Content Bridges

Frankly, Candidly, Truthfully: Newspapers CEOs Talk About 2Q

It's time for second-quarter newspaper earnings reports, with Gannett leading off Wednesday, with the long tale of woe to follow. Given the many newspaper staff cutbacks, which I thought might include the investor relations people, I've put together a few boilerplate remarks that I hope are helpful.

Good morning. Let me say I’m glad that the few remaining financial analysts covering the industry want to hear about our second quarter results. Our CFO will be giving you the details on those in a few moments. But let me make a few introductory remarks first.

Frankly, visibility has gotten worse. We told you in the last quarter that it was limited. Well, now – did you see that George Clooney movie “The Perfect Storm” -- we’re smack in the middle of the biggest fogbank you’ve ever seen. Some of you have asked why print revenues have fallen off the table. Frankly, I don’t even see the table anymore. What I see though, I don’t like. Some of you have asked to see what I see, and I’ve got to tell you, it’s better not to.

Excuse, me, I think I’m being Twitterized, isn’t that what you call it? Rupert keeps buzzing, like I’m media so I can be in Sun Valley and you newspaper rats are stuck in your hot, brick buildings. But back to the subject at hand.

First, let’s address costs.

We’re having our people talk to Dean Singleton’s people – I’m not talking to Dean directly; I think that’s how Ganzi got in trouble – about centralized printing. Frankly, Dean’s better than us at thinking outside the box, and we’re talking about one large printing plant, somewhere in the low-wage rural West, and then distributing the papers almost instantaneously, through some kind of system of high-tech pneumatic tubes. Apparently, it’s part of that Google Print deal, involving Google Flux technology. Sounds almost like back-to-the-future, but my people tell me it’s got potential.

You all know that Goldman Sachs is now predicting 30% year over year increases in newsprint pricing for the second half of the year. For some reason, all those Indians and Chinese are buying up newspapers like there is no tomorrow, driving up paper usage and pricing; I’d like to know their secret sauce.

As you know, our biggest cost is people.

On staffing, some of you have asked why we don’t cut more, and some of you have asked why we cut so much. Which proves I think that we’re taking the right, down-the-middle approach.  To tell you the truth, it’s a whole new world out there. Journalism schools seem to be stealing away our most experienced talent. Then there’s ProPublica, which considers itself some kind of high-minded, non-profit, picking off our highly prized investigative reporters. Then there’s the allure of these pajama blogger start-ups; did you see that Rafat Ali guy just got a big payday selling his site to the Brits? I always wondered if his work permit was in order.

We do realize that we need reporters, but frankly, they are a pain in the ass to deal with in good times. And, now, always in a bad mood. I’m told all the so-called “content” they create will prove very valuable online, even if we have to shrink the paper to the size of a menu. I just keep asking how soon?

Now let’s talk about revenues.

On ad sales, we’re thinking of adopting more self-service techniques. Hey, if you haven’t seen that YouTube video on how publishers can make more money using Google’s system, you should.

Our big initiative, of course, has been our work with Yahoo through the consortium. We’ve bet most of our 2009 growth on using its AMP system – or whatever they call, seems they have some legal problem on that, but they’ve got enough lawyers to work it out. Frankly, we love it. They do all the technology hocus-pocus, and our sales people just sell more stuff. You know, when they are over there golfing in Scotland with the car dealers and all, they just ladle on some more online products, and we can make some new revenue.

Some of you have asked what if Yahoo gets sold or split up like an estate. To tell you the truth, we haven’t a clue. Frankly, we don’t think it’s fair. We finally get our, excuse me, stuff together with the consortium, and then Steve Ballmer and Carl Icahn have to spoil the whole thing. We can’t seem to catch a break. We try not to think about how we’ve placed the continued viability of the American newspaper industry on the fortunes of Yahoo. I, for one, sleep better, not thinking too much about it, after 9 p.m. Anyways we have the firm assurances of Hilary Schneider that one way or another, it will work out okay, and my people say her track record certainly bears that out.

On content, you’ve asked what we’re doing in video. Lots, I’m told, though it’s not easy getting those union photographers to deal with things that move, my people tell me. Anyhow, AP’s on top of it, I hear; and yes, we plan to stay part of the AP. We’re now paying on a month-to-month basis, though I think we discontinued the use of the IndyMac card on that one.

