Content Bridges

The Twinkle in Dean Singleton's Eyes

You can see the gleam in Dean Singleton's eyes from here. He called it as he saw it, as his canny deal-making had netted him "the crown jewel" of Knight Ridder, the San Jose Mercury News. He bought the Merc, the CC Times, the Monterey (CA) Herald and my favorite Midwest paper and alma mater, the Pioneer Press today, for $1B.

Sure, the Merc, my hometown paper, has fallen on hard times. My god, in the year 2000, not long ago, the Merc pulled in $118 million in recruitment ad revenue. That's before job ads hadn't yet moved to Monster, Yahoo Hot Jobs, craigslist and Simply Hired in huge numbers. Then, the bubble burst. Santa Clara County lost more jobs than it created and recruitment fell to a mere $18 million in 2003. That missing $100 million spelled the end of a number of Knight Ridder careers, and ultimately contributed greatly to the end of KR itself. The Merc was the growth engine -- the largest single carrier of classifieds back in the day -- and could make up for KR's mature markets in Philly, Akron, Saint Paul and the like.  But we've moved from several mature papers to a mature company in what's rapidly looking like a mature industry, at light speed.

It looks like the Bay Area's about to become a two-company region, reduced from three, as Knight Ridder abandons its role to Media News and to Hearst. Hearst bought out the Chronicle a few years ago and has struggled with circulation mightily. But it still holds an impressive number -- 400,906 -- which we'll check in on when the industry reports new circ numbers May 8.
But this number -- 702,738 -- is the more impressive one. That's the one Media News CEO Dean Singleton (here) can count among his 18 Northern California (the Bay Area and beyond to Willits and Mendocino) when the purchase from McClatchy Newspapers closes around July 1.

Now two companies holding major sway in newsgathering, opinion-offering and ad selling  have raised some anti-trust-like concerns. Indeed, California Attorney General Bill Lockyer had already opened an inquiry into McClatchy's divestment of the California KR properties before this sale was announced. From a competitive point-of-view, observers are sure to raise their eyebrows even higher than they were yesterday. That's because we learned what all the discussions of "the complicated sale" became clear.

In fact, it was Hearst that "bought" the Monterey and Saint Paul papers, and now -- McClatchy-like -- has turned around on the day of sale and "sold" them back to Media News, in exchange for an undisclosed equity interest in non-California Media News properties. So officially, Hearst won't be a partner in the Bay Area newspaper picture, but given its intended partnership elsewhere, observers are sure to raise the questions of how truly competitive they'll be in the Bay Area.

Of course, you can't blame the publishers for circling the wagons, and laying to rest any notion of real daily competition in the newspaper trade. Competitive markets have become as rare as newspaper companies reporting profit improvement. (In fact, Dean Singleton was smart enough to realize that the spoils were small enough that competition in Denver didn't make business sense, joining Scripps in a joint operating agreement there.)

So Hearst and Media News do a little buddying up, spreading the costs of sale out a bit more. The pooling of assets goes much farther of course, even in this convoluted deal. It's not Media News as the buying entity in this transaction, but the California Newspaper Partnership. That partnership, spun out in 1999,  has Media News as its lead with a 54% stake, with minority partners Gannett, the country's largest news company, and the Stephens Media Group, publisher of the Las Vegas Review-Journal and about 27 other dailies.

We could go on and on with this game, but here's the truth: the wagons are circling. And with good reason. The battle isn't in the print world, but online.

Many journalists and readers fear that cost-cutting will destroy the papers at which they work and which they depend upon for news. We'll read much more in the days to come about what in fact Media News has done at the 49 papers it's owned, and how it may have treated its bigger properties, in Detroit (News) and Denver (Post) differently and better. We'll see what we can make of that.

The truth is though the cutting isn't about to begin. Remember those stats on Merc recruitment revenue? My stats tell me that the Merc has already cut newsroom staffing by 32% from its 1998 height. The cuts are coming, announced seemingly week, even at two-stock-class papers like the Washington Post.

