By: Joe Strupp
Associated Press President/CEO Tom Curley had just delivered an address on April 16 at the NAA/ASNE conference in Washington, D.C., when the congenial vibe turned ugly. For nearly an hour, Curley had highlighted the not-for-profit company’s business gains, news coverage wins, and, in his view, a terrific new rate and fee structure that he claimed would give most of the 1,500 AP newspaper members up to $21 million in combined savings. But soon after he finished his report, several editors who had listened in the downstairs ballroom of the Renaissance Washington Hotel began to pounce on Curley ? and the AP in general ? for what they contend is an unfair restructuring plan and a failure to serve some of their needs.
“I think you vastly underestimate the resentment and anger in this room,” Pittsburgh Post-Gazette Executive Editor David Shribman told Curley during a Q&A session that followed, likening the AP’s CEO to “the secretary general of the Politburo.”
Other editors, including Martin Baron of The Boston Globe and Susan Goldberg of The Plain Dealer in Cleveland, chimed in, accusing the AP of not cutting fees enough and restructuring its rates to limit editorial choices. Several editors also complained that the new rate structure, which had been announced months earlier, still remained short on specifics. “They can’t tell us how we are going to save money,” Baron said later that day. “It reminds me of what I see on 14th Street in New York, the Three-Card Monte.”
This Washington dust-up, which spilled out into the hallway following the Q&A, was only the latest in a long-running battle between AP and numerous newspaper editors ? one that dates back nearly a year to when the rate structure (set to take effect in January 2009) was first announced.
Yet the editors’ concerns go beyond rates, hitting other issues that include complaints about decreases in local and regional breaking news; disagreements over the amount of “enterprise” stories coming out of the Washington and state bureaus; and suggestions that competing, non-newspaper outlets are getting too much AP copy via new multimedia programs.
“AP needs to listen to this, because it is a real difficult period to be running newspapers,” says Anders Gyllenhaal, The Miami Herald’s senior VP/executive editor. Comments Sandra Mims Rowe, editor of The Oregonian in Portland: “The piece that concerns me most has to do with the [AP’s] mission, and if there is a disconnect between U.S. daily papers and AP on how it serves those papers.”
Bill Marimow, editor and executive VP of The Philadelphia Inquirer, adds: “At a time when the newspaper industry is feeling the biggest pinch, those who are supported by the industry need to help out.”
For their part, AP executives maintain that the realities of cost-cutting and budget-tightening are a priority. They say that editor concerns are understandable, but not always easily allayed. “AP is not a solution to all of their problems,” says Senior VP/ Executive Editor Kathleen Carroll. “But we are trying to respond to as many as we can.”
William Dean Singleton, who sees both sides of the debate as CEO of MediaNews Group and AP’s chairman, says the news cooperative is a great value for his papers, representing about 7% of his costs but 35% of his newshole. “The AP product gets better and better,” he says. “It provides for most of us the only real foreign coverage we get. I am having a hard time seeing the editors’ problem with this.”
Where are the big savings?
Under current Associated Press policy, each newspaper buys a package of general news created by AP based on that paper’s location and circulation. The package usually includes breaking news, sports, business, and other national, international, and regional news relevant to the client’s market, including its state AP wire.
Under the new structure, AP member newspapers will receive all breaking news worldwide (including items from other state wires), as well as breaking sports, business, and entertainment stories. In addition, a package of premium content ? made up of five types of non-breaking stories including sports, entertainment, business, lifestyle and analysis ? will be available at an additional cost.
When the new structure was announced in 2007, AP promised a combined savings of $5.6 million across newspaper member budgets, which increased to $14 million ?and, finally, $21 million just days before the April meeting.
“Our interest was reducing costs, [creating] stability for AP in terms of our revenue, and a broader choice for the members,” Senior VP/Chief Revenue Officer Thomas R. Brettingen tells E&P during an interview at AP’s New York headquarters. He maintains there is no connection to this mission “and thinking newspapers aren’t important to us anymore. They are important.”
Some editors see it differently, claiming not only is the rate cut too small, but many of the AP services ? such as local and regional breaking news ? are lacking. Two groups of editors penned angry letters to the news conglomerate in late December and early January demanding a change. One group spanned the country, from The Boston Globe to the San Diego Union-Tribune, among other major dailies, while the other consisted solely of Ohio newspapers.
Ultimately, the Ohio editors formed a coalition to share content among their newsrooms, an arrangement that continues today. “That is going great,” says Goldberg of the Plain Dealer. “We have had some great stories breaking here that have been picked up all over the state.”