Now, let me talk about the company overall.

We’ve previously announced that we’ve engaged strategic consultants, which – I won’t be fancy about it – is a way to say we’re offering for sale anything anyone would like to buy. Sam’s running a seminar on selling the real estate out from under each of us; my people are going, and I told them to watch their wallets. Craig still seem to have some cash – I want you to know that while I’m sure he earned every penny of that $7.9 million last year – we’re a tad more prudent than Gannett, and my compensation shows it. 

Finally, the Times Moves to Re-Brand the IHT (In Part)

The Times’ move to bring the International Herald Tribune website into the brand fold certainly makes sense. The change will add about 7 million uniques to NYTimes.com's 58 million, a nice 12% boost.

One question is why it took so long – the Times arm-wrestled the Washington Post out of its IHT stake back in 2002. The IHT is not a spectacular business, but it has a good foothold in Europe. That foothold is key to the Times’ biggest hope for a stable, prosperous future – making The New York Times a truly global, multi-platform brand.

The other question is why it is leaving the IHT brand on the paper, which is in midst of redesign. Certainly that brand has much history and resonance for its English language, European readership, but it's the Times brand that says "future," while "IHT" speaks much more to tradition, and therefore the past. Would IHT readers leave the paper if it were Times-branded; I doubt it. Would the paper attract new readers, and offer even more congruent multi-platform promotion, with a Times brand; I think so.

It is a Times-branded, global presence that is, at this point, the sole promise that fosters hope at and about the Times. It is a hope that most local and regional US dailies cannot share. The 1500+ dailies’ drive to the future is local --- hyperlocal in many cases. But for the Times – and the Journal – it’s a different game.
Both are newspapers, but they increasingly have less and less in common with their newspaper brethren. Scale and reach define their business strategies. How can they get to the almost one billion English-speaking news readers out there? How can they become a top-three, go-to source for readers on every continent?

It’s the Night Before Christmas Strategy. On paper. On desktop. On cellphone. On cable. On satellite. On social net. To the top of the porch! To the top of the (digital) wall!

No one’s close to getting the strategy done yet. CNN and MSNBC have the labeling right  --  TV, Web and Mobile fronting their TV branding, but curiously absent at the top of their websites. 

The BBC and Guardian have crossed the pond, understanding the value of new business colonization in the states.  News Corp gets it and is moving on its master plan, in part noted by the recent announcement of a single, multimedia platform for Journal, Marketwatch and Barrons properties, signing up with EidosMedia. Thomson Reuters, AP and even ABC are making their plays.

So the Times’ IHT web move makes a lot of synergistic sense. NYT Europe needs to build the same kind of momentum that the Times periodically shows, embracing and integrating multimedia, bringing high-end civilian bloggers under the Times brand, and better packaging content. Its Politics panel, for example, combines video, news, live blogging and contextual news into one easy-to-take-in whole. (Memo to NYT: now take this panel, consider it a giant, endlessly configurable widget and syndicate the hell out of it.) Its European product needs to build on the same mojo, while maintaining the IHT's Eurocentricity. Getting it done right is high-end nuance.This appears to be one step.

The Times says it is still working through various internal issues before making the change.  Certainly those issues existed – slow internal decision-making has bedeviled the newspaper industry even as layoffs and buyouts burgeon. My bet, though, is that finally it is the hot breath of Rupert that will end up closing the deal. Rupert hasn’t wasted a minute in going for the Times’ head. Anything – and everything – the Times can do to meet the threat and build the same kind of primacy in cyberspace that it has in print must be done now.

The IHT move is a small one in the scheme of Times' ones. A bigger one is what to do about the Times' local papers -- a business that makes increasingly less sense for the company to stay in, as I wrote in Februrary. Today there's an item about what will happen to the Times' ownership in the Boston Globe, with Arthur Sulzberger saying he "can't get into the whole thing." It is complex - trying finding buyers out there now amid news of default -- but more urgent a matter each day.

More NYT Coverage, here

Yahoo and Newspapers: Playing with Fire

As Yahoo burns, the newspaper industry watches, hoping it won't get singed.

The Google/Yahoo search ad agreement has drawn lots of comments over the past couple of weeks, but its impact on newspaper consortium members has gotten little attention. The deal itself, if implemented, won't have much immediate revenue impact for newspapers, but its strategic game-changing impact could well present a new headache for the throbbing industry.