When I see the gleam and the spirit in Dean Singleton's eye, this is what I wonder: Can he take that fire into the Internet in the same way that Rupert Murdoch has? Can he think about the Internet as a businessman who wants to be more part of the future than the past? Can he redeem the art of journalism in the new media world?

One quote in this morning's Mercury News gave me a bit of hope. Talking to an ASNE editors' group in Seattle, he made the point that newspapers have got to find ways to monetize editorial content that's given away on the web: ``We have to get paid for it. We either have to come together as an industry or partner with Google or Yahoo or whomever. If we don't get paid for it, we aren't going to continue to be able to produce it.''

Maybe, oddly, it will be Dean Singleton, proprietor of the nation's 4th largest newspaper company, who can figure out how to pry lose some of the new media revenue the Googles, Yahoos and MSNs are leveraging out of Old News' hide.

What the Pulitzers Tell Us About Newspaper Fortunes

Call it the Pulitzer Early Warning System. In perusing the list of well-achieved journalistic Pulitzers today, one fact cried out: all the major national news reporting awards went to big national media. The Washington Post won 4 and the New York Times won 3, testimony to importance of their continuing investment in investigative reporting in the national interest.

It's also testimony to the increasing split among the nation's newspapers. It's not by accident that the the Post and the Times have two-class stock structures, with family interests better able to insulate newsrooms from the now-apparent ongoing downturn in newspaper revenues and profits. It's not by accident that those papers with national franchises have a better chance of carving out national and global niches on the Web.

What was glaring in the Pulitzers was what was missing.

Tonight I ran across the thinking of Will Bunch. Will a Philly Daily News writer is a clear thinker, who writes perceptively about the current news industry morass. He summed up it well in his column, titled the "2006 Pulitzers ... and the Death of Local Reporting":

In fact, if you look closer at the Pulitzers, you'll see the sad toll that economics and job cuts have already taken on American journalism. The two big newspapers that survive by covering national and global affairs for a small elite gobbled up a whopping seven prizes between them. In a time when electronic voting scams and other voting problems have threatened democracy here at home, the Pulitzer for "explanatory journalism" went to a series on democracy...in Yemen.

Meanwhile, the Knight Ridder chain, under immense cost-cutting pressure, won just one Pulitzer, for its Biloxi hurricane coverage. Indeed, the newspapers with the steepest job cuts -- the Inquirer and the Daily News here, Newsday, the Chicago Tribune and the Baltimore Sun, to name a few, were completely shut out.

Read the whole piece when you get a chance, and send it to friends, when they tell you that bloggers will replace the journalists disappearing from American newsrooms. 

This is the core of it: watchdog reporting is what we are in danger of losing as economic disruption caused by the Internet  proves inevitable. Yes, citizen journalists can report neighborhood news. Yes, we can pick and choose from a many fine film critics near and far. Yes, our favorite sports columnist may no longer be housed at the newspaper.  But reporting, that's something that's not an avocation and it may not be something that attracts big audiences or many paid search dollars.

That's the prize we have to keep our eyes on.

 

