers' union remained far apart on a new agreement, prompting George Arwady, publisher of the Star-Ledger, to say the paper might need to pursue a sale or close in January.

The agreement with the truckers' union is a lifeline for the Star-Ledger, though it is unclear whether the paper will be able to survive in anything like its current form. About half of the roughly 330 current newsroom staffers have applied for buyouts, according to people at the paper.

At the Los Angeles Times, staffers say dozens of veteran newsroom employees are being encouraged to accept buyouts and the paper's Washington reporting staff is likely to shrink and be reorganized soon. Executives in business operations have been asked to cut costs, too. The Times, owned by Tribune Co., has an average weekday circulation of 773,884, fourth-largest in the U.S.

Newhouse publications other than the Star-Ledger also are feeling the economic downturn's pain. The Star-Ledger's sister publication, the Times of Trenton, N.J., has received more applications for buyouts than the 25 it needed to avoid closure.

At the Star-Ledger, the mood has darkened at the paper's headquarters as employees debated whether to accept buyout offers. Staffers decorated the newsroom with posters of the Titanic and Hindenburg, and an email that circulated with the subject line "Star-Ledger theme song" contained the Clash song "Should I Stay or Should I Go." Employees lamented the possible gutting of the paper, which has built up a fierce devotion and a lengthy list of longtime staffers.

Like many papers across the country, the Star-Ledger has had to cut costs, pare staff and eliminate sections as the Web and downturn have eroded print readership and advertising. The paper this year is expected to incur a loss of as much as $40 million, according to Donald Newhouse, president of Star-Ledger parent Advance Publications Inc. The Star-Ledger has an average weekday circulation of 345,130, 15th-largest in the U.S.

The paper enlisted J.P. Morgan Chase & Co. over the summer for a possible sale of the paper, but no steps have been taken to solicit buyers or circulate financial information.

Mr. Newhouse said management is committed to pursuing a sale if it can't reach agreements on the cost-cutting measures. "We are where we are today because there was a general belief that we meant what we said and that what we said was true," Mr. Newhouse said.

By: Russell Adams and Shira Ovide
Wall Street Journal; October 8, 2008

Financial Downturn Further Weakens Newspaper Publishers

The financial turmoil is adding headaches for troubled newspaper publishers.

The Star Tribune said Wednesday it skipped a debt payment as the Minneapolis newspaper tries to restructure $430 million in borrowings. Publisher Chris Harte indicated the company is testing all options with its lenders.

Gannett Co., the country's largest newspaper publisher, meanwhile said Wednesday it had tapped its credit line as short-term financing markets stall. And alternative weekly publisher Creative Loafing Inc. filed for Chapter 11 this week.

The Star Tribune of Minneapolis is skipping a payment to lenders as it tries to restructure its debt.

The credit crunch has further weakened newspaper publishers, which already are reeling from a prolonged drop in advertising revenue. Several major chains, including Tribune Co., MediaNews Group Inc. and McClatchy Co., have significant debt loads. As debt conditions sour, interest rates will go up for many papers, and lenders will impose onerous conditions. Some publishers risk default or even a trip into bankruptcy court.

Of the major publishers, The Star Tribune may be closest to testing the waters. Last year, private-equity firm Avista Capital bought the paper from McClatchy for $530 million. The paper missed a debt payment in June, and skipped a $9 million quarterly payment this week to conserve cash as it continues to work with lenders to give it breathing room on its debt. Mr. Harte told employees the tightening credit markets are complicating the restructuring process.

The good news is that banks -- many facing their own troubles -- are expected to cut newspaper companies some slack on debt terms. The alternative may be taking over newspapers, something many banks won't stomach. For one thing, newspapers are a tough sell in current conditions.

"We think it's more likely that value is maximized if newspapers are operated as a going concern rather than being liquidated," Fitch Ratings analyst Mike Simonton said.

Even if banks rework debt for the Star Tribune and other debt-squeezed publishers, tighter credit markets are likely to force higher interest rates and operating limitations. Lenders last week agreed to loosen debt restrictions on McClatchy, publisher of the Miami Herald. In return, McClatchy will pay higher interest rates -- a bump of less than $10 million a year, or about 5%, based on debt levels at the end of June. The banks also mandated limits to dividend payments and use of asset-sale proceeds.

