Newspaper people like to think of themselves as good storytellers. But, lately, newspaper execs find themselves with fewer good storylines to share. In fact, Gannett -- the world's largest newspaper company -- is going to tell its official stories less often. Of course, we'll see interim announcements, like yesterday's stunning one that another 10% of its local workforce is getting the axe the first week in December. (To get the color of what that cut means, check out Jim Hopkins' independent Gannett Blog today, with such tidbits as why "dead wood" at USA Today is immune to the cuts, how the Indy Star could lose 95 positions and a building necrology of those to be cut.)
Joining a trend among its smaller brethren, Gannett told analysts last week that it will now be reporting quarterly rather than monthly. It's not a big surprise, as other news companies have made that change as well.
What's most interesting about it is how hard it is to gauge print companies' progress to digital, which is of course the key metric telling analysts, journalists and small-d democrats what the chances of their survival are.
Take Gannett's last reporting. It made a point of saying it was now breaking out its "Digital Segment," this after acquiring majority control of CareerBuilder, by paying Sam Zell $135 million for another 10% of the company in September, and acquiring the rest of ShopLocal from Tribune and McClatchy. According to the stats on its site, this division took in $77 million in the third quarter. It's good that Gannett has brought all those numbers together -- some were previously in the impossible-to-decipher "all other" category. Until we get some quarter-to-quarter and YOY stats with the new accounting, though, we won't know much.
You get confused, though, if you listen to or read the company's webcast remarks and answers to analysts' questions. There, the number we hear is $177 million in digital income for the quarter, with the $100 million difference apparently due to much revenue counted more in the print and broadcast divisions than directly in the new digital division.
Wow. I'm assuming Gannett, good operator that it is, real does have a handle on how much of its business is really digital and how much legacy, print or broadcast. But I'm not sure. In addition, it's clear that many newspaper companies as they bundle, unbundle and re-bundle legacy and digital products have a hard time both internally and externally sorting out what's what and what's where.
This last quarter, Media General, for the first time I believe, provided a number for its Yahoo!-related revenue, focusing on the HotJobs program. It brought Media General $1.7 million in the third quarter.
Most importantly going forward, whether monthly or quarterly, is to get a sense of the Yahoo Bump overall. That'll be a combination of the HotJobs recruitment revenue and the display ad revenue earned by papers' deepening participation on Yahoo's APT ad platform. Since Yahoo-related revenue is likely to be the prime driver of growth for those companies in the news consortium (40% of US papers), we'll need to see that number to really see how much of a transition papers are making.
Overall, the early 2009 numbers will put to the test one of the surprising points made by Gannett CEO Craig Dubow in last week's call.
I believe all of this makes it clearer than ever just how much our industry has been in the throes of a downturn that is more cyclical than secular. Next, I want to remind you that Gannett has faced cyclical downturns before and we have a proven ability to manage through them. That hasn’t changed. Also, I will stress my confidence that once this downturn cycles through, our core revenues will rebound and together with that improvement in the core, we will see continued growth in digital.
More cyclical than structural? I hope he's right, but I think the reverse is true. Newspaper fortunes continued to decline and more deeply, in the recent relatively good times. The financial meltdown is plainly adding on to all that structural change, and we'll see some bounce if consumers buy houses and cars and HDTVs some time next year. A bounce will not be a rebound though to halcyon days, and Gannett shows it knows that, as we see in what are major job cuts.
Make no mistake. Gannett matters. While often the whipping boy among journalists for its often-middling journalistic performance, it is still the largest newspaper company on the globe, though Rupert Murdoch's news group may surpass it soon.