Analysts Ask: Detroit Plan a 'Big Step' -- But Not Enough?

By: Mark Fitzgerald Detroit Media Partnership's plan to keep two dailies publishing in the foundering home of the American automobile industry comes advertised as bold, radical, even revolutionary. But even with Tuesday's formal announcement just a few hours, some analysts declared themselves underwhelmed.

Gannett Co.'s Detroit Free Press and its junior partner, MediaNews Group's Detroit News will publish and home-deliver full-sized papers only on Thursdays, Fridays and Sundays starting this spring. A one-section paper Detroit Media Partnership CEO David Hunke described Tuesday as "compact" would be available on a single-copy-only basis the other four days of the week.

"If what you're trying to do is get advertising supply and demand back in balance, keeping both newsrooms and standalone papers -- there's a chance that doesn't go far enough, even though it's a relatively drastic step," said Mike Simonton, an anlalyst with the credit rating firm Fitch Ratings. "It seems like a large step, but it may not actually be sufficient."

After viewing the press conference by Detroit newspaper executives, streamed live on the Web, San Francisco-based media consultant Alan D. Mutter said he was struck by what wasn't presented -- protocols of the new single-copy versions, or screen shots of the digital newspapers.

"It's not clear to me how much of a plan is this plan," he said.

On his blog "Reflections of a Newsosaur" Monday, Mutter reported on a conversation he had with an unnamed former Gannett executive he described as "familiar with the months-long deliberations earlier this year" that came up with the limited home-delivery play.

It was not a strategic initiative, but, in Mutter's words, "a last-ditch effort to save two failing newspapers."

"The choice was to shut down or to try to salvage the newspaper," the executive told Mutter. "They cut all they could. We saw the papers as continuing to deteriorate -- and that was before Lehman Brothers collapsed and the global economy melted down...."

At the press conference, Detroit Media Partnership CEO David Hunke said the Gannett Co.-controlled agency that runs business, production and distribution operations for the two dailies "never considered" shutting down one, presumably the smaller Detroit News. Each has "fiercely loyal" readers and very competitive newsrooms both papers wanted to keep, Hunke said.

But Fitch Ratings' Simonton said he wishes the agency gave it a more serious look.

"It seems to us with the weakness in the Detroit market now, and the likelihood the market could weaken further in 2009 with the weakness in the automotive market and the rest -- it doesn't seem to us that that's enough," Simonton said of the delivery cutbacks.

"You still haven't shaken out a lot of your fixed costs," he added. "You still have a lot of the fixed costs of having production. You have a lot of lingering legacy costs. And you still have physical distribution during the week. ... I'm not sure that in terms of profitability this is a fix."