Philly 'Inquirer' Makes Circulation Comeback

By: Lucia Moses Things have turned out pretty good for you, Mike Proebstle. You're 45, in charge of circulation for a top-25 daily newspaper in San Diego, where the sun shines all year-round, and the Super Bowl is coming to town. Until deregulation caused a spike in energy prices, circulation was growing. You have the freedom to try new things, and since The San Diego Union-Tribune's Newspaper Guild local was decertified in 1998, you don't have any pesky unions to deal with. You're well-liked, most importantly by your boss, CEO and President Gene Bell.

And you're going to give all this up to go to -- Philadelphia? One of the toughest markets in the nation, where morale at the daily papers has been crumbling along with circulation and there's a history of union problems?

But that's just what Proebstle did last February, crossing the country with his wife and two teenage children for what might be his toughest assignment ever: circulation vice president for Philadelphia Newspapers for (PNI), parent of The Philadelphia Inquirer and the tabloid Philadelphia Daily News.

Those who know Proebstle weren't all that surprised by the move, though. A native of southern New Jersey, he liked the idea of returning to his roots. And he loves a challenge.

"Mike is too good, too energetic," says Jeff Kohler, former PNI senior vice president for circulation turned headhunter who recruited Proebstle for his Philadelphia job. "Other people would have been happy to retire in San Diego. Mike has a lot of fight in him."

It would take someone with a strong stomach to step into what Proebstle did almost a year ago. At the Inquirer, whose circulation declines have been much steeper than the Daily News', employees and readers alike were weary of the paper's uneven efforts to serve the growing suburban market. In the previous five years, several top executives had come and gone while the Inky's circ dropped 15% weekdays and 16% Sunday. Budgets had been slashed, and there were union rumblings among the district managers.

But Proebstle saw signs of hope. Inquirer parent Knight Ridder had just made a companywide commitment to circulation growth. PNI Chairman and Publisher Robert J. Hall and Senior Vice President of Operations John Walsh had been laying the groundwork for a long-term growth strategy that could be sustained even in down times. And coming from Copley Press Inc.'s flagship paper, Proebstle saw more career options at Knight Ridder.

"I heard the message consistently that circulation will be a growth business," Proebstle recalls. "It kind of jazzed me to come to an area where I could make a difference."

So far, the results at the Inquirer are encouraging, if far from definitive. Circulation was up 2.4% weekdays, to 373,892, and 2.1% Sunday, to 747,969, in the six months ended Sept. 30, while churn declined by nearly a third last year, from 65% to about 47%. For all of last year, Proebstle expects weekday and Sunday circ to be up 1.5% to 2%, and Hall is confident the paper can do the same this year.

Hope was contagious at the parties the paper threw to celebrate its monthly circulation gains, and at the corporate level. Hall was a featured speaker at a Knight Ridder analysts' meeting in November. Newspaper Division President Steven B. Rossi, who was general manager in Philly in the 1990s, says he's uplifted by the signs of suburban growth and end to the use of short-term discounting he calls "ridiculous."

The usually confident Proebstle isn't ready to crow, though. "We've got lots to do," he says. Household penetration stands at a mere 18% weekdays, 36% Sunday. Despite recent efforts to revive Center City, roughly 75% of those in the Inquirer's eight-county market live in suburbs that are well-served by established local dailies and weeklies. The Inky's latest suburban zone strategy, led by Editor Walker Lundy, holds promise, but has only just begun.

There's no magic formula to growing circulation. "What we're doing is turning the knobs and the dials," Proebstle says.

Building (not selling) bridges

As Hall knew, Proebstle's proven himself adept at that fiddling, in San Diego and, before that, two other major markets, Detroit and St. Petersburg, Fla.

Those who know him say what makes Proebstle one of the best in the business is his proficiency in the basics as well as the use of new technology to grow circulation. Working as a district manager (and as a carrier in his youth) grounded him in the importance of product, service, and price -- and helped him win credibility with subordinates. An executive who prefers to be out from behind the desk, Proebstle has been known to arrive before 6 a.m. and pays weekly field visits to his Philly district managers.

But Proebstle is most likely to be found engulfed in reams of paper. An early adopter of database marketing, he saw how data could support his newspaper's basic goals. "I think Mike has always thought of retention first, acquisition second," says Leon Levitt, who knows Proebstle from his days as vice president of circulation for the Newspaper Association of America. While his peers at other major metros describe his star quality, and he's clearly the boss, Proebstle emphasizes the work of his "team" and encouraging input from all levels of the operation. (For that reason, he was reluctant to appear on this week's E&P cover.) "A circulation department has a lot of firepower," says Proebstle, who, typically, was in his shirtsleeves during a recent interview. "It's a matter of using that firepower to your best advantage."