Yahoo appears to be in freefall.

Its execs are bumping into each other, heading out the door in the latest reorg.  The softening online ad market doesn't bolster the company's hard-to-believe projected growth. Steve Ballmer is going hot and heavy after Yahoo engineers, and indicating that his once-and-future prey's value is declining by the Internet minute. Amid it all, CEO Jerry Yang has gone Yahoo shirt in hand, traveling through the halls of Congress, explaining that his proposed save-Yahoo-partner-with-Google plan really won't create an online ad monopoly.

In old times, newspapers would find this all great sport. They'd cover it big as the fascinating business story that it is, and that would be the extent of their interest.

Now, though, more than 40% of US dailies by circulation have hitched their 2009 growth wagons to Yahoo and its emerging AMP ad platform. AMP is the most important part of the newspaper's consortium's deal with Yahoo.

Yes, traffic programs and providing site search are helpful. It's the AMP promise, though, that newspaper CEOs talk about when asked where the growth is coming from. In short, the promise of AMP is that of sophisticated, behaviorally based, audience-targeting ad delivery system. The hope: $10 CPMs will become $20 CPMs, as new targeting (in hundreds of categories from Boston-based young, SUV-driving moms to empty nester, small-town Midwesterners) improves ad effectiveness.

At this point, AMP is supposed to roll out, first at MercuryNews.com and SFGate.com by the end of 3Q. It would then move through the consortium ranks, being in place at most sites for most/all of 2009, promising tens of millions of dollars in new revenues. Amid a year of incredible Yahoo turmoil, signs still point to substantial Yahoo investment in getting the new system in place.

Most immediately though, here's what at stake:

• Though Yahoo has talked about clearing $250-450 million annually from the deal to have Google to provide some search ads, newspaper companies are unlikely to see any additional search ad revenue out of the deal.  That's because publishers got search revenue guarantees out of Yahoo as part of their multi-year deal. The guarantees didn't ramp; they were set at certain levels, depending upon assumptions of search traffic and search ad rates. So publishers' guarantees have been exceeding actual earned revenues, at least for the most part. So even if Google is able to double ad rates, most newspaper revenues wouldn't change. Midsize sites currently take in Yahoo search revenue in the four digits monthly.

• Put the arithmetic aside for a moment though and consider that newspaper publishers aren't sure whether they'd be part of the Google search ad program.  At this writing, Yahoo's unsure whether the Google ads would be provided to newspaper partner sites (as opposed to Yahoo.com, the core destination of the ads) and newspaper partners are waiting for that answer, though, given the arithmetic above, it may be mainly an academic question.

The Google deal though raises two other big questions for all those newspapers -- owned by MediaNews, McClatchy, Belo, New York Times Regional Group, Scripps, Hearst, Gatehouse, Media General, Lee, Cox and more.

What's Wrong With Tribune's Math

So, it's clear, that Randy Michaels knows how to draw attention. His 50/50 ad/news plan isn't exactly revolutionary, but it's become a lightning rod for the news industry, as it comes to grip with near-death experience.

Two weeks ago, Rupert Murdoch opined that print would outlive him, lasting (print!) another 20 years. Today, we had Steve Ballmer providing the half-life of 10 years for the newspaper, though the combo of the self-serving nature of the comment and Microsoft's Internet track record hardly make us mistake him for Nostradamus.

You can read MediaNews' Dean Singleton saying "It's time to get over it and move to a print model that matches the times." McClatchy's Howard Weaver, in a worth-reading Sunday post (the industry is really going 24/7!), was candid about the decline:

Revenues continue to be bleak, and it is increasingly apparent that fundamental shifts in competition and audience (combined with cyclical economic woes) demand permanent structural changes. Though many encouraging signs point us toward future success (total audience and online revenues are indeed growing at double-digit rates, for instance) the overall picture is undeniably changing.

Put it plainer: newspaper companies will make less money, get smaller and face greater competition. As a result, we’ll have to become more efficient, make smarter choices and allocate resources to our essential activities.

Overall translation: It's The End of the World As We Know It. Get Over It.

That's a big turning point, and it is now sinking in universally.

So now is the time to sort out real solutions from ersatz ones, an exercise that will consume many of us for a good while.

Which brings us back, most immediately, to Mr. Michaels' halfsies proposition.

