Author Archive for Paul Evans


DesJarlais represents GOP’s new brand

Republicans still fundraising for Scott DesJarlais

Keep this politician in mind: Rep. Scott DesJarlais (R-TN) is a darling of the Tea Party and is being aided in fund-raising by some of the big wigs in the GOP. A former practicing physician, he also happens to be a staunch anti-abortionist and hater of Obamacare.

“Congressman DesJarlais’s hard work and outstanding contributions to congressional oversight on issues ranging from the devastating impact of Obamacare on small business to job-killing regulations in Tennessee have earned him [House Oversight and Government Reform Committee] Chairman [Darrell] Issa’s support,” said Issa spokesman Frederick Hill. “Chairman Issa looks forward to continuing to work with Congressman DesJarlais as he pursues the best interests of his district and our nation.”

All that is standard stuff in today’s Republican party. What makes DesJarlis interesting is that the doctor, while married, slept with at least two of his patients (one of whom, according to divorce documents, he coerced into an abortion) and he encouraged his own wife, as their marriage was unraveling, to twice terminate pregnancies.

The unqualified support for someone like DesJarlais is especially interesting given the recently announced re-branding of the Republican Party. However, party big-wigs, while campaigning hard for DesJarlais, apparently don’t want that taken as a signal they intend to retool the GOP into something morally flexible or pro-choice tolerant.

“As I indicated before, I am not one of those who believe we should moderate, equivocate, or otherwise abandon our principles,” said Gov. Bobby Jindal of Louisiana, during a recent speech at a Republican National Committee meeting. “This badly disappoints many of the liberals in the national media of course. For them, real change means supporting abortion on demand without apology; abandoning traditional marriage between one man and one woman; embracing government growth as the key to American success; agreeing to higher taxes every year to pay for government expansion; and endorsing the enlightened policies of European socialism.”

Rep. Scott DesJarlais (R-TN) seems like the perfect candidate to represent the new Republican party.


Future of newspapers (or how I ate myself to extinction)

Michael Rosenblum — advocate of video for newspapers — asks a familiar question today: What is a newspaper?

It isn’t a new question. In the past decade it has been asked with increasing frequency. These days those voicing the query often have a note of desperation in their voices.

Rosenblum has some ideas, but they are largely familiar recommendations. However, some still need to be restated.

Treat the web like it’s own publishing medium. This is so true it’s hard to believe any in newspapers would need to have that repeated. But they do. That means not simply converting your print product to online bits then calling it a day. It also means using the strengths of the new media toward typical newspaper ends, e.g. informing the public and selling ads.

He offers a few ideas of his own on his this might be accomplished. 1. Hire out newspaper photography/video crews to shoot weddings. 2. Use those same folks to make advertorial content for big advertisers (Bloomies is having a sale, let’s treat it like a story, then we can charge them for the work and possibly making residual ad dollars as well). 3. Rather than simply have newspaper movie reviewers, set up an online hub where the viewing public can join the fun.

Newspapers with wedding photographers might actually work. However, local movie reviewers or their newspaper employers might be better off cutting a deal with Rotten Tomatoes then trying to compete with the many well-known and well-established online movie sites. Of course, most papers have already showed themselves as very poor hands when it comes to such cooperation.

As for doing video advertorials, that might work if the newspaper folks can a) do a better job than an advertising firm hired by the store, and b) deliver viewers. At least on the web the paper could manage CPMs for something like that in the same way they do pure advertising.

Of course, the problem then becomes that papers with dwindling staff would tend to focus heavily on things they can monetize better. There goes the coverage of local politics unless someone is screwing somebody else. Plus, they might tend to under-report stories about those institutions paying them for advertorials.

There is no doubt newspapers need to reinvent what they are and how they do it. Likewise, there are tons of things they could be doing to try and gain online viewers and marginal income. A first step is focusing on core audiences and realistic untapped sources of revenue. Instead of creating monolithic sites that regurgitate the print product online, can they manage niche sites that focus on narrow interests held by an avid group of readers? Can they escape the compulsion to try and be everything to everyone in order to focus more tightly on their own UNIQUE and COMPELLING content? The rub is that with every layoff and buyout retrenching newspapers further remove themselves (both in manpower and brainpower) from the ability to do anything more than what they do now. In classic fashion they are returning to the bunkers to wait the war out.

Given the aversion to change by newspaper publishers and their print readers it is likely too late for many to make the radical changes needed to thrive in the new world.

The real question for many newspapers isn’t whether they will discover the magic formula for success. It is whether there will be anyone left once the air raid sirens stop howling. The way things are going at the moment, what we may see — at some point in the future — is the emaciated survivors blinking at unfamiliar bright sunlight and recounting tales reminiscent of the Donner party.