That firepower includes his own creativity, though. At Detroit Newspapers, where he served in a variety of roles before being recruited by Copley, he improved retention by analyzing telemarketers' results and revising phone offers in ways no one had thought to do. Not everyone welcomed the increased scrutiny -- a circulation salesman, angry over losing his job, threatened to cut off his arm and send it to Proebstle.

Without his salesmanship abilities, his talents might not have gone so far. Proebstle built bridges between other departments and circulation, a department that traditionally hasn't been highly recognized. He realized -- again, ahead of others -- that the circulation chief needs to be, in his words, "as good in the boardroom as you are in the warehouse.

"We're 100% accountable for the numbers, but we're not 100% responsible," Proebstle explains. "We need a good product. We need it to be delivered on time. If it's not at the top of the agenda, then the circulation director has to get it there."

At the Union-Tribune, for example, he put that salesmanship to work to help convince the editorial and advertising departments of the need for a new local-news section for northern San Diego County. "Everyone was looking at it," recalls LeRoy Addison, a retired division manager who worked for Proebstle. "Mike made it happen."

Like most circulation work, the cornerstone of the Philadelphia strategy isn't a new, cutting-edge technique, but one few have used with great consistency. Some call it segmented discounting, but you won't hear Proebstle use the word "discount" -- he prefers the phrase "tiered pricing strategy."

Like many papers, the Inquirer used to offer a one-size-fits-all discount that led to high churn. Proebstle wanted to know how to build circulation to advertising's advantage.

Again, he went to the data. As a result, the Inky identified about a third of its ZIP codes as having the greatest potential for circulation and advertising growth. There, it made seven-day home-delivery offers to new subscribers that range from 25% to 68% off the regular price and that won't increase at the time of renewal, as competitive concerns warrant. In San Diego, Proebstle had implemented sophisticated price-preference research to figure out what price will sell the most subs, but Philly has taken a trial-and-error approach, which it continues to tweak. "It was based on our ability to introduce the product ... and keep it in the household -- and what the competition was doing," Proebstle says.

Other areas received similar scrutiny. Proebstle calls it "basic blocking and tackling." Bringing in a trick he used in San Diego, Proebstle charted all the Inquirer's home-delivery routes. Flipping open a fat binder kept in his office, he reveals one of many multicolored bar charts, which show where papers are arriving late. With these data, he can determine how workloads can be shifted to improve delivery times.

The real Philly stake

The intensity doesn't stop with home delivery. Single-copy marketers get a list of the next day's top Inquirer news stories, and create sales promotional materials around them. Then Proebstle tracks sales of each promotional piece to gauge what worked and what didn't.

Building circulation during each semiannual reporting period is hard enough, but Proebstle's mandate under Knight Ridder is to show monthly gains. To stay on track, he huddles with a dozen team members once a week to go over the previous week's results and figure out how to meet that month's circulation-increase goal. So far, so good.

But even with Proebstle's street smarts, strategic mind-set, and ability to use data, achieving month-to-month and year-to-year circulation growth pushes up against the limits of a circulation director. Segmented discounting, or tiered pricing, cuts into revenue, even if it helps lower acquisition costs, and is an easy target for a publisher looking to trim expenses. But Hall says he's committed to the present approach. He is determined to find a strategy that can be sustained through the next economic crisis.

"I probably created more chaos" than anyone during the 2001 cost-cutting phase, says Hall, who has been at the helm during an anxiety-causing 19% decline in full-time equivalents and a 53% plunge in help-wanted advertising over the last three years. He believes the current zoning plan and circulation pricing strategies are the answer, along with a newspaperwide culture that stresses more cooperation among departments and entrepreneurship.

While "we were very short-term [oriented] because of the economic downturn," Hall says, "I actually feel pretty good about this right now. ... There's a lot of money in this market that we don't get from advertisers. We didn't have a vehicle or a pricing strategy."

Now, they do. In October, the paper began publishing five daily zoned sections that are designed to give advertisers consistency at competitive prices.

Buying into the plan

Media buyers such as John Goodchild like what they see so far. He gives the paper points for increased flexibility with both small and large advertisers, noting, "I think they are working hard to provide better service and pricing." As long as the paper is limited to five zones, though, advertisers interested only in a narrower geographic area might be better served by a suburban daily, says Goodchild, chairman of the Philly-based Weightman Group media agency.