Bridging: Microsoft's Randomness, Fox's Model and Times Select for Students

• Sidewalk, 1996?: Check out the cumbersomely named Windows Live Expo beta , code named "Fremont" and you'll love a glimpse of Microsoft oh-so-last-century humor. Middle of the page:  "Completely Random Listings!." That's got to be engineering humor from some geeks who have tried to find a place (sometimes buried ten clicks in) for everything.
• Visit Fremont before Microsoft redesigns it.  Here's the vibrant Seattle neighborhood to which Microsoft has given its Google Base beater the aspirational code name. Fremonts in Seattle, Portland, the Bay Area and beyond :  Which Fremont can the new Microsoft take you to?
• Fox gets it right. The network's 7-year deal with the affiliates is just the kind of thing print publishers need to do. No, publishers don't have affiliates in the same way broadcasters do. But they do need to find and exploit many forms of distribution asap, and remove the roadblocks to using them. For broadcasters, their affiliates -- understandably feeling some ownership in the promotion of shows now being offered up on VOD-- could have been a stopping point. Sharing a bit of the 99 cent-downloads with them lets Fox go about its business.  For publishers, it's learning to use every distribution channel possible, finding micro-pricing models that work, and being willing to share a few pennies here and there. As Josh Bernoff, a Forrester analyst, said: "This is a way to get the affiliates to stop whining. " To which Jay Smith, head of Cox Communications and outgoing chair of the Newspaper Association of America, would have added, as he said at Chicago convention: "Stop whining. Start winning."
• Channel surfing: The New York Times is one of those trying out some new channels. Its TimesSelect product has won many subscribers and provided a vital new revenue stream -- impact on ad pages unknown. Now it is offering and promoting big-time in the paper: www.nytimes.com/university  It's not a new idea: half-price for the students and faculty, this time for the online Times Select product and, importantly, its impressive newspaper-of-record archive. What will the product, if successful, do to the Times' own substantial revenue from academic distribution, licensed largely through libraries, and how else might it disrupt the academic licensing market? As is too common with the Times, its own interface and buying process is too hard.  If you want to buy a gift sub for a student, and you're already a Times or TimesSelect subscriber, it won't let you -- reminding you "According to our records you already have access to TimesSelect." Thanks.

Welcome Backfence to the Bay Area

It's been a time of what-are-we-going-to-lose in the Bay Area.  Angst about who will own the Merc and the CC Times and what further cuts they'll make to newsroom staffing? Wonders about the dear old Chron, having sustained a 16% circ knifing last year (what will the new FAS-FAX circ numbers say on May8?).  Sure craigslist is great for buying and selling fridges and tickets, but it's local news reporting shows serious gaps.

So today's announcement that Backfence is coming to the Bay Area -- Palo Alto first -- is a welcome one. Dan Gillmor, late of the Merc, has tried to make a go out of the Bayosphere site, trying a regional community engagement, but running into too many business models issues. So he's tossed Bayosphere into Backfence, and that'll be an experiment worth watching.

Backfence, headed by  Susan DeFife and journalist Mark Potts, has been encircling D.C. with microsites in Bethesda, Arlington, McLean and Reston. Basically local-local sites, with user-generated posts spanning the kids/churches/things to do waterfront. Intentions of revenue at least, around Yellow Pages, local classifieds, some banners, sponsorships, the usual.

Interesting sites, with word having it that it has been a tougher, slower go than hoped; no surprise there.  It's been a lot of retail work; going community meeting by community meeting to stir up both reading interest and more importantly posting interest. Supply and demand. Readers and writers.  Check out the sites and you can see sprouts, but few well-developed gardens.

The Backfence notion: A regional/national network of micro sites, all over a single user-friendly platform (hey, look at my kids' photos and I'll look at yours; no software hassles).

Lots of competition emerging nationally, including newspaper-driven sites like Your Hub
and Pluck's prototypical site at Austin. Then there's the new Google Calendar, driving its beta into local markets more deeply, also aiming at the same community-oriented market + Yahoo, MSN and AOL's LOCAL efforts. Lots of local ad dollars; just so darn hard to get 'em.

One idea we noodled at some recent conference: why not combine the power of a Backfence with free dailies,  like the new SF Examiner and the chain of Examiners Qwest billionaire Phil Anschutz is starting around the country. That free, print community paper/free microsites might be a winning combo, winning critical mass. Just a thought, and one that need not be left to billionaire telcom execs.

Stuff In, Stuff Out (SI-SO), on Steroids

We in the news industry like to think of ourselves as self-sufficient, do-it-yourselfers. We gather the news, sell the ads, put all the pieces together in production, print the package and distribute ourselves, thank you, to subscribers and coinboxes throughout the lands.  It's Andrew Carnegie (below), turn-of-the-last century vertically integrated enterprise.