Strib defauls

The Newsosaur brought word yesterday that the Minneapolis Star Tribune defaulted for the second straight quarter on debt payments. The former KRT paper that was spun off in the McClatchy deal to avoid conflict issues (MNI already owned The St. Paul Pioneer Press).

The Strib was purchased in Dec. 2006 by a private equity group, Avista Partners, made up of former investment bankers. At the time The Star Tribune has a paid circulation of 361,172 daily copies and 596,333 on Sunday. Purchase price was $538 million, less than half what McClatchy paid for purchase in 1998. At the time of the deal the paper was reportedly still earning a profit.

To finance the deal, Avista borrowed $340 million initially and nearly $100 million a year later. Since then it has been forced to write-down most of the newspaper’s value and now, because of falling advertising revenue, finds itself unable to meet the payments on the remaining debt estimated at about $436 million.

The company is in the process of attempting to restructure the debt, but that will undoubtedly bring higher interest payments. MNI recently had to cut a similar deal and rates on their extended time table could top 10 percent, according to reports.

Here’s the kicker, under the circumstances some are estimating the Strib is now worth $125 million. However, that figure is based on the price one would pay to purchase all of their outstanding debt paper and not other more common ways of valuing a newspaper (i.e. cash flow or assets). But, under the circumstances the figure quoted may be charitable given the increasingly uncertain revenue picture for newspapers and that some traditional newspaper assets (such as brand or goodwill) likely have little intrinsic value at this point.

I’m sure folks at the Strib take little solace in knowing they probably aren’t alone. The Philadelphia Inquirer, another spin-off from the KRT deal, is struggling in similar waters. Also, the entire Tribune company (owners of the LA Times, Chicago Tribune and Baltimore Sun) could face default on its debt of $13 billion in the coming year according to some reports.


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Fail Efficiently

“The way to get a great idea is to have many ideas. By definition, most of your ideas will fail. You want to be able to generate ideas very fast, very cheaply and fail very often but at very low cost. Magic Labs is optimized for the efficiency of failure. Among the many ideas, there will be great ideas that bubble up and then we will invest R&D efforts to cultivate the great ideas.”

The quote is from John Wang, chief marketing officer at HTC, the company behind the first cellular handset to be powered by Google Android operating system. Find more of the interview here.

What’s the point? I wonder how many newspapers have an R&D mindset? Retrenchment seems all the rage at newspapers these days. It’s always worked in the past — right? However, some might argue it is simply trying to hold onto a past that has already passed. If now is not the time for radical reinvention then such innovation will be done on the ashes of newspapers.

Speaking of the ashes of newspapers, here is a thought from one of the leading innovators in newspapers: Dean Singleton. According to Singleton, most of newspapers problems are related to the recent economic downturn. Here is what he told

“The biggest thing we need right now is an improved economy, because at least 60 percent of the revenue problem we’re facing today is good-old fashioned economic recession.”

Alan Mutter, of Newsosaur, sees things differently.

Newspaper ad sales didn’t just go the wrong way in 2007. They have been declining steadily since 2001, when the economy suffered the twin shocks of 9/11 and the tech collapse. Even after the economy rebounded in 2003, newspaper sales consistently trailed the growth of the gross domestic product, as detailed here. Newspaper sales actually began falling in the second quarter of 2006 – even though the expansion continued for more than a year – and the rate of decline has accelerated ever since.

However, Singleton doesn’t stop there. He rightly adds: “If we lose $1 dollar in print, we don’t need $1 dollar to come back online. We need 30 cents. Maybe even 20 cents, because of the marginal profit that online produces.”

If that’s true and the money can be found online to enable newspaper survival, should those dollars go to profit margins that serve investors or should they be devoted to innovation and quality content production? Which will better serve the business in the long term?

I bet I know where Mr. Singleton stands on that question.

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Q4 newspaper advertising looks thin

Newspaper advertising was falling hard even before the financial markets tanked. Not a good sign heading into the final quarter of 2008.

According to a June Bloomberg News report:

Print advertising sales by American newspapers fell the most on record in the first quarter, tumbling 14 percent as the real estate and job markets shrank and business was lost to the Internet.

Advertisers spent $8.43 billion on newspaper ads in the first three months of 2008, according to the Newspaper Association of America, the eighth drop in a row. Real estate and recruitment ads each fell 35 percent.

The pace of that decline picked up in Q2 of 2008, but NAA is predicting it will stabilize for the rest of the year and the dive will become shallower in 2009. It isn’t clear why they believe the pace won’t continue to accelerate. But chances are all those calculations went out the window in the past few weeks as bank failures and stock market woes have all but guaranteed that advertising dollars will be at a premium for the rest of the year — if not longer.

