Houston Chronicle's soar in circulation is one for the textbooks p.14

By: Mark Fitzgerald Key to its strategy was buying the subscription list of its shuttered rival sp.

IN A MOSTLY dismal Audit Bureau of Circulations FAS-FAX report, one newspaper's achievement stands out: The Houston Chronicle joined the top ten of newspapers by increasing its daily circulation by about 32%.
Daily circulation shot up 132,471 copies to 541,478 and Sunday circulation leaped an average 135,554 copies to 743,689.
Of course, the single most important reason that Chronicle circulation rose was the folding last April of the rival Houston Post.
But throughout the last decade, many big cities have lost their second paper ? but no surviving paper has capitalized on the death of its competitor quite as effectively as has Hearst Corp.'s Chronicle.
Consider some examples: The Dallas Times-Herald closed in December 1992. Just as in the case of the Chronicle and the Post, it was the surviving Dallas Morning News which bought the assets and closed its rival.
Yet, in the next reporting period after the death of the 210,000-circulation Times-Herald, the Morning News showed an estimated growth of about 50,000 copies ? about a 25% increase. (Because the Morning News chose that period to change its Audit Bureau reporting plan, the FAS-FAX did not report year-to-year comparisons.)
In 1986, when the St. Louis Globe-Democrat finally succumbed after two years of chaotic ownership, the circulation of its surviving rival, the St. Louis Post-Dispatch, jumped 16%.
The only performance comparable to the Chronicle's circulation spike might date from 1992 when the Arkansas Democrat won a hard-fought newspaper war in Little Rock by buying and folding the rival Arkansas Gazette. As in the case of the Morning News, it was not possible to make exact circulation comparisons in the next reporting period, because the new Arkansas Democrat-Gazette changed the way it compiled its daily circulation. However, the figures indicated the Democrat-Gazette picked up about 45,000 ? or about 30% ? when peak circulations of both papers were compared.
But the six-digit increase in Houston is one of a kind. Chronicle president Gene McDavid attributes the circulation jump to long-term planning.
"I will say, [the Post's folding] was not unexpected," McDavid said in an interview. "We've been planning for this eventuality for a long time."
A key to the Chronicle's strategy, McDavid said, was buying the Post's subscription list.
For while some newspaper analysts have dismissed the value of these lists to a soon-to-be-monopoly daily after all, they reason, what else are readers going to buy? ? McDavid argues they are vital.
"Finding the folks who were Post subscribers, and finding their characteristics ? were they full-paid, how loyal were they? ? nowadays that kind of information is just invaluable," McDavid said.
And the Post maintained very good circulation records, he added.
Unfortunately, those records revealed that the Post had leaned heavily on discounted subscriptions to keep its numbers up.
"They had many customers paying highly discounted rates, which was a problem for us. But they also had a cadre of hard-core readers," McDavid said.
The first thing the Chronicle did was deliver its newspaper to former Post subscribers, no matter what they were paying for their subscription.
Just as quickly, the Chronicle followed upon all the readers through the mail and over the telephone trying to convert them to the Chronicle.
"For the full-price [Post] subscribers, we had very, very good success," McDavid said.
"For the discount subscribers, the rate was not as good."
Nevertheless, the Chronicle marketed relentlessly.
"We put in a very sophisticated 'Stop the Stops' program. We get back about 60% of the folks who stopped," he said.
The Chronicle's own loyalty card program proved insignificant in moving Post readers to the Chronicle, McDavid said ? but a card of another kind was very successful.
When the newspaper raised its monthly, seven-day home delivery rate from $13.50 to $15, it gave readers the option of keeping the old rate in exchange for permitting the newspaper to automatically charge the amount to their credit cards each month.
"That thing is just taking off like crazy," McDavid said.
"And it is a big savings for us in terms of billing. It's clearly a good business decision."
Beyond that, McDavid said, the Chronicle engaged in "all the usual hard-sell," including youth crews of solicitors, telemarketing, street hawkers and single-copy sales drives.
The FAS-FAX results are a heartening payoff.
"This comes only once in a career ? and I'm enjoying it," McDavid said.
?("This comes only once in a career- and I'm enjoying it.") [Caption]
?(Gene McDavid, president, Houston Chronicle) [Photo]