That of course us has caused us all kinds of problems in trying to get our Web acts together, since the web is all about time to market,  and strategically and quickly partnering with others to get stuff done that your own company and people can't.

Our DIY self-image is particularly strong in newsrooms. We have this image of intrepid journalists wandering in, some time in the a.m. and then pursuing all the news that counts and bringing it back alive. We think of the paper as being local and staff-written.

Local and staff-written has always been a key to our success, but never more than now do we see that model busting up. (Actually news orgs have also brought in lots of content: TV and movie listings, syndicated columns, comics, sports data, stock listings, etc.)

Just in the last week, we've seen announcements by Mochila, Pluck, Newstex and Your Hub, among numerous others, that point to the rapid changes in the works.

You could call it Stuff In, Stuff Out (SI-SO). We're seeing a lot more stuff moving into news pages in print and especially news pages online. We're seeing the ability to move news company-produced stuff out of  news companies more easily.

Take the Stuff In. Pluck's new BlogBurst* product is a new provider of content to digital newsrooms, topical content produced by bloggers. Why pay a travel writer when you can pick up some travel content more cheaply? How about health? Cricket? Antiquing? And on and on.
Already, the Washington Post (which just whacked 80 newsroom jobs recently), the San Francisco Chronicle and a spate of Texas papers near Pluck's Austin base, the Houston Chronicle, the San Antonio Express-News and the hometown Austin American-Statesman ( & Austin 360).  As BlogBurst builds up its 700+ blog suppliers and its categories (first out are "Travel, Women's Issues, Technology & Gadgets, Food & Entertainment and Local Metros".)

Also, on Stuff In. Consider Your Hub. I visited the Your Hub booth at NEXPO a couple of weeks ago. Your Hub reports that in Denver, its launch site, it is now receiving 1400 community posts and 800 calendar items a week. Those, if they hold, are impressive numbers. They will create a vibrant, newspaper-company-hosted community, which is both able to be monetized and exposed to more content on the Denver newspapers sites of  the Denver Post  and Rocky Mountain News.  (Of course, what they may be exposed to is BlogBurst-supplied content, so you can see how this circle is working.) And the best of Your Hub community content is being put into weekly, hyper-local tabs (90% community written) with more, and presumably, new advertisers.

Stuff Out. Newstex* is now making a business of licensing full-text blog content to among others LexisNexis. Larry Schwartz, Newstex's CEO, is on to something here, just as Pluck is with BlogBurst. It's simple: some blog content has more value than other blog content and can be licensed or monetized through advertsing. How about all those thousands of blogs now being produced by newspaper staffers? No longer are they just nice additions to one paper's destination website; they are grist for syndication, sliced by topic and locale, and, eeks, talent!

Stuff In and Out, In and Out.  Then there's the recent Mochila announcement, unveiled after months of secrecy in the Times.  Given an exclusive, the Times provided a sunny piece, reporting that “Mochila will be a place where newspapers, magazines, websites, and broadcasters sell content to each other." You know, dance on the graves of ISyndicate and Screaming Media, and have exquisite timing: offering a state-of-the-art content exchange that can work seamlessly and with greater transparency than current, largely opaque deal-making affords.

Well, maybe. I wish CEO Keith McAllister good luck and hope his timing is better than others. The admin set looks great, and as a veteran licensor of content, I wish I had it a half-decade ago.

To our SI-SO point here, though, the metaphor is right (and write.)  Stuff just wants to get out and in. Stuff In, Stuff Out. SI-SO. It's the age we're moving into.

Addendum (4/19):  Good piece by Kevin Maney in USAT interviewing Mark Cuban on the fast-changing media landscape. Well worth a read.

*Content Bridges BLOG dislosure:  Content Bridges can be found in both the Newstex and BlogBurst feeds. Not a penny received.