I consulted one of my best sources, a highly experienced ad director -- we'll call him AdMan, to protect one of those still industry-employed.

He doesn't think much of the Michaels' plan.

"It's nothing new that he is proposing. I don't know how many long meetings I sat through, looking at sectioning, looking at how to run the paper more economically.....I'm skeptical he can take pages out [we believe Tribune wants to cut another 500 pages chain-wide each week] and do it in strategic ways. Fundamentally, he's right, but Macy's is going to say you're not going to put my ads in the B section."

The Newest Barbarians, Toting Spreadsheets

Sam, I get it. You're being aggressive. When you add to Randy Michaels' aggressive talk about cutting newspaper size and staff that "I promise you he is underestimating the level of aggressiveness with which we are attacking this whole challenge," you seem to be proudly announcing that the newest barbarians may well be inside the gates. I'm not sure who that impresses aims to impress -- your employees are fairly shell-shocked already -- but it does capture attention.

What I don't get is why the aggressiveness seems to take us back to 1980 rather than forward to 2012? (Though 2012 may seem even further away to Zell and Michaels than it does to Hillary Clinton.)

It's little surprise to keen observers of the new Tribune that more draconian cuts had to be on the way. Zell relied on this trading acumen, and luck, to create an auction for Newsday, and that netted him tens of millions more than most people will tell you the paper is worth. The Cubs, Wrigley Field and cable network assets are next, but the deepening downturn in the industry (and as of Friday, maybe the cyclical economy as well) tell us that those asset sales may not even be enough to get Tribune through 2009.

What is surprising is that in publicly announcing cutbacks, Randy Michaels, Zell's radio guy-turned-Tribune czar, is focusing on, of all things, PRINT.

Take his notion of how to make the papers more readable and sell more of them.

Michaels saying the papers will become more USA Today-like, with:

"a new look and feel in each market, emphasizing what people are telling us they want in the research: charts, graphs, maps, lists."

Wow. Great solution for 1992 perhaps, 10 years after USA Today turned the newspaper world, Pleasantville-like, from black and white to color. The problem with that is that USA Today is essentially flat last several years in circulation, and it's got a national base and multiplicity of hotel/travel programs to keep the numbers up. The biggest innovation of the last couple of years isn't the color weather map on USA Today's back page; it's Google's ability to map everything and anything, instantly -- at the customer's fingertips and choice, 24/7.

Which takes us to the bigger news that Tribune figured out that the problem is one of ratios, now believing that a 50/50 ratio of ads to news is right.

Michaels' reasoning:

"If we take, for instance, the Los Angeles Times to a 50-50 ratio … the smallest paper, Monday and Tuesday, [would be] 56 pages. That would be substantially larger than that day's Wall Street Journal. We don't think that's a bad value to the consumer. And we think that by doing that, and then by being able to produce less editorial content … we can save a lot of money by producing the right-size newspaper.

Let me hear that again. You're going to decide how much editorial content to produce by seeing how much will fit into the new downsized papers? You're going to ratchet down the amount of editorial content (and staff), leaving the decision of what you are going to give your print readers essentially in the hands of print ad buyers?

Surely, we can make good journalistic arguments about the folly of that. Journalism's never been mainly a quantitative business. But let's look broadly at "product." Would Randy Michaels, who rebuilt Clear Channel on a low-cost model, let the amount of radio ads sold determine how much programming listeners got? I don't think so; you've still got to have a consistent product for listeners or readers.

Readers are already fleeing newspapers -- and I'm talking about decades-long readers, not the young whom the industry too often blames -- because they see every day that less is less. This change, however it looks on a spreadsheet, will only hasten that decline.

That's a decline that is, at this point, inevitable anyhow. I give Michaels' credit in publicly announcing some thinking about how to justify cuts, but he could have put it more simply. People and paper are our two biggest costs, and we don't have enough money to maintain current levels of spending. That's less fancy, but more to the point.

What we'll soon see is "daily" papers becoming, uh, less daily. Monday and Tuesday editions are a sinkhole, with the latest evidence here, as MediaNews looks to those days as "quick-read" editions. Those days could soon be dropped completely, at smaller operations here and there. Anyhow, the whole notion of a daily newspaper is now obsolescent. It has taken way too long to get to 24/7 newsrooms and news output, but that's what the national players -- from CNN to the New York Times to the BBC -- have adjusted to. Even TBO.com, in Tampa Bay, has made a centerpiece of its new "Continuous News Desk" and committed a couple of dozen people (print, broadcast, web) to making it work.