Other editors have stopped short of forging such sharing agreements, but many feel the AP’s response to their concerns has been limited ? and they fear they’ll either have to cut back on AP copy or find some other way to defray the cost. “There is a significant number [of editors] who are concerned, if not angry,” says Rowe in Portland. “It does have the potential of having more and more editors start to question it.”
Then there are those who have already begun to reduce their use, such as the Globe and the Plain Dealer ? both of which are dropping AP’s stock market listings and replacing them with Bloomberg News content. Meanwhile, the Akron (Ohio) Beacon Journal claims to be saving $1,500 annually by reducing the use of AP sports feed and photo services. “I want to wait and see what they are going to come back with on pricing,” says Editor Bruce Winges. “If they give us more of a break on pricing, that is good.”
Kathleen Carroll, responding to those cases, says, “These are editors who haven’t paid particular attention to AP until their budget situation forced them to. They didn’t have any engagement on coverage issues. That is a factor for those who have been more vocal. It is a fine debate to make it local coverage versus enterprise ? but define ‘enterprise.’ The most productive conversations are about how AP can best serve the most papers.”
She adds: “You have geographic splits where editors in one part of the country think editors in another part are getting special treatment.”
Some explanation needed
The thorny rate restructuring comes at a time when both AP and its member newspapers are facing some of the same issues: cost-cutting demands, uncertainties about the future of print, and pressure to better utilize the Web.
AP’s staffing has remained pretty stable in the past five to 10 years, with 4,100 employees worldwide including 3,000 journalists. The news organization still maintains 244 bureaus in 98 countries, most in the United States. It has had its experiments in the online world ? such as the “asap” packages that offered a daily menu of feature-oriented and quirky Web stories with video, which ended months ago. The D.C. bureau also saw a major shake-up with the ouster of 10-year bureau chief Sandy Johnson in May, and a new regional editing approach is being put in place that will likely mean fewer eyes on some copy.
On the positive side, the news organization ? technically a “not-for-profit” ? remains well in the black, with revenue up some $30 million to $710 million in 2007 and net income rising about $10 million to $23 million. AP recently hired Michael Oreskes from the International Herald Tribune as managing editor overseeing most domestic coverage and launched the Mobile News Network, which delivers reports directly to iPhones and Blackberrys. A deal with Google also gives AP content more readership and places to have its work seen.
“The bottom line for us is that the world thrives on information, and we all want to survive to provide that,” says Carroll. “We are constantly calibrating things.”
Senior VP Brettingen, whose time at AP dates back to his days as a reporter in Sioux Falls, S.D., in 1970, calls today’s changes in price and structure the biggest during his time at the news cooperative. “The combination of redoing the assessment formula, this packaging that takes out all of the intermediaries, and if you consider what we are doing all at once, it is certainly the biggest change in my memory,” he says. “I think if newspapers feel like it is a negative, it means we have been good [for a long time] at directing to keep newspaper rates down.”
He also stresses that many of the changes being planned and executed were put in place with input from newspapers: “In the year-plus we have been working on it, the challenges of the newspaper industry haven’t gotten any easier. In discussions with the membership and the board, we spoke about making the savings [higher], and we did.”
AP officials say they began meeting with members to discuss a restructuring as far back as early 2007, adding that at least 100 meetings have been held with different groups of editors, bureau chiefs, and local papers, including some 1,000 people. Those gatherings continue, adds Brettingen, who admits that the full scope of AP’s new approach may not have been properly explained.
“The two bits of information a paper needs to know are, how much am I going to pay, and how much of your primary content do I need to buy?” he says. “Do I want to buy the sports premium before I know what is in core sports? Members need to know that, but we could not give that in great detail.”
Along with the rate restructuring, which he claims simplifies the content offerings into two levels (breaking news and premium content), AP also created its digital co-op, which allows member newspapers to submit multimedia content that AP tags with metadata that makes it easier for Internet searches. It also makes the content available for future outside business opportunities, such as the new mobile news service. Participation in the digital co-op makes members eligible for a 5% discount on basic AP fees.
In addition, in the spirit of the content sharing the Ohio papers are now doing, the news cooperative in 2006 created AP Exchange, the online display of all AP content available to members ? either through their member choice and premium arrangements, or on an a la carte basis. Within AP Exchange is also a member sharing area in which newspapers can share content with each other, without any AP involvement.