 

 

10 Questions for Ron Burkle and Yucaipa

Ron Burkle got quite a welcome from the press.  No sooner had he announced the intention of his venture fund,  Yucaipa Cos., to bid on Knight Ridder properties than he ran afoul of the press, or maybe ran into the foul press. Reports are flowing out of the NY tabs, with the main allegation being that a NY Post freelance contributor to its Page Six gossip column had tried to extort $220,000, in exchange for "not reading bad stories." With newsprint use on the decline in the current cost squeeze, that's a strategy that other publishers may want to think about -- getting paid not to publish. Without the nasty extortion schemes of course.

Since Mr. Burkle seems to be undeterred in his quest to buy the Knight Ridder Dirty Dozen, the 12 papers to be divested by McClatchy soon as it can, Content Bridges offers a few questions we're hoping he's pondering:

1. With your experience in licensing (you advised Michael Jackson on when best to sell his Beatles' rights), can you bring your licensing chops to content monetization, a skill the industry badly needs?
2. Though you've got about 2 billion dollars in the bank and don't need financial partners in the deal, have you given some thought to strategic partners that might be helpful?
3. With the Bay Area's papers on the line, could these strategic partners include a Yahoo (whose board you sit on), a Google or an E-Bay to get fresh digital blood thinking about publishing opportunities?
4. Could  a public media investor with Knight Ridder roots,  like Jeff Skoll ("Syriana," "Good Night and Good Luck,"  "North Country"), bring a whole new perspective to such a public medium as a newspaper?
5. What kind of experience can you bring from the grocery industry, in which cutting costs (health care,  wages) in the face of Walmart competition,  may be applicable to the legacy news industry under attack by lower-cost upstarts?
6. With the Guild in your corner and as a friendly non-investing partner, what kind of thought have you given to how you can make workforce changes (multimedia retraining for reporters and ad salespeople, for instance) and keep your friends on your side?
7. With community blogging and citizen journalism catching on here and there, how can you best bring this power to your notion of papers published in the public (and employee) good?
8. Can you convince Bob Hall, former Inqy publisher and your senior advisor, to come out of retirement and take a fuller role in your new publishing company?
9. Have you called Gary Pruitt and asked him to give you a meeting and a fair shake?
10. When will you take a page out of Gary's playbook and go public, taking your case for a different kind of newspaper ownership public directly to the would-be readers?

 

McClatchy and Yucaipa: STBFKAKR and 'The Numbers'

Now maybe this gets interesting. Yucaipa  Cos., Ron Burkle's investment company, will now get at least some of the company-by-company financials it wants. Those are the financials of  12 soon-to-be-formerly-known-as-Knight Ridder (STBFKAKR) ones that McClatchy immediately deciding on divesting upon winning its KR bid.

Why Yucaipa couldn't get the numbers earlier is a bit of a mystery. McClatchy had said that the confidential information could only be made available to those publishers who had signed confidentiality agreements with KR, those who had participated -- and been accepted to participate -- in the original bidding for all of KR. Knight Ridder then said it would allow new bidders access. A few days of confusion ensued. Then on Thursday, the Newspaper Guild (which spurred employee-friendly Yucaipa to bid)  announced  that Yucaipa would get the info.

How this will affect the bidding though is still unclear.

McClatchy accepted bids in the "first round" of bidding on March 28. Yucaipa, apparently, was the only bidder to say they'd take all 12 papers, which include a California group (San Jose Mercury News, Contra Costa Times, the Monterey Herald), a Philly duo (Philadelphia Inquirer, Philadelphia Daily News), a North Central group (the Grand Forks Herald, the Duluth Tribune and the Aberdeen American), the Fort Wayne (IN) News Sentinel, the Wilkes-Barre Times Leader and two legendary Knight Ridder stalwarts, the Saint Paul Pioneer Press and the Akron Beacon Journal.

