Ex­ec­u­tives share mar­ket ex­per­tise and vi­sion

Newspapers & Technology Magazine - - Front Page - ▶ BY MARY L. VAN ME­TER NEWS & TECH EDITOR AND PUB­LISHER

SAN DIEGO – Ex­ec­u­tives from Adams Pub­lish­ing, Hearst, AIM Me­dia and A. H. Belo shared ideas and ad­vice on ac­qui­si­tions, in­vest­ments and oper­a­tions at the Key Ex­ec­u­tives Mega-Con­fer­ence, held in late Fe­bru­ary in San Diego. Over­all op­ti­mism, a be­lief in lo­cal com­mu­nity cov­er­age and a strong, ed­u­cated sale team were com­mon themes in the ses­sion, as was the sen­ti­ment to build news­rooms in­stead of de­stroy­ing them.

Here's a sam­ple of some of their com­ments.

Jim Moroney, A. H. Belo chair­man and CEO, Dal­las Morn­ing News pub­lisher

Moroney stressed the need for rel­e­vant, dif­fer­en­ti­ated and lo­cal news and in­for­ma­tion in the mar­ket. "Be­cause most mar­kets have a lo­cal television sta­tion that has a web­site and apps, they are not go­ing to put a pay­wall up any­time soon," he said. "When the con­sumer who is ac­tu­ally pretty smart starts look­ing and says here's a web­site that I have to pay for and here's a web­site with the same news, which one am I go­ing to visit? It's about lo­cal news and in­for­ma­tion, so news­pa­pers have to have more re­sources than the TV sta­tion and make the ef­fort for bet­ter cov­er­age."

Mark Al­dam, Hearst ex­ec­u­tive vice pres­i­dent and COO

"We believe that news­pa­pers are a growth busi­ness but it's not easy one," Al­dam said. "At our best per­form­ing news­pa­pers, dig­i­tal ad rev­enue rep­re­sents greater

than 50 per­cent of our to­tal ad rev­enue base. The cul­ture of cost cut­ting with­out in­no­va­tion or rein­vest­ment is a death sen­tence in our opin­ion," he said. "Cost cut­ting is eas­ier than build­ing. And what we are try­ing to do at Hearst is to build size, ca­pa­bil­ity and tal­ent with our jour­nal­ists. The num­ber of news­room em­ploy­ees has grown by over 20 per­cent over the last three years. In ad­di­tion, the size of the lo­cal ad sales team is costly, but so vi­tal."

Jeremy Hal­bre­ich, AIM Me­dia chair­man and CEO

"There re­mains a driv­ing need for what we do as lo­cal con­tent providers," Jeremy Hal­bre­ich told at­ten­dees. "The model we use at AIM to­day is in­vest­ment in news­pa­pers, and we believe news­pa­pers have a great fu­ture. We con­tinue to believe in print. It's still very prof­itable; it could be bet­ter. We believe in ecom­merce as it's one of our legs in the me­dia tool­box. We are not big be­liev­ers in shop­pers any­more," he said.

Ses­sion mod­er­a­tor Pene­lope Muse Aber­nathy, Univer­sity of North Carolina Knight Chair in Jour­nal­ism and Dig­i­tal Me­dia Eco­nomics

"We've lived through more than a decade of ex­tra­or­di­nary change in the news­pa­per world," Aber­nathy said. "The bot­tom line: To­day there are fewer news­pa­pers, fewer read­ers and fewer own­ers. Over the last 13 years, we lost more than 1,400 news­pa­pers in the U.S. to clo­sures, merg­ers and the down­siz­ing of smaller free-stand­ing news­pa­pers that be­come editions of larger re­gional pa­pers. There's been a net loss of 70 some dailies, and at least 1,300 week­lies. Dur­ing that same pe­riod, more than 100 news­pa­pers have shifted from daily to nondaily, or on­line-only, pub­li­ca­tion. To­day we count roughly 7,200 news­pa­pers, of which the vast ma­jor­ity, 6,000, are non-dailies. To­tal print cir­cu­la­tion has been halved from 117 mil­lion to 67 mil­lion, with the big­gest drop among dailies. The av­er­age print cir­cu­la­tion of a daily news­pa­per in 2018 is 20,000, 7,000 for week­lies."

