By: Mark Fitzgerald
The saddest words of tongue or pen, so the poet Whittier claimed, are these: It might have been. But for entrepreneurs, there’s another, equally pithy, collection of short words that are sadder still: We were ahead of our time.
That’s the not-altogether-rueful conclusion that Edward Schumacher Matos has come to as he ponders his experience with Rumbo, a newspaper start-up that at every stage of its development seemed to do exactly the right thing, often the seemingly brilliant thing — only to be forced to retrench again and again.
Rumbo launched with a bang in 2004, rapidly rolling out in four Texas markets a strikingly good-looking tabloid designed by the acclaimed Roger Black, helmed by the Colombian-born Schumacher Matos who was founding editor of The Wall Street Journal Americas, and marketed by a sophisticated and creative cast of newspaper veterans, experts on Latino audiences, and guerrilla marketers.
But a couple of weeks ago, Meximerica Media simultaneously announced that Schumacher Matos was stepping down as chairman and CEO, and that the Rumbo papers — which had previously gone free, then abandoned the Austin market and cut its frequency to thrice-weekly from five times a week and knocked the Rio Grande Valley paper to a weekly — would now publish as weeklies in Houston and San Antonio, as well.
“I’d do it all over again,” Schumacher Matos tells me the other day. “It’s been fascinating, and I think we’ve learned a lot. The bottom line, essentially, is that we were ahead of our time.”
Rumbo can hardly be called a failure. Its 2006 revenues were up 40% from the year before, and as a weekly it won’t be burning through cash so rapidly. Schumacher Matos continues as an investor in the venture.
Yet Rumbo should also serve as a cautionary tale for the newspaper business on many levels. It’s a story not only of the glittering potential of the Latino market for print, but also the real difficulties and limitations of that market. It also reveals the continuing caution and sometimes ignorance of national advertisers, who many suppose wrongly will leap at any opportunity to tap into the Hispanic market.
Rumbo was conceived as a highly formatted Spanish language weekday daily that could be edited and assembled at a central spot for local distribution.
That was perhaps the only flash of intuition involved at the creation of Rumbo. Everything else was rigorously researched, and nothing else — so it seemed, anyway — was left to chance.
Even the decision to start up in Texas. With Jonathan Thompson, Meximerica’s first CFO, Schumacher Matos studied Hispanic concentrations across the country. New York, Chicago, Los Angeles, southern Florida had plenty of Hispanics, obviously, but too much print competition.
“We settled on Texas because we felt it was the most underserved market in the country,” Schumacher Matos says. Houston had a daily, El Dia, and there were a number of Mom&Pop weeklies in Dallas, Austin and the Rio Grande Valley. Some were pretty successful, like the shopper Subasta. But most were undercapitalized, unaudited, unsophisticated — no match for a real daily newspaper.
And Rumbo was determined to be a “greenfield” start-up. It was not going to take the route of, say, ImpreMedia, which has grown into the largest Spanish-language newspaper publisher by buying up existing local papers. “They are authentic voices,” he says, “but they have a lot but lot of bad habits, in terms of ethics.” And marketing.
Marketing, goodness knows, wasn’t going to be Rumbo’s problem.
But what followed is by now an oft-told story (http://www.editorandpublisher.com/eandp/search/article_display.jsp?vnu_content_id=1002611284.) A clever plan to convert sampling into paid single-copy flopped. Focus groups who claimed to be avid readers ready to plunk down a quarter every day were, shall we say, exaggerating. Advertisers balked at five-day buys.
Or buying at all. “Hispanics make up 14% of population, and 8% of the (national) buying power, according to studies — and yet they get less than 3% of the ad buy,” Schumacher Matos notes. The Rumbo dailies were not the first, and probably won’t be the last, to discover that the Hispanic ad market wasn’t growing as fast as they hoped.
“And equally important there is just a whole hell of a lot more competition for those ad dollars than we planned for when we started,” he says.
Before entering its four markets, Rumbo offered to partner with the mainstream dailies. No thank, they said — and promptly started up or enhanced their own Spanish-language products. The Dallas Morning News launched Al Dia. The Fort Worth Star-Telegram expanded La Estrella from a twice-weekly to the daily Diario La Estrella. The San Antonio Express-News launched a bilingual, bi-cultural print product designed to appeal to its market’s many long-time Hispanic citizens. And it wasn’t just the dailies targeting Spanish-language readers. “Today in Houston must be 10 Spanish-language newspapers,” he says.
“We competed well in terms of advertising and terms of readership,” Schumacher Matos adds. “But (competition) was just dividing up the pie too thinly.”
The standalone Rumbo papers could not offer advertisers the classified upsell that mainstream dailies could. And Rumbo’s attempts to snare more national advertising by expanding distribution priced many of its original local advertisers out of the papers.
Ratcheting back the frequency to three days helped with the cash burn, but didn’t do much to pump up the national category, Schumacher Matos says: “The national advertisers, and the major chain retail big boxes, they only do mechanicals for ads once a week — they don’t buy frequency.”
Schumacher Matos says he would do it all over again, but he would launch Rumbo as free papers right from the beginning. Like much in the Rumbo story, being a paid product made sense at the time. Advertisers said that’s what they wanted, and they couldn’t get audited by the Audit Bureau of Circulations as a standalone free sheet. “Being paid helped you gain credibility,” he notes.
But he also observes that big advertisers no longer disparage free distribution.
Rumbo had — has — much to be proud of, Schumacher Matos says with considerable justification. The centralized editorial production, which continues with the weekly, isn’t only cost-efficient, it allows for better quality journalism. “The quality of journalism is such I think we raised the bar for (Spanish-language) journalism nationally,” he says.
And, together with the many other Spanish-language newspaper start-ups, Rumbo showed again that the readership is out, despite the continuing spin of the radio and TV marketers who propagate the myth that Hispanics don’t read.
The demographics of Hispanics are changing, Schumacher says. Domestic births now outnumber immigrants added each year, and the second generation of Latinos is growing faster than the immigrant generation.
“But that doesn’t affect anything today, and for many years to come,” he says. “Spanish-language print is aimed mostly at that first generation, the immigrant generation, that continues to grow in buying power, and in number. Readership is going to grow (because) they are going to read Spanish-language newspapers until the day they die.”