In L.A. and Chicago, Tribune's 'Hoy' Goes Free

By: Mark Fitzgerald A week after the Audit Bureau of Circulations determined that Hoy had overstated its circulation by a whopping 46%, Tribune Co. announced today that the Spanish-language daily will convert its Chicago and Los Angeles editions from paid to free distribution.

The New York/New Jersey edition, where the circulation fraud occurred under former Editor and Publisher Louis Sito, will remain a paid product. The cover price for Hoy, which is almost totally sold on a single-copy basis, is 25 cents.

Hoy's Chicago and Los Angeles editions will be delivered to homes in ZIP codes with heavy Hispanic populations and will also be distributed through vending boxes, stores, restaurants, and other locations where people spend time reading the newspaper. The editions will convert to free next month, Hoy said.

Launched from Tribune's Newsday on Long Island in 1998, Hoy presented itself as among the fastest-growing dailies in the nation until the elaborate schemes to pump up circulation fell apart earlier this year. By September of 2003, Hoy was claiming its weekday circulation as an average 92,604 copies. The audit bureau reported last week that circ was actually 49,681. Sunday circulation was also adjusted from a claimed 33,198 to 25,465. Tribune Co. put aside $90 million to compensate advertisers for the circulation overstatements at Hoy and at Newsday, where similar fraud was found.

Hoy Publisher Digby Solomon Diez said the paper determined that the only way to grow quickly in the two markets was to abandon the paid model, with its higher distribution costs. "Paid is just a proxy for a newspaper's wantedness," he told E&P in a telephone interview. "What you're really looking for is readership, and readership that translates into results for advertisers."

Broadcast, Solomon noted, is capturing the lion's share of the exploding Hispanic consumer market because of its targeted, efficient delivery. "So we said to ourselves, at the end of the day, 10 years from now, do we want to continue this long slog with a less efficient distribution and a much slower build, or do we want to use the money we save on the [paid] distribution for a more efficient delivery?" Solomon said.

"It's no longer a radical model," he added, saying the tipping point in the decision to go free-distribution came at a meeting with a big advertiser. When Solomon asked the advertiser what he thought of going free, the executive said he had come to advise the paper to do just that.

In Chicago, where the paper was launched in September 2003, Hoy is now printing about 35,000 copies and delivering to consumers -- between sales and sampling - - about 25,000 copies, Solomon said. The plan is to increase the press run in Chicago to 45,000 copies Mondays through Thursdays, with the expectation of "getting at least 40,000 into people's hands." On Fridays, the paper's best readership and advertising day, the press run will be increased to "north of 60,000," he said. Most of the increased run will be delivered as sampling.

Hoy launched in Los Angeles just last March. It now has a weekday press run of about 88,000, and gets about 75,000 to customers through sales and sampling, Solomon said. The plan for Mondays through Fridays is to keep at the effective delivery level and cut the press run back to about 80,000 copies. On Fridays, the press run will increase from 126,000 now to 150,000, he said.

"This is all going to be verifiable," Solomon said. Hoy is asking ABC to audit its distribution on a twice-yearly basis. Scarborough will conduct semi-annual readership studies, and Gallup will continue to study readership on a quarterly basis, he said. Right now, Solomon said, Gallup reports average daily readership in Chicago as "north of 70,000," with a cumulative weekly readership of about 300,000.

"We are going to do much more readership analysis," he said. "We're going to spend a six-figure sum to do heavy research in Chicago and L.A. on how Hispanics use print and their use of print in buying decisions."

Solomon said Hoy will continue to be a paid newspaper in New York City because Hispanics are not clustered as heavily as they are in Chicago and Los Angeles, and because the distribution system for paid papers is quite efficient. "You've got three kiosks on every corner, and those guys have no interest in carrying a free paper," he said.

Hoy has done well in New York as a paid paper, Solomon said. "In five or six years, we've kind of caught up with a century old leader. ... We've built a decent audience there in a short period of time in very cost-efficient ways," he said. With Hoy's circulation adjusted, the rival El Diario La Prensa is the biggest Spanish-language daily in New York City, with a weekday circulation of 50,132.

The Chicago edition of Hoy has looked skimpy in recent weeks, which Solomon attributed not only to a cutback in some editorial content but a decision to move the paper closer to the traditional 60/40 advertising/editorial mix and the end of certain multiple-placement offers to advertisers. "I can tell you we are way above our projections on revenue in Chicago," he said. "We're currently at where planned to be at 2006."

Hoy competes in all three of its markets with ImpreMedia newspapers: El Diario La Prensa in New York City; La Raza, a free-distribution weekly in Chicago; and La Opinion, the nation's largest Spanish-language daily in Los Angeles.

In a telephone interview after the Hoy announcement, ImpreMedia Chairman and CEO Doug Knight said he wasn't worried in any of the markets. "The depth of loyalty for La Opinion in Los Angeles is extraordinary," he said. "They've been around since 1926, and they have a phenomenal reach. La Raza is focused on household penetration and delivers about half of all Hispanic households in Chicago."

El Diario, he noted, outsells Hoy even though, at 50 cents, it costs twice as much as the Tribune Co. daily. "We call ourselves the premium product," he said.

ImpreMedia has no plans to convert either of its paid papers to free distribution, he said.