AP officials stress that the new rate structure takes much of the choice out of AP’s hands and into individual editors’ by allowing them to decide what they want. In the past, some editors would not even know of a particular story or photo if an AP editor deemed it unworthy for their area to receive through the older distribution system. “There are a lot of attractive things for newspapers,” says Brettingen. “It is the local news provider’s choice.”
Griping editors consider options
But in reacting to the new rate and distribution structure, which many newspapers contend is still unclear due to a lack of specific fees for each member that has been promised by late June, numerous editors brought up problems that they say have been simmering for years. One is that they see AP failing to provide the kind of regional and state-level news they want, in favor of more enterprise and non-breaking stories.
Some papers also accuse the Associated Press of taking their content and sharing it, via state wires, with competitors. The unusual nature of AP has always held that it is a co-op, with member papers taking content but also providing its own content to share. In the Internet age, with stories posting on Web sites almost immediately, many editors say that kills competition.
“It is irksome that their information goes to outlets that are competitive with us. That is growing,” says Dennis Ryerson, editor and vice president of The Indianapolis Star and a former top editor at the Des Moines Register. He points to the increased use of AP content on rival outlet sites such as television, radio, and other news producers in the same market. “I think it is a concern to a lot of us.”
Others say the opposite is true, that in some cases, AP versions of breaking news or regional and state stories arrive too late. “There are still some concerns institutionally with AP,” says Todd Franko, editor of The Vindicator in Youngstown, Ohio, and one of the state’s content-sharing papers. He cites the reporting on a recent statehouse scandal that ended with the resignation of the Ohio state Attorney General. He says the AP’s coverage of that story “has been irrelevant for the three-week run this has been on.”
Rowe of the Oregonian has taken to assigning a staffer full time to comb the Web for local and regional news her paper does not have and posting it online with credit: “We now need to do that if we want to give readers a summary of what is going on, breaking news. AP does not do that. That used to be their bread and butter through the years. But AP has wanted their local reporters to do more enterprise. They duplicate us, but do not tell us what is happening in Eastern Oregon 500 miles away.”
She is among several editors who say they may be forced to turn to a content-sharing arrangement similar to that in Ohio if what they say is a lack of service ? or at least of service they value ? continues. “It may come to that,” Ryerson says. “It may be easier for a lot of papers in non-competing markets.”
Marimow at the Philadelphia Inquirer agrees: “If other papers do what is done in Ohio, there will come a point when [AP] will have to do something.” He is among editors who have cut back on AP services, noting he has stopped using horse racing results in recent months. New York’s Daily News made a major reduction in sports agate use in the past year, signing up with PA Sport of New York, while the Globe also used PA Sport in a trial run. Globe Editor Marty Baron explains, “We continue to evaluate every AP service we take and see if we can do without them, or can find an alternative.” Goldberg in Cleveland says she plans to cut AP sports agate, but did not say what her new source would be.
“We have been giving a lot more presentations,” says Jay Imus, PA Sport’s director of sales, who says he met with a handful of Ohio editors in May. “They want to see some more creative use of sports ? fantasy sports columns, player rankings, and customized content.”
But more editors say they are stuck with AP, for now, given that the news cooperative requires a one-year notice to opt out. “It is a Catch-22,” says Karin Winner, editor of the San Diego Union-Tribune. “We need the information, and we have fewer people getting it for us.”
Good buy, or goodbye?
But for all the complaints, AP officials say the news co-op remains a necessary commodity for newspapers, at a low price. “Newspapers are our biggest customer segment,” says Brettingen, noting 27% of AP revenue comes from them.
He cites a recent 50-newspaper survey that indicates AP accounts for 46% of newspaper text, photos and data, but only 5% of the total newsroom budget. “That seems to us like a pretty good value,” Brettingen says. “Would every paper like to pay us half of what they do now? Of course. The board looks at newspapers, but also a stable and strong AP.”
Dean Singleton admits, however, the reduced impact newspapers have on the Associated Press’ bottom line, noting that they will drop from 27% of the AP revenue stream to 25% in 2009. He also says that MediaNews and Gannett are the only newspaper companies in the top 10 revenue sources for AP: “I suspect, over time, that percentage will continue to decline because other areas will continue to grow.”
Some observers note that AP has also weathered much of the print-to-Web transition better than many of its members, having ventured into digital journalism earlier than most newspapers, who are still trying to find out how to raise revenue online.