"Since 2004, more than a third of all news­pa­pers have changed hands, and many of those have had two or more own­ers. When you cal­cu­late size based on num­ber of pa­pers owned, not cir­cu­la­tion, the top 25 news­pa­per com­pa­nies own a third of the na­tion's 7,200 news­pa­pers. No sur­prise, the largest is Gate­House, which counts 446 pa­pers among its 600-plus pub­li­ca­tions.

"In early March, New Me­dia In­vest­ment Group an­nounced that it has agreed to ac­quire the Austin Amer­i­can-States­man and its niche pub­li­ca­tions and com­pan­ion web­sites from Cox Me­dia Group for $47.5 mil­lion."

Mark Adams, Adams Pub­lish­ing Group CEO

Adams Pub­lish­ing Group was founded in 2013 and has pur­chased more than 100 pa­pers in just three years. "This was a space we wanted to in­vest in," Adams said.

"We believe our brands are strong with good sea­soned man­age­ment. The com­mu­nity ser­vice com­po­nent is im­por­tant to us. … We want to buy in good mar­kets. We do tra­di­tional anal­y­sis on re­tail and pop­u­la­tion trends, we see if there are ed­u­ca­tional in­sti­tu­tions, if it's a county seat, etc. The best way to un­der­stand a mar­ket it to just go there, see it, drive it, talk to folks and get a feel for it.

"We like buy­ing from other ' like-minded' fam­i­lies. They share the same val­ues and haven't stripped down their news­room.

"This is a re­oc­cur­ring theme that I've heard (since) I got into this busi­ness. We all un­der­stand that tak­ing a ma­chete to the news­room is a bad busi­ness de­ci­sion and we sim­ply won't do it.

"We believe in more sales peo­ple on the street and more in­vest­ment in the news­room. Some­thing we found out early on was that tra­di­tional news­pa­pers are very good at dis­tri­bu­tion, but not that great at mar­ket­ing and pro­mo­tion, so we've in­vested in heav­ily in that. We like to pur­chase a news­pa­per at four to five times earn­ings.

"We also like to take a long, hard look at the press as­sets. We found that com­mer­cial print­ing is a nice source of rev­enue. Lots of com­pa­nies have de­com­mi­sioned their presses, so we are build­ing that busi­ness and in­vest­ing there where a lot of com­pa­nies are de­fer­ring in­vest­ment in their press­room, and hope­fully they will have to out­source. Call me. I think I'll have a deal for you.

"We are stream­lin­ing sys­tems and soft­ware. Leave the news­room alone. The news­room needs some bod­ies, some pro­fes­sion­als.

"Not just hire more sales peo­ple, but up­grade the sales force. We need sea­soned, good and solid pro­fes­sion­als and we need to pay them what they are worth or they won't stick around.

"One of the ben­e­fits of be­ing a pri­vate com­pany ver­sus public or pri­vate eq­uity com­pany is that we don't have to live quar­ter to quar­ter or worry about an an­a­lyst call. It al­lows us to think in the long term. We have a board made up of my father and sib­ling. (Con­cern­ing the) com­pa­ny­wide op­er­at­ing mar­gin goal, we are not there yet.

"One thing we have found is that peo­ple like billing to be mailed from their home­town and not from a re­gional cen­ter out­side the area.

“What's in the fu­ture? More dig­i­tal and hope­fully the pri­vate eq­uity folks will go away," Adams said.

Jim Moroney, chair­man of the board and CEO of A. H. Belo; Mark Al­dam, COO and pres­i­dent of the news­pa­per divi­sion of Hearst; Jeremy Hal­bre­ich, chair­man and CEO of AIM Me­dia; and Mark Adams, CEO of Adams Pub­lish­ing Group.

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