Out of many memorable quotes from my Knight Ridder days, one keeps bouncing back to me. It came of the company's mess in Detroit. Knight Ridder had long run the Detroit Free Press, one of the country's liveliest, most readable papers. But it fell afoul of Detroit's tough economy, and Knight Ridder ended up falling into a minority position, joining in a JOA (don't joint operating agreements seem like relics from another age today?) with Gannett, owner of the rival Detroit News.
Jerry Tilis, a longtime KR ad exec, had been part of those negotiations, the reckoning of the paper and its future. For KR, that reckoning was hard to stomach. I recall Jerry talking frankly about what happened in Detroit. What happened, really, those of us in other Knight Ridder cities asked?
"We believed our own b.s.," he told us. Many more words followed, but those stuck. Knight Ridder people had told the public story of how things would get better, how they'd weather the storm, etc., while they knew the problems were deep and seemingly intractable. Jerry's point: Know the difference between what you had to say for public consumption and the truth.
Today, it is worth looking back on what newspaper people have told the world about their own fortunes. I think of it in three phases:
- Phase I, maybe 1995-2004: “The Internet Won’t Hurt Our Business, and We’re Making Prudent Investments in the Internet.”
- Phase 2, about 2005-mid-2007: “The Internet is Changing Our Business, but We Believe our New Internet Revenues Will Make Up for Print Losses.”
- Phase 3, mid-2007 on: “We Can’t See the Future”.
Each public phase lagged internal reality.
Here's how it played out.
Inside the newspaper company, you look at the mounting set of bad numbers. You hope that what may be a structural change in the market -- craigslist taking classified listings, for instance -- will be cyclical. Experience tells you otherwise. You modulate your tone, parse your words. You have charts drawn up that focus on that amazing up arrow of digital revenue (though on a relatively tiny base) and downplay the down arrow as temporary. You don't offer the public the private arithmetic you know that those two lines together will never -- in the foreseeable future -- equal what overall revenues totaled in the good, old days.
Instead of acting on that truth, and making major moves to restructure the business while you've still got a reasonable cash flow and more ability to get from here to there, you believe too much of your own, uh, wished reality and wait too long. When the bottom drops out, you follow the trend of the industry and frightsize.
Now, finally, we are catching up with real reality, and that's good. I've often said that Elizabeth Kubler-Ross' work (The 5 Stages of Grief: Denial, Anger, Bargaining, Depression, Acceptance) well applied to newspaper fortunes. We're somewhere between Depression and Acceptance. You can see it in statements like those of McClatchy CEO Gary Pruitt that his “visibility is limited.”
Pruitt is one the good guys in the battle to hold on to as much journalism and community service as the company he heads has lost more than 90% of its market value in 2 years – now valued by Wall Street at a laughable $350 million. “We’ll become a smaller, more efficient company,” he told analysts last week. No one wanted to ask the most obvious journalist’s question: how small, how soon?
What's missing from the public conversation, I think are these three key questions of the moment:
- What exactly does this new "local media" company look like?
What are its products? How many journalists and ad sales staff does it
have, in each city served and centrally? If newspaper companies used
white boards like those upstarts in Silicon Valley, what would be on
the white board -- and what wouldn't be?
- How big is this company in revenue? That's a question investors and financial analysts really want to know, but seldom ask and never get answered.
- What kind of local market opportunity does the rapid shrinking of the DFKAM (Dailies Formerly Known As Monopolies) leave for new entrants? If putting together a mainly online (with niche, focused print) business is the way to go, look for an explosion of new, expanded and better-funded regional and local efforts as some kind of economic recovery sticks. There is a widening cast of those watching dailies' demise and wondering where they might fit into this emerging new world order. They include: the portals (all talking up the value of local media) to early entrants MinnPost, Pegasus, Voice of San Diego and Crosscut, to Arianna Huffington (launching limited forays into "local"), to local broadcasters ramping up their digital businesses and to the now mostly print alternative weekly press. It's the delta between shrinking Old Media and aspirational, if so far tiny, new media that's worth watching, as we figure out a journalistic future.
Another way to ask the question: what story will we be telling in 2010 and in 2015?