For Tribune, recent rising interest rates could cost the company nearly $100 million more on its nearly $13 billion in debt, according to analysts. Tribune also risks tripping requirements to keep debt levels to under nine times its adjusted cash flow. At the end of the second quarter, the ratio was 8.3. Tribune declined to comment.

Tribune has given itself breathing room in many ways. The company sold assets to pay debt, and a pending auction of the Chicago Cubs baseball team is expected to fetch $1 billion or more. Tribune is relying on the Cubs deal in part to pay off $1.4 billion due next summer, though it's unclear what impact the financial tumult will have on prospective buyers.

As credit conditions tighten, USA Today publisher Gannett moved Wednesday to tap its $3.9 billion in revolving credit facilities. The company's debt is tilted toward commercial paper -- short-term debt with floating interest rates. In recent weeks, the market for commercial paper has dried up.

"Throughout all of this, we've successfully funded ourselves," a Gannett spokeswoman said. Gannett has modest debt levels compared to its cash flow, and the company said tapping the credit line was a precaution. Still, the move was sign of how tight credit conditions are for even the healthiest borrowers. "That doesn't bode well for even weaker companies," said Dave Novosel, an analyst with debt-research firm Gimme Credit.

By: Shira Ovide
Wall Street Journal; October 2, 2008

New York Sun Says it May Close in September 2008

The editor of the New York Sun, a small five-day-a-week newspaper that professes to offer "an alternative" to The New York Times, said Wednesday the paper may close at the end of September 2008 if it doesn't receive new backing.

The Sun "has yet to achieve its financial goal of making a profit," editor Seth Lipsky said in a letter to readers posted on the paper's Web site. The letter is to appear in print editions in September 2008.

"As costs rise and the advertising market for newspapers generally tightens, keeping the Sun alive and moving it toward self-sufficiency will require broadening the base of investors beyond the original group," Lipsky's letter said.

The paper's investors are willing to infuse more capital, and talks with other newspaper owners and investors about "possible combinations or investment relationships" will continue, he said. But there's no guarantee of rescue for the paper, whose losses he called "substantial."
Lipsky said The Sun is losing money despite "increases in print advertising revenues not only last year and the year before but also so far this year" - in contrast with most newspapers across the country.

The Sun was founded in October 2001 and began publishing daily in April 2002, according to Lipsky's letter.

Newspaper Inserts Trending Down

Advertisers Not Using As Many Print Inserts

Newspaper Industry experts cite several reasons for a recent slowdown in the retail insert marketplace, among them declining news paper circulations, rising paper and ship ping costs, as well as advertisers' desire to reach younger, text-savvy consumers. Several printers and at least one media company, however, have introduced data-intensive programs designed to convince retailers of the power of print.

“We see a decline in inserts year-over-year, of between 12% to 20% industry wide,” reports a marketing director at Quebecor World Market ing Solutions Group.

Printers point to a decrease in pages as the cause. “Retailers are increasing insert page counts for key events like Christmas, Thanksgiving, Mother's Day and Father's Day while decreasing pages for other, less key, events,”. Costly gate-folds are also used less often. Newspapers in general are no longer delivering Return on Investment for Advertisers.

“The newspaper home sub scriber has always been one of the retailer's most valued consumers, and advertisers are beginning to walk away from newspaper and insert advertising efforts,” reports a top sales officer at Valassis Communications Livonia Michigan.

There are a few positive signs remaining for Hypermarket Meijer is taking in 10 times the number of paper coupons that it did last year, accord ing to Valassis. “Cash register returns drive circular and preprint behavior.

Targeted marketing, a direct marketing strategy, using demographics, minority demographics are all being applied to retail inserts more often to drive relevance.

Tribune Company, which publishes 10 daily newspapers, has started rolling out a program called PrePrint Optimization. It pairs client customer data with subscriber data to target where and how advertisers can effectively reach consumers.

“We know we're in the age of account ability and that this was a key component missing from newspaper advertising,” says an advertising director for major accounts at The Chicago Tribune, of the Tribune Newspaper's data-oriented market segmentation advertis ing programs. Linking Tribune newspaper household demographic data bases with their own customer databases, advertisers can insure they are get ting the best return on investment from print insert efforts.

