By: Kristina Ackermann
Mike Klingensmith could have gone anywhere. During his 30+ year career at Time Inc., he co-founded Entertainment Weekly, served as president of Sports Illustrated, climbed his way up the ladder to chief financial officer, and reached executive vice president before stepping down in 2008. His resume is impressive, to say the least.
So why, after the plush NYC offices and media recognition, did he choose to take the helm of a Midwest newspaper company fresh out of Chapter 11, still reeling from cost-cutting, layoffs, and union battles? The answer, in part, is for the challenge.
“I’m a big fan of newspapers — in all their distribution forms,” Klingensmith said, conveying at once both a reverence for the past and acceptance of a multi-platform future. “And I’m a fan of the Twin Cities, which is my hometown. So the challenge of restoring health and building a future for my hometown newspaper seemed like a great opportunity and a very worthwhile goal.”
When Klingensmith started at the Star Tribune in January 2010, no one would have argued that it was a worthwhile goal. The “great opportunity” part would have been a tougher sell. And yet, after less than two years on the job, Klingensmith is poised to prove the skeptics wrong. With consecutive gains in circulation and a stable of new digital products, the Star Tribune is standing tall as one of the elite U.S. newspapers.
And while his background in magazines helped shape his business acumen, it definitely was not a big-city swagger that won over the hearts of Minneapolis consumers. He’s actually the hometown hero in this story.
Klingensmith’s Midwestern roots run deep. He grew up in Fridley, a suburb of Minneapolis, and drove a cab in the Twin Cities for three summers while attending the University of Chicago. He’s an avid Twins fan, and casually mixes sports analogies into conversation. There have been several profiles written about Klingensmith since he returned to Minneapolis; most paint a happy homecoming portrait for this native.
The Star Tribune went through some rough years before finally emerging from bankruptcy in late 2009. A few rounds of layoffs coupled with deep cost-cutting measures in all areas of a business can lead to low spirits and even lower expectations. But Klingensmith said he was pleasantly surprised when he arrived on the job, with the financial restructuring already fully completed.
“I was actually surprised that the company was in better shape than I had expected,” he said. “There was a really great team here, and most of them are still here.”
Boosting morale was an early challenge, especially in the newsroom, but it was a challenge the employees were ready to tackle with him. “Obviously people had been through a lot. It was a drain on the newsroom management. Everything had been focused on what costs to cut as opposed to making the paper stronger. So in a way it was a relief from that huge distraction,” he said. “They were willing to give me the benefit of the doubt, and they were glad to have a permanent publisher again.”
Early in his tenure, Klingensmith had the pleasure of handing out profit-sharing checks to his employees — $1,100 to each full-time staffer — due to the company’s financial health. “That was actually part of the restructuring agreement, so I can’t take credit for that,” he said. “The profit sharing is something that was put in place to help mitigate some of the reductions that everybody was forced to go through. The theory being that if the company succeeds then we would be able to share that success.”
Though he may not take credit for the idea, he certainly benefited from the buzz that followed. In an industry wrought with layoffs and closures, the notion of profit sharing turned a lot of heads and was a reversal on the expectations made just a year prior.
“The greatest challenge is to defeat the conventional wisdom that newspapers are a dying medium,” Klingensmith said. “We have to remake the storyline, to point out the tremendous resource that we have with our newsrooms and the opportunities that digital distribution affords us to leverage that strength. In our market, we’ve been able to demonstrate that there is a lot of life left in the business, because all of our consumer usage numbers are up — both in print and in digital.”
One of the greatest successes Klingensmith likes to tout is his paper’s increase in circulation. “Our circulation will show an increase in the upcoming ABC release for the third consecutive period, with Sunday print up about 2.5 percent — including even some gain in single copy sales,” he said. “And of course our digital visitors and visits are up double-digits percentages year over year.”
That circulation boost didn’t just happen — it took some creativity, hard work, and a crash course in new marketing methods. “We have borrowed a few techniques from the magazine business in circulation,” he said. “We’ve deployed more sophisticated direct mail and added new sources of subscription sales, like using digital daily deals.”
The push for more paid subscriptions is coupled with a renewed commitment to providing a quality product. The recently redesigned paper features a refreshed frontpage design and eight additional pages of color every day.
“Clearly we’ve made every effort to reduce costs where possible, but not at the expense of investments in the product and our future,” Klingensmith said. “While we are investing aggressively in our digital future, we are not ignoring our print base. As long as we publish a printed paper, we are going to do it with all the excellence we can.”
Finding ways to boost readership both online and in print are clear priorities, and he asserts that the two forms are complementary, rather than competitive.
“We did remake the website in April, and people have responded well to that, and we’ve been working on the printed paper as well. We’ve had a positive reception with both of those,” he said. “We did have a price increase of 9 percent for home delivery customers with very little falloff, so we see that as a sign that people value their subscription relationship with their local newspaper.”
Value and trust are points that come up often when Klingensmith talks about his readership. He’s a big believer in focus groups and consumer research — a trick learned from his past life in magazines — to get a feel for what readers want.
“Our research is directed at understanding what people are looking for and how people are consuming their news and information across various platforms and how we can fit into all that,” he said. “We’ve found that our brand is strong. People view us as authoritative and reliable — trustworthy; that’s where our competitive advantage is and we’re moving as rapidly as we can, trying to meet those needs with the introduction of digital products.”