The old daily paper is being -- as we watched Hillary Clinton's concession on Saturday and its instant analysis on TV and web -- replaced by the web.

When News Turns Comedic, Comedy Turns Into News

You've had the sensation. You DVR up last night's The Daily Show or Colbert Report, expecting some laughs and relaxation, and you get them. But you get more: You get news reporting, stealthy news reporting that pretends to be comedy, but is actual news.

Last week, I loved Jon Stewart's disarming grilling of toady-turned-confessor Scott McClellan. He wouldn't let McClellan get away with his week-long shtick that nobody was lying, just "misleading." Even the best of the card-carrying journalists doing interviews usually let go of the tough questions when interviewees give them non-answers, and that was characteristic of their McClellan interviews as well. Stewart didn't, and he made his point about the very nature of White House information management and duplicity.

Cool, I thought -- and entertaining. Then Colbert came on, with an interview of George Will,
whose body temp has apparently never exceeded 95 degrees. Still, through the brilliantly exchanged repartee (tennis for intellectuals), he got Will to talk about his agnosticism. Colbert's got one of the best poker faces in the biz, but you could see the combination of triumph and surprise on his face, when he elicited that one. It was an amazing moment in an otherwise curious discussion of basic American values.

That's stuff you don't see in many places.

The emergence of comedy as real news is now getting certified as the Pew people compared, in May, its impact on traditional news and made this recent conclusion:

“In its choice of topics, its use of news footage to deconstruct the manipulations by public figures, and its tendency toward pointed satire over playing just for laughs, “The Daily Show” performs a function that is close to journalistic in nature—getting people to think critically about the public square....In that sense, it is a variation of the tradition of Russell Baker, Art Hoppe, Art Buchwald, H.L. Mencken and other satirists who once graced the pages of American newspapers." David Weir's take on the stats and meaning behind that statement is worth reading here.

In April, David made a similar point in comparing Jon Stewart's take with that of the New York Times on the cozy embedding of military experts into media. David lambasted the Times' report as "so boring as to make sleeping pills outmoded". He then gave the BNET Media Industry Award for the Best Political Report on Television — in the Context of the Best Business Plan ( or BMIAFTBPROT-ITCOTBBP) goes to The Daily Show, concluding "...of course the award for the best business plan goes to everybody who’s thinking outside of the old media box, which in due time will be recognized as the coffin it is."

But it's not just comedy that's changing the nature of what we consider news, or journalism, or sometimes, more fundamentally, what we consider to be journalistic operations.

Summer, 2008: The Smell of "Burning Furniture"

Summertime and the livin' is far from easy. Now that we're past Memorial Day, let's speculate on the summer that will be. It's a long time til Labor Day for the news industry. We've seen Rupert Murdoch, ironically drawing stark attention to his own advanced age -- and the question of what will become of his emerging digital empire -- in recently noting that print will out-live him. ("Print will be there for at least 20 years, and outlive me.") The London bookies might be having a field day with that one.

But for most publishers, the times just turn edgier and edgier. I asked a keen observer about the major strategies news publishers are considering as they face the changed business landscape. "Strategies?," he laughed. "They're too busy burning the furniture."

Burning the furniture? In June? Well, the industry has had a hard time separating out cyclical change from structural change, but those still working might hope some wood's left for winter.

Here are nine of my questions about the summer ahead. What's yours?

---1. At the New York Times, it's going to be a tense summer. Buyouts and layoffs have now taken out about 100 jobs, as the Times increases its dividend to try to retain shareholders. The new Harbinger/Firebrand board members are now inside the tent, poking at its corners. How soon will the Times management heed their calls to bite the bullet, sell ailing newspaper properties (Globe, regional group), buy a little time, save a little staff and invest more in the great digital future, which is the Times' salvation?

---2. Love the photo with David Hiller (left) and Randy Michaels (center), in Crain Chicago Business story.
Hiller, tried-and-true Tribuneite, is the ultimate survivor, but the expression says even his tenure as L.A. Times publisher is limited. The Times' publisher and editor change dramas have been quite public, but consider they've been churning through ad VPs about yearly for most of this century. Think what that does to the numbers (and you see why Tribune's own numbers are disproportionately down). Will David Hiller last out the summer or the year?

