New Century Cuts Costs as Owners Debate Strategy

By: Steve Outing

All may not be sweetness and light at New Century Network, the cyber venture of nine of the largest newspaper companies in the U.S. Indications, though sketchy, are that the owners are not seeing eye to eye recently, and NCN is on a cost-cutting campaign — bringing into question the owners’ commitment to NCN’s long term viability.

Last week, as reported here on MediaInfo.com, NCN layed off about 10% of its then 70-person staff and scaled back its Newsworks national news aggregation site because of concerns among some affiliate newspapers that it competed too much with their local efforts.

This week comes another cost-cutting measure that’s likely to raise a few eyebrows. At the upcoming Interactive Newspapers conference in Seattle (February 4-7, sponsored by Editor & Publisher), NCN will not have a booth in the exhibit hall — despite last year having the largest presence in the hall in an effort to attract new affiliates. NCN had scheduled a sizable booth presence at the show, but this week cancelled it. NCN also was scheduled to host a reception Thursday evening during the show, but cancelled that, too. (E&P conference executives say they have filled the spots vacated by NCN.)

NCN chief executive officer Lee deBoer downplays the conference cancellations, and says that they are not indicative of NCN being in trouble. He says it was purely a cost-saving move, and that NCN representatives will be at the conference in an affiliate relations and affiliate acquisition mode. A NCN affiliates meeting is scheduled in Seattle around the same time as the conference — though not directly connected to it — and deBoer says the decision was made that that was enough money to spend for the Seattle trip.

deBoer says that NCN continues to seek affiliates — it currently has 144 newspapers on board — and has added a handful in recent weeks.

Not seeing eye to eye

A rather strong rumor mill — which prompted this column — indicates that there’s some dissension among the nine owners about the strategy NCN should be employing. deBoer admits that disagreements among the founders take place, but says that’s hardly anything out of the ordinary. As NCN makes more investments in new projects, each time it is necessary to get support of the founders. In a fast-changing business environment like Internet publishing, and with nine companies involved in NCN who have different views and interests, it’s common for arguments to surface. “If we weren’t having any disagreements, that probably would suggest that we weren’t doing anything,” deBoer says.

Asked about rumors that some of the nine owners are rethinking their commitments and investments in NCN, deBoer says that he doesn’t have any news that any of the companies are thinking of getting out. “We’ve still got nine owners,” he says.

Initially, the nine founders — Advance Publications, Cox, Gannett, Hearst, Knight Ridder, The New York Times Co., Times-Mirror, Tribune Co., and The Washington Post Co. — each ponied up $1 million to get NCN off the ground, and periodically they are asked to put up more money to keep the venture going. The founders reportedly faced another capital call in December, but I was not able to determine the outcome of that. NCN board members from the founding companies reportedly have made a pact not to discuss their investments and the status of their involvements in NCN as an ongoing entity.

One NCN board member, Knight Ridder vice president of new media Bob Ingle, says NCN may be at a turning point, but it has been there before and has hung together. It’s the nature of joint ventures such as this one to be difficult to manage and for disagreements to be common.

Ingle says that NCN “is not in trouble,” but that nevertheless his company is thinking about its future commitment to NCN. Responding to reports that Knight Ridder might pull out of NCN, Ingle says no decision has been made and “we don’t have the information we need” to make such a decision. Knight Ridder has embarked on its own national Internet site advertising network called “Knight Ridder Real Cities,” which markets advertising across its network of newspaper Web sites with its own sales force. NCN’s national ad network does the same thing (across more newspaper sites), hence the speculation among industry insiders about Knight Ridder’s future with NCN.

Sounding a more upbeat tone is Ralph Terkowitz, NCN board member and vice president of technology for The Washington Post Company. He says the Post “absolutely” remains committed to NCN. “We think the (basic) concept makes a lot of sense,” of developing Web solutions to be used across multiple newspaper markets. He termed reports of serious disagreement among the founders “just speculation.”

Other board members were not available for comment.

Planning for the year ahead

deBoer says that for 1998, NCN’s focus will include three major initiatives, now that the Newsworks project has been scaled back. (He denied rumors that NCN might be trying to sell off its searching technology developed for Newsworks.) They are:

A new HTML e-mail project that will allow newspaper sites to offer e-mail “push” subscriptions to their content, with NCN providing the technology for use by local sites. The service is proving to be quite popular with newspaper affiliates. Growing the national newspaper Web site advertising network, working in conjunction with New York-based Real Media. deBoer says he’s optimistic that this relationship will help grow the network, and notes that Real Media’s technology will allow NCN to begin supporting Java ads on the Web. Developing more content aggregation and site marketing services for use by local newspaper sites. For example, NCN will likely find ways to “build bridges” between newspaper sites when a breaking story occurs, so that a local site can utilize the content produced by other NCN affiliate newspapers on the same topic. The emphasis is on serving the local site, rather than creating a national service (which was the case with Newsworks and is the primary reason for its downfall). deBoer admits that the joint venture nature of NCN makes moving forward difficult, but defends his organization’s success to date. Compared to other industry joint ventures — like CityWeb, a network of TV station Web sites that has yet to launch — NCN is making good progress, he says.

Super Bowl cross-media ads

Here’s an example of how advertising campaigns increasingly are cross-media. Turning up in many U.S. media are ads being run by Intel that promote a series of TV ads during Sunday’s Super Bowl. The Intel TV ads will run throughout the game, and viewers are invited to log on to the Internet during a break to vote for what ad will be shown during the fourth quarter. Internet survey-takers will determine what gets televised.

Newspaper ad network Real Media also has a hand in the Intel Internet-TV extravaganza. The company put together a 14-newspaper Web site ad buy for Intel, with Web banner ads being placed to promote the Sunday Super Bowl ads by Intel. Sites running the Intel ads are the Boston Globe, Chicago Sun Times, Detroit News, Fort Worth Star Telegram, Milwaukee Journal Sentinel, New Jersey Online, Orange County Register, Philadelphia Inquirer, Rocky Moutain News, San Diego Source, San Jose Mercury News, and the Washington Post.

Final note: Go, Broncos!

Correction

My last column about Northern Light contained a couple errors worth correcting. NL’s CEO is David Seuss (not Suess). The company’s database contains articles from 3,000 sources (not 300).

Steve

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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at steve@planetarynews.com

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company

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