Brettingen says AP is easy for many papers to attack because with so many costs close to their newsrooms, the news co-op as a far-away entity is a simple target: “We are a big line item, and we are noticeable. It is absolutely understandable that you want more stuff to put out the product you put out. If we don’t have a positive cash flow, how are we going to do what we have to do to make decisions?”
The AP recently updated the circulation figures it uses to set rates for each paper for the first time since 2003, basing them on 2006 figures. Brettingen says that will likely mean a price reduction for many papers that have seen circulation decreases. On the product front, he notes that the new simplified breakdown of offerings will give newspapers under the basic member-choice plan access to all photos, all financial information, and all archived photos.
AP supporters, which include numerous newspapers, say they have found this new approach positive and, in many cases, cheaper. They say complaining editors were not willing to be involved enough in the process from the beginning.
“If people wanted to have a discussion with AP before anything was done, that opportunity existed,” says Tom Silvestri, president and publisher of the Richmond (Va.) Times-Dispatch. “Standing up at a meeting and yelling at Tom Curley is not what people should be doing. They are trying to put savings on the table for most of their members.”
William “Skip” Hidlay, former executive editor of the Asbury Park Press in Neptune, N.J., and current president/publisher of two Gannett New Jersey dailies, agrees: “I believe AP is doing what it needs to do to grow and market its services. I am a little surprised by the anger.”
Dennis Ellsworth, executive editor of the St. Joseph (Mo.) News-Press, says those who understand the changes realize it likely means a savings. “AP is a value,” he declares. “I don’t know why I would start to value AP differently.”
Adds Brettingen: “Most members will see rates go down, pay less. Some will go up, but it won’t be many.”
A necessity, at least for now
While its status, size, and scope have changed in the 38 years since Brettingen first worked for the AP in Sioux Falls, that block of time is actually a small part of AP’s 163 years of service ? which dates back to the days of Morse Code. Newspapers, of course, were a larger part of AP’s clientele in the past, and represented a bigger chunk of its revenue.
The news cooperative, which lost much of its competition when UPI downsized to an almost non-entity during the past decade, has had to stay competitive against such news services as Reuters, PA Sport, and Bloomberg. Staying ahead of the New York Times News Service, McClatchy- Tribune Information Services, and the Los Angeles Times-Washington Post News Service is another challenge.
Still, AP officials believe they can survive this new pushback ? and they claim there is little chance that many newspapers will seek to cut services completely. They also believe the business-to-business approach, in which AP still provides content to news outlets and not directly to consumers, will not change.
On the idea of numerous papers cutting the service completely after dropping bits and pieces over the years, Brettingen says, “There has been a decline in stock listings [use] for the last several years” ? one area that has seen extensive demand reduction. “Papers drop things because they don’t need them, but that has been going on for years. We are still valuable. A lot of this content doesn’t have to make its way to newspapers, it makes its way to the Web.”
With more newspapers focusing on local and regional coverage ? and more considering content-sharing arrangements ? there is a danger that AP’s national and international reporting might be seen as less valuable. There’s also the argument that newspaper readers can find such non-local coverage on other Web sites, from CNN.com to Yahoo News, much of it in the form of the same AP reports that newspapers would buy. Ben Marrison of The Columbus (Ohio) Dispatch envisions a day when AP might be cut altogether, simply to save money.
“There is a chance that all of AP will go at some point,” he declares. “If it comes to our stuff or AP stuff, we stick with our stuff. That might come in 20 years, or two years.”
Still, most say AP’s vast coverage makes it a necessity ? at least for now. “Alternatives are not very easy to find,” says Gyllenhaal of the Miami Herald, in supplying the “whole gamut of what you need.”
Marimow in Philadelphia agrees: “If we have five to six stories on the front page, I would like 30% to 40% to be national and international stories. The best formula for success is to be indispensible to your readers.”
So does that make AP indispensible to newspapers? “Who is out there covering the world?” asks Brettingen. “We are one whose presence is growing.”
CORRECTION:In the original version of this story, it was incorrectly reported that Associated Press President/CEO Tom Curley delivered his address on April 16 at the AP’s annual meeting. It was at a session during the NAA/ASNE conference in Washington, D.C. Also, Tom Brettingen first worked for the AP in Sioux Falls, S.D., not Sioux City.
CLARIFICATION:In a previous version of this story, one paragraph about the creation of AP Exchange did not state that AP Exchange was created in 2006 — and that paragraph may have incorrectly implied that its creation followed or was somehow related to the content-sharing agreements currently in place in Ohio. They are not related.