Publishers Skeptical About Cross-Ownership Payoff

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By: Lucia Moses

As optimism has grown that the federal media-ownership deregulation is at hand, so has skepticism about the financial payoff to come from owning multiple same-market properties.

Cross ownership can yield cost savings by combining back-office functions, and generate extra advertising dollars through the use of multiple platforms, according to publishers who gathered here at the Newspaper Association of America’s annual convention last week. But the biggest benefits — increased promotion, improved journalism, and expanded audience — are tougher to quantify.

“I don’t think there are these great sources of revenue people were predicting a year ago,” said Gary L. Watson, president of the newspaper division at Gannett Co. Inc., which has expressed interest in pursuing more cross-ownership opportunities.

With the Federal Communications Commission reviewing the rules barring newspapers from owning broadcast stations in their markets, cross ownership was a hot convention topic.

Cross selling, which contributes relatively little revenue to the enterprise, doesn’t justify owning both TV and print, said James M. Moroney III, CEO and publisher of The Dallas Morning News, a Belo sibling of WFAA-TV in Dallas-Fort Worth.

Cross promoting by TV and newspapers, however, draws bigger audiences, which can grow circulation and eventually attract more ad dollars, Moroney said.

Convergence also has pitfalls, he and others emphasized. Ad sales staff must to be trained to sell unfamiliar media — and newspaper and TV ad salespeople and journalists, who are used to competing with each other, don’t easily mesh.

“There’s a great deal of fear among America’s editors about convergence,” said Diane McFarlin, publisher of the Sarasota (Fla.) Herald-Tribune, which has operated a converged newsroom with SNN Channel 6 since 1995. Both the print and the TV newsrooms need to trust each other, she said. McFarlin’s advice: “I would invest in marriage counseling.”

Hopeful that the industry is emerging from its 2-year-old ad slump, publishers agreed that newspapers also will need to change the way they sell to readers and advertisers. The decline of department stores and increased competition for help-wanted ad share means papers will have to go after smaller retailers and offer recruiters a wider array of advertising formats, they said.

As for reaching future readers, Gannett’s Watson said papers can’t assume that young people who grew up with free news via the Web and alternative weeklies will automatically start subscribing once they reach a certain age. As a result, Watson said, “We may have to reach them with an alternative product.”

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