Knight Ridder Circulation Strategy Pays Off

By: Lucia Moses

Knight Ridder’s circulation-growth strategy is starting to pay off, with some papers growing for the first time in years. But can it sustain the increases?

Newspaper Division President Steven B. Rossi told attendees at Knight Ridder’s annual Investor Day last week that as a result of Sunday single-copy price cuts and other marketing tactics, its papers in the top 75 markets grew daily circulation 1.2% in the six months ended Sept. 30, while Sunday rose slightly.

Strategies varied from market to market. At the Fort Worth (Texas) Star-Telegram, discounting for longer subscription periods and increased bulk sales helped lift circulation by 3.61% daily, 0.39% Sunday in the six months ended Sept. 30, reversing declines in the year-earlier period. Half the new subscribers this year signed up for six months for the price of three, and paid in advance, Chairman and Publisher Wes Turner told the gathering last week.

Knight Ridder’s problem child, The Philadelphia Inquirer, also showed improvement. By discounting subscriptions to targeted new customers by 25% to 68%, moving 19% of subscribers to its auto-pay program from 4% in 1999, and adding suburban single-copy outlets, the paper grew circ by more than 2% daily and Sunday in the September publisher’s statement, Publisher Robert Hall said. The paper also reduced churn to 46% this year from 65% in 2001, he said.

Sunday single-copy price cuts made last spring and summer in five top markets met with varying success. The Miami Herald sold 17% more single copies after knocking its price from 75 cents down to 50 cents, but the San Jose (Calif.) Mercury News‘ Sunday single-copy sales rose only 6% after cutting the price from $1.50 to $1.

Rossi said while Knight Ridder will rethink the price cuts for 2003, it’s still committed to circulation growth, pointing to revenue and cost benefits. He said circulation marketing costs are down this year because of better subscriber retention, and circulation revenue, which fell 6.8% in the third quarter as a near-term cost of the price cuts, could be down 2% or less next year.

Asked about the outlook for 2003 ad rates, Rossi said confidence in the strategy will support more aggressive rate increases. The challenges will be to sustain the circulation growth and translate it into ad dollars.

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