PrePrint Optimiza tion is too new for results. Tribune Company said retail advertising revenues were down 26% for the second quarter; preprint revenues dipped 19%.

Sometimes analytics show the best medium for an advertiser to be one of Tribune's non-subscriber publica tions or its shared mail program. By ensur ing that advertisements are more targeted, Tribune hopes to increase the relevance of ads for consumers and advertisers.

“Advertisers test different methods to reach consumers to see what works best,”says a sales manager for Direct Delivery+ at Tribune Media Net, Tribune Company's national sales arm. While no “silver bullet” may exist, “by no means are we sitting back on our laurels, we have to get aggressive to counter internet marketing and the power of Google."

Retail insert printers Quebecor World, Vertis and Valassis have each introduced strategies for print advertising by crunch ing available data. The goal is to assist retailers to effectively reach their audi ence through such vehicles as shared mail, targeted direct mail, in-store on-demand coupons and other print solutions.

Advertising Opportunities are there for retailers to reach consumers via print, offered a SVP of sales at Vertis. “Free-standing inserts are one way to convey a print message. It needs to be part of the total media mix.

By its cross-selling initiatives, Valassis shifted $7.3 million in newspaper preprint business to shared mail in the first half of 2008, giving advertisers a way to reach non newspaper-reading households (not reported is the breach of privacy used to identify and list non-newspaper households.

This month, Quebecor World will launch Store.driver, a new direct-mail piece — designed to drive people into retail stores — that can be printed in-line with a map, paper gift card and fragrance strip.

All of these untested, new print advertising programs appear as desperate efforts by the print and newspaper community to combat the shirt of advertising dollars migrating to online marketing programs.

Sacramento Bee Offers Buyouts To More Than Half of Employees

The Sacramento Bee is offering voluntary buyouts to a majority of its full-time employees in the latest round of cost-cutting at the newspaper.

Publisher Cheryl Dell says buyouts are being offered to 55% of the paper's full-time employees and a smaller number of part-timers. The buyout offer includes about 200 of the 240 full time news and editorial-page employees.

Ms. Dell says ad revenue is down more than 22% this year at The McClatchy Co.'s papers in California and Florida.

Sacramento-based McClatchy, which announced a wage freeze almost two weeks ago, owns 30 daily newspapers nationwide.

The Modesto Bee offered all its full-time employees buyouts last week, and the Sacramento paper's move Monday comes on top of the elimination of 86 jobs there in June. The paper hinted more layoffs are possible.

Wall Street Journal; August 26, 2008

As Papers Cut, Tribune Updates TV News

Traffic and weather are the only exclusive content left for local TV stations

Tribune Co. is slashing staff and space at newspapers across the country. But in another old-media business -- local television news -- it's moving in the opposite direction.

Nearly half of Tribune's 23 broadcast stations are expanding or launching local news operations, many of them hiring staff as a result. The biggest investment is in KSWB-TV in San Diego, which has hired a staff of nearly 50 to produce the station's first in-house news broadcasts in nearly three years.

KSWB abandoned its original newscast in 2005 to save money. The new programs, which debut Friday, will be radically different from the old, with a format that borrows from conventions of cable television and incorporates interactive elements of the Web. Morning anchor Arthel Neville will wander an open set, chatting with reporters, as well as with "Jack the Cop," a former sergeant for the San Diego County Sheriff's Department. Some correspondents could join via Web cam. If the format works well, the company could import elements to other parts of its empire.

"It's practically like there's a government regulation that regulates how a TV station sounds," says Lee Abrams, Tribune's chief innovation officer. He notes that some of local-news conventions are fodder for parody, from "The Simpsons" to the 2004 movie "Anchorman: The Legend of Ron Burgundy," which stars Will Ferrell as a pompous 1970s news anchor -- and is set in San Diego. "It's out of date and ready for reinvention," he says.

Mr. Abrams is part of a new management team hired by real-estate mogul Sam Zell, who led an $8.2 billion buyout of Tribune in December. The new team has been aggressive in cutting costs on the newspaper side of the business, where ad revenue has plunged since the deal amid an industrywide slump.