Klingensmith is perhaps one of the loudest proponents of digital transformation, but even he admits that his audience is still print-centric. “The habits for local news consumption are very ingrained and don’t change as rapidly as you might think.”
Making the sell
While readers may be stuck in their habits for the time being, advertisers — and their relationship with the newspaper — have undergone a categorical change. Klingensmith isn’t discouraged by the industry-wide decline in advertising revenue; he already has his eye on the future.
“Our advertisers are struggling in the new fragmented media environment to figure out what will work for them and how they can best use their marketing dollars,” he said. While many of the Star Tribune’s clients are national accounts represented by larger ad agencies, the company must also cater to smaller mom ‘n’ pop advertisers. “Here in the Midwest, a lot of the businesses we serve are small, local businesses. There’s a big role for us to play,” he said.
Klingensmith said the paper has stepped into the role of the ad agency, providing consulting services for advertisers and offering guidance on areas such as SEO, targeted email marketing, and video ad rolls. “We look for ways we can help them with their marketing and to utilize their budgets as effectively as possible. Most of the time it’s a Star Tribune product, but not always,” he said. “It’s changed the nature of the sales job for a local newspaper rep. It used to be about just calling up and placing an order — it’s not like that anymore.”
Increasing the number of products advertisers can utilize is a key component of this strategy.
“We’re working very hard to introduce new and interesting solutions for our clients to enable them to get the most from their marketing dollars. These products range from search engine optimization programs to iPad impressions to video avails — in quality content ranging from our traditional news pages to high school football iPhone apps,” Klingensmith said. “With our digital growth, today we reach the largest audience in our region both in print and in digital — a reach that is on par with broadcast.”
Talk to Klingensmith about his business for any length of time, and the conversation always comes back to digital. Unlike many other publishers, he doesn’t see digital as a necessary evil, but rather as an opportunity to expand his paper’s reach and credibility. His goal for 2012 is to better serve his advertisers and to have a larger portion of revenue come from reader subscriptions, and it’s the digital initiatives that will help the Star Tribune reach that goal.
“We are setting out to change the definition of a subscriber relationship to one that includes access to all of our products — in print and digital for our subscribers,” he said. This is another area where Klingensmith’s experience at Time Inc. comes into play. “I have used the analogy to Time Warner’s introduction of ‘TV Everywhere’ where if you subscribe once to HBO, now you can access it on your tablet and mobile devices — as well as through your living room TV. In the same way, if you are a Star Tribune subscriber, we invite you to read our content and view our video wherever, whenever, and however you like.”
His use of the word “subscriber,” rather than “viewer,” is intentional. The paywall is coming to StarTribune.com, and it’s coming soon — perhaps by the time this issue of E&P lands in your inbox.
“So as part of that strategy, we will be metering our website and introducing digital subscriptions within the next few weeks,” he said. “For the most part, we are following The New York Times model, with more Midwestern prices.”
With a newly relaunched website, iPad app, mobile apps, a daily deal program, and a metered paywall in the works — not to mention a redesigned print product — the Star Tribune is sending the message that it’s not going anywhere, and readers and advertisers like what they see.
Defy conventional wisdom
One of the most endearing qualities about Klingensmith is his genuine humility. He told me he was “quite surprised” to receive the recognition of Publisher of the Year, and he was hesitant to offer words of wisdom to other newspaper publishers. “I’m a little loathe to be giving advice to people who have been doing this a lot longer than I have, and everyone’s situation is different,” he said.
As for the Star Tribune, much of the business model is in not throwing the baby out with the bathwater.
“Since investment dollars for the future, for most of us, probably need to come from legacy business cash flow, we should maximize those dollars and not be in a rush to abandon the print business,” Klingensmith said. “Some of the old-fashioned businesses we’re in — like distribution — actually generate contribution, so we’re looking for more products to put through that distribution system as long as we already have it in place. Our total market coverage advertising product is one, for instance. My other advice is simply not to accept the conventional wisdoms about media — in my experience they usually turn out to be wrong.”
And while Klingensmith has certainly managed an impressive feat at Minneapolis’ legacy paper, he didn’t do it alone. “It’s embarrassing to be singled out, because I really do have a great team, and they’re a big part of what goes on. I have 11 direct reports, and eight of them were here before I was and had to go through the trying years of restructuring. They handled that very gracefully and really helped with the transition into what we’re doing here today,” he said. “I’m just happy this honor could end up at home here on the prairie.”
Turf wars? Not exactly.
In the region known as the Twin Cities, there are also twin newspapers. Just across the river in St. Paul, Minn., is another metro daily that has been upping its involvement in the digital sphere — the Pioneer Press. But the theatrics of a cross-town rivalry are out of mind for Klingensmith.
“I don’t know that I would characterize it as a rivalry; it’s more of a peaceful coexistence,” he said. “We consider ourselves more of a regional paper, and we aspire to be the paper of the whole state, which can be made possible by our focus on digital distribution. So we’re not focused on that particular geography.
“It’s not the Red Sox and the Yankees,” he added with a chuckle.
Another local news source that has gained a strong foothold in the Minnesota market (and provided much of the background for this feature) is the news site MinnPost.
“MinnPost is staffed to a great extent by alumni of the Star Tribune, so everyone here knows everyone over there and vice versa,” Klingensmith said. “Their mission is a lot narrower than ours, and I think they do a good job in their segment of reporting with the resources they have. Overall, I’m in favor of more reporting and more journalism, not less, and our missions are complementary in some regards.”