Yucaipa made  its first-round bid for the first 12, though it had to bid blind, without all the financials. Now it can fine-tune its offer, at least somewhat. The Guild's announcement (McClatchy added no comment to published stories) said that McClatchy had agreed to make information available on papers "as they come to market."  That probably means that if some papers reach a second round of bidding, financials may be made available.

It also means some of the papers may not come back to a second round, having been bid on and maybe had deals sealed after the first bidding round. Industry observers have whispered that McClatchy and Media News deal around the California papers was done, or close to done, early on. It is now believed that Media News has made a bid for those three, plus the Philadelphia papers and the Pioneer Press.  (Observers say that while Media News made all the preparations to bid on all of KR originally, it did not put forth a final bid for the whole company.)

In fact, will their be a second bidding round? Gary Pruitt told me yes, when we spoke at NAA. The question will be what's left over from the KR sale leftovers.

This much is clear:  CEO's Gary Pruitt's #1 goal in the divestiture is getting it done cleanly. That means getting the deals done, past any Justice Department anti-trust review and the properties ready to be transitioned simultaneous to the close of its KR deal, around July 1.

The #2 goal may be maximizing the amount of the sale prices. That's understandable, from an operational viewpoint -- why get bogged down taking over papers (temporarily) that you're not intending to run? (I've suggested that strategic goals should play as well, though they would undoubtedly complicate both timing and pricing.)

Pruitt will have to balance those goals, keenly mindful of maximizing the offset of his purchase price and of doing the very best by McClatchy shareholders who want to see high prices fetched. 

Wall Street is waiting for this second shoe to drop. What indeed is the value of papers, post McClatchy's KR buy? Will they be collectively  worth closer to the bottom estimate of $1.4B or the high one of $2.0B? Investor pressure is already building on Tribune, similar to the noises first heard around KR last fall, and the price McClatchy fetches will inform that pressure deeply.

 

Newspapers: The New Real Estate in Town

You remember the rule of real estate: Location. Location. Location.

Well now, with a dollop of irony tossed on stew of newspaper turmoil, it is developers and home builders who are seeking  a new location for their wealth – buying the local paper.

As McClatchy conducts its auction for the Knight Ridder’s Dirty Dozen, the 12 papers it is not planning to keep post closing of the acquisition, real estate moguls are surfacing.

In Philly, it is Bruce Toll, head of the Toll Company, a luxury home construction company, a prime mover in a bidding group for the two local papers.

From the Tolls, you can get your choice of fantasy: Belize Contemporary or Catania Mediterranean and more.

In Monterey, it is home builder Nader Agha, leading an investment group.

Developers, home builders, apartment owners and real estate brokers, of course, have seen unparalleled boom times in the last decade. Americans’ embrace of real estate, as shelter and as investment – recent lifestyle stories now tout the 3^rd home trend -- has grown and grown. That embrace has meant great profits for those in and around the industry.

Those profits, ironically, have grown at the same time that those in real estate have grown less dependent on the local newspaper. All manner of websites allow consumers to bypass their local print classifieds sections and search for houses. There’s realtor.com, homestore.com and the sites of the big national/regional real estate companies.

Americans have learned they can find out far more online, see multiple pix and even get slide shows and videos, without leaving the comfort of their current abode. Developers are using more direct advertising, online and in other media, to sell new houses. Apartment seekers and landlords increasingly turn to sites like craigslist to find each other, minimizing the essentiality of newspaper classifieds and newspaper-owned sites like apartments.com.

Now we don’t know whether these real-estate-turned-would-be-newspaper moguls will succeed with their bids. 

Just their effort though takes us finally to another old maxim: follow the money. Follow it as it departs newspaper coffers, accumulates in greater volume in the pockets of those in real estate and then – presto, magico – reappears improbably back at the newspapers, as they are bought by real estate moguls. 

Is this the virtuous cycle I keep hearing about? 

Or does it say more about our values of the day? Collectively and unintentionally, we seem to have valued real estate more than news and information, comfort for the body more than food for the mind. Still another unintended consequence of the great Internet land rush.