The tough economy and a shift of young viewers to the Internet are also hurting ad sales in the TV industry. Several owners of major station groups, including Belo Corp., CBS Corp., General Electric Co.'s NBC Universal, and Walt Disney Co., have in recent weeks reported continuing softness in local advertising, and some groups have laid off staff in recent months.

But Tribune's management team, many of whom cut their teeth in broadcasting, are optimistic about growth prospects for television. Local news has long been a signature program for TV stations otherwise dependent on syndicated talk shows and sitcom reruns. Homegrown newscasts also draw a disproportionate number of local advertisers.

"News is the one area that they can control both in terms of focus and more importantly in terms of the economics," says Bill Carroll, a programming consultant for Clear Channel Communications Inc.'s Katz Media Group, an ad-sales and marketing firm. News programs brought in $4.7 billion in ad spending on U.S. local stations in 2007, up 10% compared with 2003, while advertising on non-news programming was flat, according to TNS Media Intelligence.

Some station groups, such as Hearst-Argyle Television Inc. and LIN TV Corp., have been increasing their local newscasts in recent years, pushing into the newly popular area of weekend morning shows. But few if any are expanding on the scale of Tribune. Its TV station group is adding more than 90 people nationwide to its news departments by January, an increase of about 10%, according to Steve Charlier, who is in charge of news for Tribune and Local TV LLC, a station group owned by Oak Hill Capital Partners that shares resources with Tribune.

TV news reinventions aren't new. But introducing an updated format of a newscast can be risky, as CBS News learned when it revamped its Evening News by hiring Katie Couric -- only to see ratings slide sharply. There's a chance that KSWB's newscast -- which features a 900-square-foot "mega map" of San Diego spread out in a backlot behind the studio -- might not resonate in a relatively small market that already has five English-language TV news operations.

Station executives acknowledge it is a risk. "But I think it would be a much bigger risk to invest all this money, talent and people and do the same thing as everyone else," says Ray Schonbak, the station's general manager, who now oversees Tribune's other local affiliates of Fox Broadcasting.

Helping spark the decision to relaunch original news programming was the station's affiliation switch from the ailing CW network to Fox, which, like The Wall Street Journal, is owned by News Corp. Tribune expects Fox programming to boost the station's ratings.

"We're confident that we'll see the money back," says Ed Wilson, president of Tribune Broadcasting, of the company's news investment. "They key thing is to be local."

By: Sam Schechner
Wall Street Journal; August 1, 2008

Newspapers Think Locally for Online Ads

Sales Efforts Increase, But 'Smaller Dollars' Prove Hard to Chase

In an effort to make up for their plunging print-ad revenues, newspaper companies have been scrambling to train their sales teams in the intricacies of selling online ads to local marketers.

But in many cases they aren't selling a lot of ads and at least some of the new ads they are managing to sell are cannibalizing their print-ad revenues, industry analysts say.

Over the past two years, the number of local salespeople peddling online ads for newspapers has ballooned to 15,500 from 5,900, according to estimates from media-research firm Borrell Associates. Traditional media companies have believed strongly that they have an edge over Internet companies because they are based in the communities they serve.

But whatever edge may have existed appears to have evaporated. Newspapers now control only 27.4% of the local online ad market, down from a 35.9% share in 2006, according to Borrell.

There are several reasons why newspapers so far have failed to crack this market. Because online ads are far less expensive than print ads and thus offer lower commissions, it's difficult to get salespeople to focus on selling the digital products.

Also, the types of ads that newspaper companies are selling -- typically banner ads -- don't correspond with the needs of a local merchant. And much of the potential local online ad revenue growth comes from small and medium-size local businesses, a market segment that newspaper companies have typically ignored.

It's not that spending on local ads isn't growing -- that market expanded at a 57.2% clip last year. The big winners so far are Internet companies like Google and Local.com, which collectively control 53.3% of the local online ad market, up from 25% in 2006. And they've done that with only 1,400 ad-sales reps. They specialize in selling ads that target consumers searching the Web for a particular product or service, whether it's a plumber or a neighborhood pizzeria.

