Tierney on First Year of ‘Blocking and Tackling’ in Philly

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When Brian Tierney led a group of investors in a half-billion-dollar buyout of Philadelphia’s two largest dailies a year ago, he didn’t set out to solve the newspaper industry’s problems of declining advertising sales and circulation.

But what he has been doing in the past 12 months at The Philadelphia Inquirer and Daily News could set the template for other newspaper owners: jettisoning old management practices, bringing in big hitters and spending big on marketing and technology even as the ad market remains tough.

“I’d like to say I’ve invented the Apple iPod, but I really haven’t,” said the 50-year-old chief executive of the papers’ owner, Philadelphia Media Holdings. “It’s just common sense blocking and tackling. A lot of it is, ‘Why haven’t they done it before?'”

In his first year at the helm, much of what Tierney has been doing is changing business practices that he says make no sense and hurt the newspapers.

Take the caps on commissions for advertising salespeople. Tierney said the sales force wasn’t motivated to sell more because they weren’t compensated past a certain level.

“How does that make any sense?” said Tierney, in an interview at his office in the Inquirer’s landmark building in downtown Philadelphia. “Can we ask people, like, if there’s really any other stupid things you deal with every day, will you let us know what they are and we can fix them?”

Newspaper analyst John Morton agreed that capping sales commissions is “illogical,” but said it’s not an uncommon practice among papers. “The newspaper business usually has to be dragged kicking and screaming into the current century,” he said.

Tierney was able to boast of a slight improvement in weekday circulation at the Inquirer this spring, one of a handful of major papers to report gains. The newspaper’s average weekday paid circulation rose by 2,136 copies, to 352,593.

But circulation for its Sunday edition and the Daily News continued to fall, although at a slower pace than before, and the ad business industrywide has only gotten worse in the past few months as the shift to the Web has accelerated.

The weakness in advertising revenue makes it tough to predict whether Tierney is paddling hard enough to overcome the downstream currents of a long-beleaguered industry.

The company “is struggling with things it has no control over,” said Morton, president of Morton Research, a media consulting firm in Silver Spring, Md.

Tierney has continued to make operational changes he hopes will put the newspapers on sounder footing after years of declining ad revenues and circulation.

“We’ve made some great progress,” he said, quickly adding, “We still have a long way to go , don’t get me wrong.”

In the advertising department, he said, he put an end to a practice that handcuffed the Daily News, a tabloid. Previously, salespeople for the Daily News were barred from going after advertisers that the Inquirer could not land.

Under former owner Knight Ridder Inc., the number of newspaper boxes dropped from 9,600 to 8,000, he said. Tierney said he brought the number back up to 8,500. He also started offering home delivery of the Daily News outside of Philadelphia for the first time in 81 years.

“It’s important to make it convenient to buy,” Tierney said.

Tierney said he also found a number of poor financial practices. The newspapers, for instance, were not buying basic materials through competitive bidding.

He’s also assembled a new management team, earning high marks for his choices.

In a surprise to industry insiders, Eric Grilly, a star at a much larger newspaper publisher, MediaNews Group in Denver, moved to Philadelphia to be president of Philly.com. Tierney also hired executives from Gannett Co. and Forbes Inc. The former executive director of the fast-growing Pennsylvania Lottery, Ed Mahlman, was brought in as chief marketing officer.

Tierney also wanted big-hitters in the news departments. Bill Marimow, a Pulitzer Prize-winning, former Inquirer editor now runs the Inquirer newsroom, which had to adjust to about 70 layoffs at the start of the year.

Rick Edmonds, media business analyst at the Poynter Institute, a St. Petersburg, Fla. provider of journalism education, said he’s been impressed by Tierney. “He’s looking at the business with fresh eyes,” he said.

To help raise the newspapers’ profile, Tierney hired Hollywood talent agency ICM , which represents Cameron Diaz, Halle Berry and Woody Allen , to handle movie, TV and book spinoffs.

Tierney said the papers’ online ventures account for 5 percent of revenue but 20 percent of profit. Philly.com generates about $25 million in annualized revenue, he said. After looking at what a few other major papers’ Web sites make, he said revenue should be $45 million based on the Philly.com’s traffic of 30 million page views a month. The site has ramped up its video offerings, community content and reviews.

Asked what he’s learned in a year, Tierney said he hadn’t fully appreciated the power of the press to unearth wrongdoing and change the status quo. As the owner of Philadelphia’s two largest papers, he said, “we’re doing the people’s work and if we don’t do it, it’s not going to get done.”

Is the longtime Republican activist turning into a liberal?

Tierney laughs: “I’m post-political now. I’m totally out of those loops.”

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