By: Jennifer Saba
Merrill Lynch analyst Lauren Rich Fine and her team recently took the temperature of online newspapers in a panel discussion with representatives from E.W. Scripps, McClatchy, and the St. Petersburg Times.
Overall, Merrill Lynch got a sense of urgency from the panelists — Scripps’ Bob Benz, McClatchy’s Christian Hendricks, and the St. Pete Times’ Christine Montgomery — who are “embracing innovation more willingly now that the print franchise is clearly under both secular and cyclical pressure.”
Some interesting data points: Both Scripps and McClatchy are in the midst of re-examining the cost structures of their print operations with a “fresh eye” as profits decline, according to a Merrill Lynch report on the meeting.
The current game of musical chairs with online recruitment sites has benefited Scripps and the St. Pete Times, both of which left the industry-owned CareerBuilder for HotJobs and Monster respectively. Since switching, both companies have seen some lift in their help-wanted advertising revenue. The rise could be attributed to the brotherly nature of the partnerships where the newspaper owns the local market. With CareerBuilder, the site maintains sales people in markets even if the newspaper is a partner.
Panelists are currently focusing on growing local paid search and video — attractive to retail advertisers — and they are exploring user-generated content though advertisers are still a bit squeamish with concept.
At McClatchy, Merrill Lynch noted that classifieds accounted for about 70% of total online advertising at its legacy papers. Taking Knight Ridder into account, the percentage jumps to 80%.
Currently 35% of McClatchy’s online revenue is online-only.* About 80% of recruitment online revenue was made through upsells.
*Correction: Merrill Lynch originally reported that 80% of McClatchy’s total online revenue was through upsells compared with 20% of online only.