Some publishers say rising competition from everyone from Google to local bloggers has made it tough to offset newspapers' sliding share of local online ad revenue. "At the moment we're just trying to retard it as much as we can," says Dan Shorter, president of digital media for the Minneapolis Star Tribune.

The cannibalization of print ad revenues is also a problem. One common scenario is that a trusty local print advertiser -- a car dealership, say -- that used to spend $20,000 a year on advertising might now spend a quarter of that with the newspaper online and nothing in the print product. Thus, the newspaper company is now selling more digital ads, but the new sale is taking away from its bottom line.

Companies like E.W. Scripps, A.H. Belo and Lee Enterprises generally have three broad streams of ad revenue -- local, classified and national. Classifieds typically represent 60% to 70% of papers' online revenue, but Craigslist, among others, is fast gobbling up that business. The pool of national ads, meanwhile, has been a promising area for newspapers, but even there, growth is slowing. That's why papers are focusing relentlessly on local online ads. A lot of newspaper companies have teamed up with Internet players like Yahoo on a variety of cross-selling and ad-technology initiatives to get more local ads.

Small- to medium-size businesses are a prime target for newspapers because their limited ad budgets price them out of the daily print paper. Newspapers aren't the only traditional media businesses trying to reach this crowd: Yellow pages-style directories, which for years have sold listings to small businesses, are also eyeing this opportunity.

But as newspaper companies have discovered, smaller and less sophisticated advertisers require more hand-holding -- and bring in fewer ad dollars -- than a traditional local advertiser. The independently held Bakersfield Californian recently started offering free seminars to teach local small companies how to set up free business listings on Google and Yahoo, and on an online directory hosted on the paper's Web site. These smaller businesses for the most part have annual advertising budgets of $10,000 or less a year, which would be eaten up by buying just two full-page ads in the paper.

"It's a very long sales process for smaller dollars," says Mary Lou Fulton, vice president of audience development for the Bakersfield Californian, which now has a handful of digital-only ad-sales reps.

Most newspaper companies don't break out local from nonlocal ad revenue. But in the last week, Scripps, Belo and Lee reported declines in online ad revenue for the second quarter. Those figures includes both ads sold separately and as part of a bundle with a print ad.

Some papers, like the Scripps chain, are starting to give sales people more motivation to sell online ads. At Scripps's Corpus Christi Caller-Times paper in Texas, for example, the online audience is about a third of the size of the print circulation. As a result, the paper is in the process of tying a third of the salespeople's commissions to their sales of online ads. The digital goals will increase sharply each year, forcing the sales teams to sell more digital ads to continue to maintain their monthly commissions.

"Unless you take practices that have been in place for 50 years and shake the dust off the rugs, you're not going to move the needle," says Mark Contreras, senior vice president of Scripps newspaper division.

By: Emily Steel and Shira Ovide
Wall Street Journal; July 31, 2008

Palm Beach Newspapers Set to Cut 22% of Staff

The company that owns the Palm Beach Post plans to cut 300 jobs, or 22% of its work force, at four publications. Palm Beach Newspapers Inc. employs 1,350 at the Post, Palm Beach Daily News, Florida Pennysaver and La Palma. The publications are owned by Cox Newspapers, a subsidiary of closely help Cox Enterprises Inc. Post publisher Doug Franklin said a prolonged slump in advertising revenues, increased Internet competition and “an overall difficult economic environment” made the cuts necessary.

Tribune Starts Its Overhaul in Orlando

The Orlando Sentinel landed on newsstands Sunday with a new layout featuring more graphics, quick-read digests of top news, blog summaries and other changes aimed at making the newspaper more appealing to harried readers.

Orlando is a proving ground for Sam Zell's effort to reinvent floundering Tribune Co., owner of a string of television stations and newspapers, including the Sentinel, the Chicago Tribune and the Los Angeles Times. Between now and the end of September, Tribune plans to roll out redesigns at its papers. Accompanying the makeovers will be scaled-back page counts and further paring of employees.

Mr. Zell took control of the company in December after leading an $8.2 billion deal to take Tribune private. The buyout left Tribune saddled with debt amid an industrywide meltdown in newspaper advertising, but Mr. Zell and his new management team of radio and TV executives have promised a revival built on fresh ideas.