---3. We hear the grrrrrrrrrrrrrrrrrrrr grinding of teeth from large-player Gannett to small-player Gatehouse, down to a new low of $3.90 a share on Monday. As the Goldman Sachs report put it circumspectly: ""Our thesis that a focus on smaller, 'hyper-local' markets would serve as a counter weight to the cyclical and secular pressures negatively impacting newspaper industry revenue performance has proven only partially correct, as evidenced by the declining trend in same-story revenues over the last several quarters." In other words, is there no refuge out there?

---4. Why did US news publishers fail to follow other big US corporations in diversifying to international markets?  Look at the now-double digit decreases in US ad revenues -- 10% in ads overall in April; 20% in classifieds -- and you see that the US is the epicenter of the newspaper meltdown. UK, Europe and Japan are muddling along -- down a tad -- but much of the developing world from Eastern Europe to Latin America to South Africa to China and India is going gangbusters. Chains like the Irish-centered Independent News and Media and the Norwegian-based Schibsted saw this change coming and have invested way beyond their initial  comfort zones. Now they are diversified, and growing, while US chains see the double whammy of fewer ads and higher newsprint (expected to price up 20% year over year for the second half of 2008) costs.

---5. Will salvation be found in motherhood? "Soccer moms" might have been so last election, but momomania is sweeping news websites. Boston.com's ""Bomoms"," and the Orange Country Register's "OCMoms" are part of the profound move to niche. If general news still pulls in puny CPMs, sites are looking at profiliferating niche sites around them -- in this case, the fast-expanding, now dozen-strong Mama web chain (San Diego Mama, Houston Mama, DC Mama. The hard part - producing enough compelling content, engaging real community and getting the ad people sufficiently connected.

---6. How fast can we replace expensive staff-written stuff with user-gen? The economics are clear. Better to pay nothing for something that will get you 1000 page views than part of a professional salary. User-gen's not just about community engagement -- it's about cold, hard cash. As user-gen initiatives rage, look for more of them to get connected to newspapers' main publishing systems -- witness the recent Saxotech/Pluck announcement -- joining the two worlds of newsroom and user gen. One publishing system, monetized singly.

---7. How big a bandage will we need to blot the paper cuts? Much has been made of the news industry covering its own demise (that's what we do). But you have to admire the Google mapping/color-coding of the rampaging layoffs and buyouts by Erica Smith, here.

---8. How much workouts will the whiteboards get? Structural change is an order of the day. Sometimes highly strategic, perhaps, and sometimes Titanic deck-chair-like. Belo and Scripps have split themselves in halves, the Washington Post is re-doing print/online orgs and the San Diego Tribune is trying a grand experiment of putting it all together.

---9.  How loud will the Yahoo! be by summer's end? With AMP being touted by Yahoo as a salvation to newspaper consortium members' audience/ad targeting woes, its arrival by end of summer at MediaNews properties, among others, may be a cause for whooping it up. Of course, it is bound to be a  summer of High Anxiety (shout out to Harvey Korman)
at Yahoo and for those partnered with it at the hip and wallet. With Google gaining search ad market share, Yahoo and Microsoft, abetted by matchmakers like Carl Icahn, are being forced to do something. Yes, Microsoft's making a bunch of moves, but expect it to circle back around to Sunnyvale., especially given today's revelations that Jerry Yang may have rejected an earlier $40 a share Microsoft bid. Nothing's stopping Yahoo from moving on AMP and its implementation for now, but a Yahoo uncertain of its own future just adds to the newspaper summer worry pile.

Bloomberg's Next Push: Consumer, Advertising and Global

If you've seen a bit of Bloomberg TV or heard Bloomberg Radio or been in front of one of its terminals, you may have recently wondered: Why isn't it doing more with what it has?

Its reporters are some of the fastest moving on the web, and know data better than most covering the news industry.

So what might today's announcement that news industry veteran Norm Pearlstine is becoming "chief content officer" of Bloomberg mean?

