Shoptalk: Cutting News to Line Pockets?
Posted: 6/20/2013 | By: John K. Hartman
Why is the Newhouse family converting its newspapers into shoppers?
Newhouse executives announced last month that the once-mighty Cleveland Plain Dealer would end daily home delivery in a few months in favor of three-day home delivery, following the model Newhouse has enshrined at its other newspapers in Michigan, Alabama, New York, and, most notably, the New Orleans Times-Picayune.
In my opinion, the reason is simple: to restore generous payouts to family members.
The privately held Newhouse empire provides a comfortable living for dozens of family member owners, and tight times in the newspaper industry apparently have cut their payouts and perhaps their lifestyles.
The only way to push the stipends back in the direction of comfortable is to dramatically cut expenses while maintaining advertising revenue. So, the papers are cutting costs by being home delivered only on Wednesday, Friday, and Sunday — the biggest advertising days of the week.
The Plain Dealer, and most of the other papers, will continue to publish a token, thin, daily edition the other four weekdays that is only available from vending machines and convenience stores.
The PD can expect to get one-sixth of its daily readership on the days it is not home delivered. This is what happened to the Newhouse-owned newspaper in Syracuse, N.Y., when it cut home delivery to three days a week. Therefore, the PD’s average daily circulation will be cut to one-third of its former weekly average.
In Ohio, this will make The Columbus Dispatch the state’s largest daily newspaper. And in northeast Ohio, this will make the Akron Beacon Journal the largest daily newspaper in the region. If the Akron paper gains daily circulation from the PD’s demise the way the Baton Rouge Advocate has gained 20,000 by expanding into New Orleans, the Beacon Journal will open up an even bigger lead — a humiliating turn of events for the PD and its home city of Cleveland.
Newhouse is saving big money by eliminating news staff, eliminating office staff, eliminating delivery staff, and eliminating delivery expenses. In other words, Newhouse is getting out of the daily newspaper business and into the tri-weekly advertising shopper business.
Gannett tried the three-day model for a while in economically devastated Detroit, where it is the controlling partner in a joint operating agreement with MediaNews. The Detroit News and the Detroit Free Press went to three home-delivered days a week four years ago but lost so many readers they had to beef up their non-delivery-day newspapers and restore limited seven-day home delivery. The Free Press now offers home delivery to 15,000 households through independent contractors the other four days a week. Nonetheless, hundreds of thousands of readers of the print products were lost in Detroit, and the projected switch of readers and advertisers to digital sites has not taken place.
Other newspaper chains, large and small, understand that reading a home-delivered daily newspaper is a habit still shared by millions of Americans. These folks tend to be older than 40 and tend to have money and are the kind of folks that many advertisers still like to reach.
Gannett erred in Detroit, because once you break the daily newspaper reading habit, it never comes back for many folks. They either subscribe to a home-delivered national newspaper such as The New York Times, The Wall Street Journal, or USA Today, or turn to a computer, tablet, or mobile device where they find a world of reading possibilities vastly superior to their local newspaper.
Newhouse is watering down what is left of its journalistic products after big staff cuts so much that readers may find little benefit and go elsewhere. The chain already is backing off its three-day-a-week publication schedule in New Orleans with the announcement of new tabloids to be published on the other three weekdays in both New Orleans and Baton Rouge in response to competition from the Advocate.
In the final analysis, what the Newhouse chain has shown is a lack of understanding that the home-delivered daily newspaper assembled by journalists is a valued tradition of millions of affluent Americans whom advertisers want to reach.
By effectively breaking that habit in its markets and apparently trying to increase family member payouts, Newhouse is putting its financial viability at risk.
John K. Hartman is a professor of journalism at Central Michigan University. He is the author of two books about USA Today. Send comments to firstname.lastname@example.org.