Newspapers And Finances p.14

By: DEBRA GERSH HERNANDEZ THE FINANCIAL STRENGTH of newspapers is essential to their survival, but it is not incompatible with their editorial mission, according to P. Anthony Ridder, chairman and CEO of Knight-Ridder.
"Unless our financial underpinnings are solid, we cannot do the things we want," Ridder said during a speech at the American Society of Newspaper Editors convention in Washington.
Without a solid financial base, Ridder said, "We cannot innovate editorially; we cannot attract and retain talent; we cannot be forceful presences in our communities.
"I read that publicly held media companies are 'squeezing' newspapers to provide greater return to investors. Be careful of the hype," he warned. "What investors ask ? a fair return in relation to alternative investments ? is not unreasonable."
Further, Ridder warned that if newspaper companies cannot generate a fair return, the price of their assets ? and stock ? will fall.
"Make no mistake," he said. "It could fall to the point where someone else might find it an attractive proposition to buy those assets and see what kind of return he or she could get from them.
"And that person, a takeover shark perhaps, would not necessarily have quality journalism uppermost in mind," Ridder cautioned.
Ridder gave an emphatic "no" to the question of whether financial health is "incompatible with all else we would like to accomplish."
Newspaper values and "quality journalism" are as strong as ever, Ridder asserted, noting that to maintain that excellence, "newspaper companies need to make some base-level commitment always, no matter what the economic climate."
For example, he explained that at Knight-Ridder, "that commitment starts with a ratio of news and editorial expenditures to total revenues that averages almost 11%."
"Our ratio of news linage to advertising and in-paper promotional space combined is about 50% every year. If you just compare news hole to advertising, the ratio is about 55%," said Ridder, adding that the company has increased its news hole "significantly" over the past seven years.
Noting that "market conditions have made our business significantly more challenging," Ridder chalked that up to changes in the world.
Urging the ASNE not to take any business stability for granted, Ridder said that reacting to these changes from without must involve changes from within.
"The people creating the paper need to talk to the people promoting and selling it; the people selling it need to read and comprehend what their colleagues have created; and everyone needs to understand the marketplace dynamics that bear on success or failure," he said, suggesting that "everyone needs to be thinking of new ways to generate revenue."
None of his suggestions, however, means "giving up on our core commitments," Ridder commented. "It is simply recognizing that there is frequently tension between what journalists want and what readers want. More is not automatically better where the news and editorial columns are concerned."
In raising the bar for Knight-Ridder's editorial and business units, Ridder noted next year will be even more challenging, and newspapering is not "for the faint of heart."
"If you cannot be interested in change, excited about the new technologies, intrigued by the marketing challenges ? and still devoted to the values we have always stood for ? maybe you should find something else," he said.
By next spring, 30 of Knight-Ridder's 31 newspapers are expected to be on the Internet, and explorations of various online revenue sources will be continuing.
"How will it all shake out?" he asked. "None of us knows. You have only to look at your own children to know how computer comfortable, e-mail proficient and online literate tomorrow's America is going to be."
While Ridder was almost certain that online newspapers will have a financial impact on the industry, he couldn't say how much.
"Smart companies," he said, "will need not only to preserve online the essence of their papers as they develop electronic competencies, they will need to take advantage of the expanded capabilities to make their online products even richer."
With a sort of online Darwinism, Ridder believes that "natural forces will drive things toward the most efficient medium."
"Thus, material that is less efficient in print, like stocks, classified and micro-zoned news, could migrate ? in whole or in part ? to electronic services," he explained.
Newspapers, however, absolutely will remain viable, Ridder added, noting that "they will be the most effective remaining mass medium as broadcast continues to fragment."
"Newspapers may derive less of their print-oriented revenue from classifieds, but they'll save substantially on the newsprint they're not using," he said. "And, with any luck, we will have identified a way of recapturing that 'lost' revenue online.
"So maybe you generate less revenue on the print side," he said, "but the equivalent generates more profit on the electronic side."
The only thing of which Ridder is sure, he said, "is that one year from now, my thoughts about online possibilities will have evolved markedly. By the same token, I know my views of journalism and business will stand."
?("Unless our financial underpinnings are solid, we cannot do the things we want." Without a solid financial base, "We cannot
innovate editorially; we cannot attract and retain talent; we cannot be forceful presences in our communities." ) [Caption & Photo]
?( ? P. Anthony Ridder, chairman and CEO, Knight-Ridder) [Photo]