Newspaper promotions declared "New look, new stories, new attitude," in the run-up to Sunday's launch. Like other newspaper makeovers, the redesigned Sentinel reflects a new industry reality: to avoid looking dowdy to readers used to the pizzazz and immediacy of the Web, newspapers must be eye-catching and full of alluring and indispensable stories.

"Our community is fast moving, very modern. It's changing and growing," says Sentinel Editor Charlotte Hall. "We need to have a paper that feels like that, too." The Sentinel, Florida's third-largest newspaper by weekday circulation, has seen circulation hold essentially flat in the last year to 227,593. Times Publishing Co.'s St. Petersburg Times leads in Florida with a weekday circulation of more than 300,000 and McClatchy Co.'s Miami Herald is at No. 2 with circulation of about 240,000.

Newspapers and magazines looking for new life frequently turn to makeovers. Since the introduction of USA Today in 1982, newspaper redesigns have followed a similar pattern: splashier color, simpler layouts and more digestible stories for busy readers.

The new Sentinel has drawn on many of these same design elements, and even Ms. Hall concedes the redesign isn't as radical as it could be. But some of the new touches are less common: Lee Abrams, Tribune's new chief innovation officer, encouraged the paper to do more to emphasize its "stars," and that idea made it into the new look, in the form of front-page pictures of columnists accompanied by blurbs from their columns.

The paper has also bolstered its coverage of local news, consumer information and government-watchdog stories, and has coached reporters on different ways to tell stories. A feature about a troubled school turned into an emotional first-person account of the reporter's year spent in the classrooms and hallways.

New Tribune management has been encouraging fresh thinking from company properties. Tribune's newspaper division in particular has been slammed by Mr. Zell and his team as being stuck in the past. Mr. Abrams, a radio-industry veteran, has raised eyebrows with stream-of-consciousness memos tossing out ideas from front pages consisting entirely of maps to more flexible sizes for wedding announcements so wealthy people can drop big money to trumpet their big day. A frequent target of Mr. Abrams's ire is newspapers' staid look. Talk of revolution, however, has translated into few specific prescriptions from the Zell camp to cure Tribune's ills.

It remains unclear whether thinner, jazzier newspapers can bolster Tribune's precarious financial health. Ad sales are in free-fall across the industry, and Tribune is faring even worse. Newspaper advertising dropped 13% in the first quarter, according to the Newspaper Association of America, while Tribune's ad revenue fell 15%. By virtue of its $13 billion debt load, largely stemming from Mr. Zell's buyout, Tribune has little room to maneuver. Already the company's $1 billion in annual cash flow has the company close to the edge of its lending commitments.

Past experience shows newspaper makeovers don't necessarily translate into financial success. After the Bakersfield Californian underwent a drastic redesign two years ago, the 60,000-circulation paper in California's Central Valley saw a small initial jolt to circulation and revenue, sparked by the brighter look and expanded coverage of hot topics like immigration. But the gains have been erased as the area economy struggles. Bakersfield Californian Chief Executive Richard Beene says the steps were necessary to keep the paper relevant, but he has advice for others considering a similar redesign: "Don't expect it to turn around circulation or revenue overnight. It's not a magic bullet."

Orlando will be a petri dish as eight of Tribune's major dailies plan their redesigns. The South Florida Sun-Sentinel and the Baltimore Sun are teed up next. The Chicago Tribune has named leadership teams to oversee its revamp planned for September, according to an internal memo in recent days, and will use its Saturday editions to test new ideas. Mr. Abrams says Orlando's prototypes are being shared as he and other Tribune officials jet across the country visiting the newspapers. He says, however, that every paper will be left to chart its own course. "I think there will be similarities, but it won't look like a national template by any means," Mr. Abrams says.

Newspaper design experts who saw prototypes of the new-look Sentinel generally gave it high marks. Howard Greenberg, publisher of the Sentinel and the South Florida Sun-Sentinel, says Orlando advertisers are excited about the redesign, and he is hopeful the makeover can help reverse sliding ad revenue dented by the souring Florida housing market. "If we could get everyone reading the paper one more day a week, this will be a financial home run for us," he says.