Suburban prospects, who have seen the Inky give them local sections over the years, only to pull them away, also will take some convincing to give the paper another chance. "It will take a while before suburbanites really change their perception of the paper," says Zachary Stalberg, editor of the citycentric Daily News.

That's principally the job of Inquirer Editor Lundy, who, like Proebstle, is part of a recent management reorganization. He's playing the delicate game of trying to shift coverage to the suburbs while keeping the Inky's identity as the paper of record for city, national, and international interests.

Lundy also has to convince many journalists that covering the 'burbs isn't second-class, a view reinforced by the fact that the paper's suburban coverage had long been handled principally by a lower-paid, less-experienced corps of staffers. To send the message that the suburbs are paramount, Lundy disbanded the so-called correspondents program, hiring more seasoned reporters to cover the 'burbs and expanding themed beats. When all is said and done, he expects to have 90 suburban reporting staffers, an increase of 34%. In Lundy's paper, suburban stories appear on Page One with more frequency than before his arrival.

Such sweeping changes don't come without criticism, and reporters have complained about the elimination of editorial assistants, reshuffling of jobs, and de-emphasis of national stories. "You don't change the belief that suburban reporting is inferior overnight, but I think we've made a big giant step," Lundy says, thrilled that more than 800 outsiders applied for the 40 suburban positions advertised. Still, he agrees with critics who say the paper still lacks personality. Again, he has some persuading to do. A lot of old-school newsies believe personality doesn't belong in the story, he says, adding, "I just couldn't disagree more."

Running on tough turf

Well beyond Proebstle's corner office at 400 N. Broad St., the competition is getting stronger. The Journal Register Co., based in nearby Trenton, N.J., has been on a buying spree, and now encircles Philadelphia with a cluster of seven dailies with a total circulation of 195,000 and 113 nondailies with a combined distribution of 1.2 million. Last spring, JRC launched The Reporter Sunday, a Lansdale edition of The Times Herald in Norristown, Pa. The company's 1-year-old area printing plant has improved the print quality of five of the seven dailies and 30 weeklies.

Levittown, Pa.-based Calkins Media, with three Philly-area dailies, plans to have its flagship Bucks County Courier Times coming off a new press in a year, which will allow for later deadlines, earlier delivery, and more color.

"I think it's difficult for a metropolitan daily to duplicate the coverage of a local daily," says Gary K. Shorts, CEO and president of Calkins. "People tend to be more interested in news where they live and work. ... They do not change habits easily, and I think that gives us a decided advantage. It usually takes more than a few months to gauge success."

Robert M. Jelenic, Journal Register's chairman, CEO, and president, believes the local-news breadth of his company's dailies and weeklies makes them more valuable to readers and advertisers than the Inquirer and its shoppers. For evidence, he points to a 50% increase in color ad revenue in the third quarter and Scarborough Research numbers showing average daily readership of JRC's Philadelphia cluster rose 4.4% daily and 7.6% Sunday from spring to fall of last year.

"I've seen them do numerous things over the years," Jelenic says of the Inquirer. "They've been in the suburbs and out, collapsed the zones. ... We believe the best way to cover the suburbs is with a specific paper in a specific location."

The Daily News has its own problems. While less dependent on suburbia, its reliance on single-copy sales mean the paper has to sell itself each day. Because of difficult year-ago comparisons, weekday sales declined 1.5%, to 150,154, in the six months ended Sept. 30, although Stalberg considers the News to be doing pretty well "in an environment when single-copy is getting tougher."

Internally, Proebstle also faces potential challenges. Union talk among the district managers has quieted, but he'll have to convince them life is really getting better. Meanwhile, his role in aiding the biggest newspaper-union decertification in recent history in San Diego won't help his standing with the union drivers in Philadelphia. In an effort to give the drivers a bigger stake in the business, management now refers to them as route sales representatives and rewards them for finding new single-copy rack and retail locations.

Teamsters Local 628 President John Laigaie isn't impressed with the name change, though. He complains that many of the new locations are just previously abandoned sales locations and that making drivers electronically record returns at each stop takes time from selling papers. "We have more people analyzing and less sales."

The mood in the executive suites is patient and hopeful, though. In this competitive and slow-growth market, where circulation gains are measured in low-single-digit percentage points, no one's expecting overnight success. "You can be revolutionary, or you can be evolutionary," Proebstle has been known to say. In this case, the latter might not be such a bad thing.