My quick take:

* Right now, Bloomberg derives almost all its revenues from Corporate markets. With Pearlstine at the hub, it plainly will look at leveraging its assets beyond Corporate, most directly to B2C markets. I hear that has made recent forays into Legal markets as well, competing with Reed Elsevier's LexisNexis and Thomson Reuters' West Publishing.
* Key question is one familiar to all legacy news companies. Can it keep its grip on stable (in this case, installed terminal) revenue, while competing in markets new to it. It faces risk of commoditizing its core business, unless it executes a Free Web B2C strategy smartly.
* Business advertising draws among the highest CPM rates, more than $100 CPM for business news video and above $50 CPM for graphical ads, for high-branded content. But the overall pie of online business news ad revenue is still small -- that's why News Corp decided against eliminating wsj.com subscription wall. There's simply not enough money in web business news advertising to make up its online sub revenue loss.
* Pearlstine's experience tells us that this is all about leveraging the content assets across all modern media platforms. So expect Bloomberg to go where the growth is -- advertising. Web advertising is still growing around a 20 per cent rate, and Bloomberg should cash in there.
* The new Bloomberg view should be more global. According to Outsell research numbers, it drives 47% of its revenues from the US, 38% from EMEA and only 10% from Asia. Asia should be bigger. So look for Bloomberg to become a more global player, both through acquisition and greater use of partner distribution channels.

In sum, I think there are three words that define the Pearlstine announcement:
---Consumer
---Advertising
---Global

Bloomberg sees a similar opportunity as Rupert Murdoch saw in buying Dow Jones -- the global business news opportunity leveraged over all platforms. Today's announcement means more competition for Dow Jones -- and Time Warner's business magazines, McGraw Hill's Business Week, Forbes, the New York Times and the Financial Times.

Let the new business games begin.

Cablevision Moves Forward with First Home Run Game Plan

I've long compared the cable and phone companies on the one hand to the newspaper companies on the other.

Newspaper companies saw there business being upended by the Internet, made small bets and have lost out on the big ad growth the web has generated.

Telephone companies -- the successors of monopoly Ma Bell -- first consolidated and then saw that old vanilla phone service was disappearing, well, almost as fast as newsprint-based news. They moved into internet service provision and then into more lucrative broadband, acing out the many small companies that had at first parted the waters (some of which, including Infinet, were owned by newspaper companies). They invested heavily (and often clumsily) in mobile and have figured out how to wring many new dollars from all of us.

Cable companies saw that they were reaching a saturation point in their own penetration, and then felt the hot breath of the formerly telephone companies moving to offer .... cable TV. So they've gone after both internet service providing and local voice, understanding that boomers still want the comfort of the old landlines.

Triple Play, once a novelty, has become the standard. Cable + Internet + Telephone.

Now Cablevision's stuck out its neck, $650 million worth, to swing for fences.

Cable + Internet + Telephone + Newspaper. A combo that could give Cablevision an edge against Verizon, its biggest competitor.

A home run?

My betting is that it's one of the best labs for everyone in the news industry to watch.

What stands in the way of a big Cablevision win? In a couple of words: strategy and exectuion.

In strategy, Cablevision must move beyond the hazy notion of Long Island Convergence (some say the Dolans may have had a bit too much Long Island Tea in offering $70 million more than their competition for Newsday) to a true strategy. That strategy, in a nutshell:

---Create a new ad vision of how Cablevision/Newsday can serve local advertisers, from its Long Island home base to metro New York to southern Connecticut to northern Jersey. Providing advertisers reach to mass and targeted niche audiences, through cable, newspaper and internet is what must be done.
---Create a new content vision for how Cablevision/Newsday can serve local news readers, sports lovers, business observers and entertainment seekers. The company will have a newsgathering/production force of more than 500. The goal has got to be to get out of text/TV/audio silos, creating text and multimedia content, distributing that content to become dominant in its key geographic areas
---Connecting the ad and content engines to the wider web distribution world. The new independent-of-Tribune Newsday may well move out of its Tribune partnerships (nothing in release one way or another on CareerBuilder, Classified Ventures, QuadrantONE, etc.) and look at joining the Yahoo News consortium, among others. The Daily News is in it, but has no market exclusivity.

The Execution? Tougher than the strategy. It should be streamlining as many of the cost centers of both companies as possible, but doing that in a way that builds the company for success, rather than crippling it.

Yes, ad staffs and selling propositions can converge and yes, scribes and TV producers are really members of the same species. But the human dimension here is what's tough. Habit, tradition and skill set are all obstacles. As I wrote last week, someone is going to surmount them; Cablevision's just one of the newest and potentially most interesting to try.