The Sentinel, whose Sunday circulation is 332,000, set up a phone line and email address to handle feedback on the redesign. Early reader response appeared to be light, but Ms. Hall said the impact of a redesign would take months to pin down. "We will be listening to our readers carefully," she said.

By: Shira Ovide
Wall Street Journal; June 23, 2008

Newspaper-Circulation Drop Sharpens

Most of the nation's biggest newspapers saw circulation tumble at an increased rate, a sign that the migration of readers online may be picking up speed.

The Audit Bureau of Circulations reported Monday that average weekday circulation at 534 daily newspapers fell 3.6% for the six months ended March 31, compared with the year-earlier period. The rate of decline is accelerating: ABC had reported an average weekday circulation drop of 2.1% in the year-earlier period and 2.6% in the six months to November.

Sunday circulation fell even more, losing 4.6% on average.

Newspaper circulation has been falling for more than 20 years amid increasing competition for advertising dollars and readers' attention. The latest results were grim but unsurprising, said John Morton, an independent newspaper analyst. "Big-city papers are suffering right now, and this is just reflective of that."

Newspaper publishers have also seen worsening drop-offs in print-ad revenue over the past few months, at least partly because of the economic slowdown.

Nearly all of the 10 biggest newspapers in the U.S. posted circulation declines. Circulation at the Los Angeles Times -- which has struggled with turnover among its newsroom management as real-estate magnate Sam Zell took effective control of its parent, Tribune Co., in December -- fell 5.1% to 773,884. The New York Times' average weekday circulation fell 3.9% to 1.08 million. It saw an even steeper drop in Sunday circulation, which was down 9.3% to 1.48 million.

"This was a decline that we planned and budgeted for," said New York Times spokeswoman Diane McNulty. The company has eliminated "bonus days," in which the Sunday paper was delivered to weekday subscribers, and has cut back on discounted and advertiser-paid distribution as it attempts to grow more-profitable circulation, she said. In that shift, she added, "We do expect to see some copy decline."

A Los Angeles Times spokeswoman said it too has cut bonus-day issues, which lowered circulation. She also noted a price increase for home-delivery subscribers and competing pressure from other media outlets.

Of the top 10, only two newspapers saw circulation growth. Gannett Co.'s USA Today, the largest paper in the U.S., posted a 0.3% increase in weekday circulation to 2.28 million. At The Wall Street Journal, which is owned by News Corp., the number of subscribers inched up 0.4% to 2.07 million, a figure that includes print subscriptions as well as about 352,000 online-only ones that qualify under the Audit Bureau's rules. The year-earlier figure included 340,618 online-only subscriptions. Other papers also offer electronic editions that qualify as part of their circulation, but the Journal has a far larger number of such subscriptions.

Some particularly big declines occurred among big newspapers below the top 10 ranking, including the Boston Globe (down 8.3%), which is owned by New York Times Co.; Cox Enterprises Inc.'s Atlanta Journal-Constitution (down 8.5%) and Advance Publications Inc.'s Star-Ledger of Newark, N.J., which lost 7.4%. A.H. Belo Corp.'s Dallas Morning News experienced the biggest percentage drop among the top 25 newspapers, losing 43,607 weekday subscribers, about 11% of its weekday circulation, compared with the year-ago report.

The Morning News said last year that its efforts to reduce bulk circulation -- free copies sent to hotels and airports -- as well as a smaller delivery zone, would cause it to lose circulation at a faster rate for a year.

The Daily News and the New York Post maintained their fierce battle for readers, although both lost subscribers. The Daily News, owned by real-estate developer Mortimer Zuckerman, ended the period with 649 more average weekday subscribers than its local rival the New York Post, which, like The Wall Street Journal, is owned by News Corp.

Both papers lost circulation, with the Daily News down 2.1% to 703,137 and the Post down 3.1% to 702,488.

The ABC announced in March changes that may allow papers to count more copies in their paid circulation, while separating some bulk circulation, including copies distributed at hotels, into a separate category. Those new rules won't go into effect for at least another year.


By: Andrew Lavallee
Wall Street Journal; April 29, 2008