What a bummer for those of us still trying to make a go in the newspaper business.

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Media stocks slide with Dow

Media stocks didn’t escape the mayhem on Monday, Sept. 29. Newspaper stocks have already been drubbed this year (heck, most have had their pants yanked to their ankles at this point) and some took another beating: Newscorp down nearly 10 percent; Gannett down almost 7 percent; Media General down 4.5 percent.

Oddly, McClatchy — which has dropped more than 90 percent of its value since the ill-fated KRT purchase in 2005 — rose nearly 2 percent. The bump was on news of a new agreement with lenders regarding the $1.2 billion debt it is carrying. But even that silver cloud had a lead lining because the deal — negotiated due to reduced revenue expectations — required the newspaper company to put up more collateral and accept a higher interest rate.

Does it mean anything that broadcasters were hit harder than most newspaper companies? Or is that simply because there is more value remaining in the TV company stocks than in most from newspapers?

The following figures are from Al Tompkins blog.

News Corp. and Viacom hit their lowest levels in more than four years, while CBS and Time Warner fell to one-year lows.

Here’s my summary:
News Corp. down 9.6%
Viacom down 7.83%
CBS down 7.14%
Belo Corp. down 4.27%
Time Warner down 9.22%
Walt Disney Co. down 9.22%
Gannett Co. down 6.59%
New York Times Co. down 3.82%
Media General down 4.33%
Washington Post Co. down 4.18%
McClatchy Co. actually rose 1.78% on news that a new debt agreement had been struck with lenders.
Hearst-Argyle Television was only down 2.87%
Meredith Corp. was down even less, only .69%
Charter Communications down 2.38%
Cablevision Systems Corp. down 5.47%
General Electric Co., a Dow Industrial Average component and parent of NBC Universal, saw a 8.51% stock price drop Monday.


What’s the plan?

Newspapers are in the midst of the greatest retrenchment in their modern history. Almost weekly there are reports of a few hundred more jobs being cut or eliminated. According to the Paper Cuts web site, created to track the loss of jobs at US newspapers, there have been nearly 11,000 jobs lost this year and there are still three months to go. That’s up from about 2,200 in all of last year.

It isn’t like this hasn’t happened before. In the late 80s and early 90s I worked at a mid-sized daily in the Philadelphia area. There I survived three rounds of layoffs. In one I saw a photographer with 12 years at the paper ushered out the door because he had the least seniority in that department.

But the difference in the past was that the newspapers didn’t really need a plan. They cut back and rode it out, confident that the economic factors affecting their bottom line would eventually be reversed and all would return to business as usual. That doesn’t seem likely this time.

The newspaper industry is in the midst of the longest and most severe advertising revenue downturn in US history. And rather than finding a floor, indicators are that everything up to now has just been the beginning of a deepening decline.

Here is what Alan Mutter at Newsosaur had to say on the subject:

In the longest sales setback ever, advertising revenues at newspapers declined for 9 or 10 consecutive quarters in the period ended on June 30, 2008. This surpasses the downturns in 1990-91 and 2001-02, when sales in each case slid for six of eight consecutive quarters before they revived.If sagging newspaper sales don’t turn around in the second half of this year – which few expect they can do – then the decline will be on track to be twice as long as any in history.

What will make matters worse? More major retailers are expected to go bankrupt and the credit crunch will discourage others from spending cash on hand for newspaper ads. But what may be most telling is that advertisers are losing confidence in newspapers.

As evidence Mutter cites a report to the NAA Retail Advertising Forum that just concluded in Dallas, TX.

While most of the retailers appearing at the NAA conference continued to profess their appreciation for newspaper advertising, David T. Clark of Deutsche Bank said in the report that nearly all of them are moving ever-greater percentages of their advertising budgets to the interactive media – especially when young people are the targets.Marketers “are ‘flummoxed’ by the multitude of media choices they have right now, so there is an opportunity for newspapers to step in and offer a multi-platform ‘big idea’ to major retail advertisers,” says Clark. “However, it is unclear whether many newspapers are up to the challenge, though there appear to be some that are.”

And newspapers may have a limited window in which to prove they deserve continued advertiser support. According to Clark.

“The next year to 18 months may be ‘make or break’ for the newspapers,” he said in the report. All signs point to weak retail sales and lean advertising budgets for the balance of this year and much of next, [making] it “unclear” whether newspapers “are moving fast enough to secure local market share for when the economy climbs out of its hole.”

What’s your newspaper doing? Do it have a plan to stop the slide or climb out of the hole? Or is it just cutting jobs and hoping things will all turn around on their own?

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