For Rupert-watchers, the sale is something of an enigma. Why did it go this way less than a week after his public boast that he'd win the prize? Questions to be answered:
---Did Tribune's latest double-digit declines convince him that it really wasn't a prize at all, that the the Post's $50 million loss really wouldn't turn to profit, given both a bigger Newsday pricetag and the detiorating newspaper ad market?
---Is News Corp thinking that further investment in newspapers just won't pencil out?
---Back to the overpay question. Did Rupert overpay for Dow Jones and did the Dolans overpay for Newsday?
Both are long-term investments, and you can't make judgments based on today's pressures and short-term trends. This is all about real convergence and its value.

Can Cablevision Turn a Triple Play into a Newsday Home Run?

It's easy to get lost in the current era of Big Man in Town Journalism. Zell. Singleton, Murdoch. Tierney. Harte. So much of the recent drama in newspaper ownership change has been driven by personality, as keep-it-in-road, rationale profit-seeking companies turn up their noses at the prospects of buying newspaper companies. It takes an outsized ego, an outsized wallet (your own maybe, but preferably someone else's) and a perhaps outlandish optimism to grab onto the horns of the bull and take off for a wild ride.

One current installment of that drama is playing out in Long Island, home of once-proud Newsday, a paper that innovated ahead of its day and then saw its fortunes cascade through the Times Mirror and Tribune funhouses. As Sam Zell stares down his first balloon debt payment, Newsday's hit the block, and an unusually crowded one it is. Isn't it great to see a bidding war for a newspaper company? It is highly enjoyable, if unique to market circumstance. With Murdoch's Post and Mort Zuckerman's New York Daily News in lethal competition, both have a hard time imagining the other getting Newsday and using it as cudgel in the war.

The weapon for each in that case is, of course, cost reduction -- a relentless streaming of cost in all departments -- ad, circ, production and printing and finance, not to speak of how newsroom synergies might be achieved. It's the other bidder in this case -- currently the high one -- that I think paints a more interesting picture of what the local "press" may become.

Cablevision has offered $70 million more than either Mort or Rupert, currently at $650 million, $150 million above its original offer. With Rupert and Sam increasingly better buddies (formally on AP board and informally, we can only guess), I would have put my money on that deal (and agree with Alan Mutter's notion of a potential Murdoch/Zell endgame, here). But $70 million is quite a differential, and for now, Rupert is saying he isn't going up. Further the potential of FCC review of his increasingly entangling NYC-area cross-ownership (the Post, WWOR-TV and WNYW-TV, Dow Jones and Newsday) would at least slow down and bring uncertainty to the deal. Sam Zell's bankers don't like uncertainty.

So that may leave us with a new attempt at....synergy. In fact, it could turn the emergent idea of Triple Play -- TV cable service, Internet service, local phone service -- into a Home Run, adding "newspaper" to the diamond.

In this new synergistic interpretation, we'd observe what new owners would see as complementary in combining Cable News -- including News12 Interactive.com (its cringe-worthy tagline -- "only in cable  not on phone company tv or anywhere else"; you need a password to get in unless you are a local cable subscriber) -- with Newsday. It's been done before you say, and you're right. In fact, Cablevision and Newsday themselves jointly produced a one-hour cable news program years ago. But it was too early and didn't pencil out. It's been done elsewhere as well, with mixed results.

What's changing now, I think, is that the time is coming back around to do it right and to make it pay. Is it a "TV-centric" time, as someone close to the Dolan family, who control Cablevision, said? TV-centric misses the point. It's more video-forward than TV-centric. News video is now here to stay. More than half of the US population has watched video within the last month; already in Britain, that number is now more than 90%. We're getting used to seeing video first, on our time, time-shifted, Apple TV-enabled, and through the Internet. The much-maligned pre-rolls and their children, "in-video" ads, are still highly sought after and fetching $25-35 CPMs, on average. We do like to watch. 

Look at most newspaper sites, and you see dabbling. The AP Online Video Network is so far populated on about 1800 sites, newspaper and broadcast. On too many, though, it's relegated downpage, and seems like an after-thought.

So what happens, in this new, coming age of convergence -- in which easily watchable video marries quick-read text and always-on opinion -- if you combine the resources of a Newsday and a Cablevision, which, too, counts hundreds of journalists in its newsrooms that span from northern New Jersey to southern Connecticut.