For the Telegram & Gazette, a Moment of Opportunity
Friday, October 18, 2013
The media empire of the Providence Journal’s parent company, Dallas-based A.H. Belo, has been coming apart for years, and now, with the sale last week of its Riverside, California, operation, the Press-Enterprise, down to just two main properties. The hope here is that the Projo will, too, be sold before long and end the chronic and debilitating cycle of downsizing for the newsroom and bonuses for the executive suite that has marked the Belo regime.
This week marked the closing of the celebrated, if problematic sale by the New York Times Company of its New England Media Group, featuring the Boston Globe, to commodities-and-sports mogul John Henry, another tectonic shift, not necessarily for the better.
And so it’s a good time to consider the property closer to home, the Worcester Telegram and Gazette, the third piece of the NEMG, along with the Globe’s digital operation, Boston.com
If this were a column about a blockbuster baseball trade, the T&G would be the “player to be named later,” or at least the Double-A journeyman who might platoon at second and short.
But if, the T&G is not -- let’s face it -- an especially storied or celebrated institution, it is an important one to its hometown.
And while it has struggled – like the rest of the business – it’s facing an interesting moment. If Henry and his Fenway Sports Group really intend to make a go of it in the newspaper business, the T&G offers a great opportunity for experimentation, innovation, and change.
First, its troubles.
Its weekday print circulation, now about 75,000, for instance, is off nearly 30 percent since 1999, aka, “back in the day,” before the digital revolution wreaked havoc in newspaper finances, when it was about 107,000. Nationally, newspaper circulation is off 20 percent, nothing to write home about, but better.
In some ways, as I’ve written, the T&G mirrors my old paper, the Projo, which has also lost circulation more rapidly than the national average. The Projo, though, is even worse off, from about 165,000 weekdays in 1999 to about 89,000 in 2012, a drop of 45%.
(The Projo’s circulation losses, worryingly, include new digital subscribers, which have buoyed circulation figured elsewhere.)
At this point, and ironically, after the ravages suffered by its Rhode Island rival, the T&G is in some ways better positioned than the Projo for a renaissance.
The paper, in some form, has been part of the Worcester landscape since the mid-19th century. Its predecessor, The Worcester Evening Gazette, is probably one of the few newspapers that can claim to have been founded by a dentist, and a Rhode Island dentist at that (in 1866), according to archival news accounts. The Worcester Sunday Telegram began publishing in 1884, and was owned by Stoddard and Booth families for the bulk of the 20th century, before being bought by the San Francisco Chronicle’s parent in the 1980s.
The year 1999 is a useful baseline since that’s when the New York Times Company bought the T&G from Chronicle Publishing Co. for a reported price of $295 million. Current value of the paper is not disclosed, but we know it’s very small since Henry paid $70 million for TimesCo.’s entire New England Media Group. A rough guess would put the paper’s market value is in the single-digit millions or very low teens (by comparison, the 127,000-circulation Riverside paper just sold for $27 million).
It’s difficult to tease out financial information about the Worcester paper because The Times Company had folded its results into the larger New England Media Group. However, a few details have emerged. Over the summer, for instance, Craig Douglas of The Boston Business Journal laid his hands on an offering document circulated by the Times Company’s investment bank, Evercore, to prospective buyers of the New England group. The document, Douglas wrote, described a vast but contracting business, with “razor-thin” cash flow and consecutive years of operating losses that has already prepared $35 million in cost cuts over the next couple of years.
That’s the entire New England group. The Globe accounts for about $255 million, or more than two-thirds of the group’s $370 million in estimated revenue. The T&G has $42.5 million in forecasted revenue for the current year and is the second biggest of the six operating units in Henry’s new media company.
T&G publisher Bruce Gaultney didn’t reply to requests for comment.
A few more things from Douglas: print products account for 88 percent of the NEMG revenue, which is high, given that the group also includes Boston.com, the free digital news site, which generated $40 million in revenue.
Working backwards, we can learn that total digital operations from the entire company is about $44 million (12 percent of $370 million), meaning that the Globe and T&G’s operations generate about $4 million in digital revenue total between them (since we know Boston.com generates the other $40 million in digital revenue). It’s safe to assume the Globe generates the lion’s share of that (it’s 39,000 digital subscribers pay about $48 a year, for a back-of-the-envelope $1.8 million a year, and that doesn’t count digital ads).
The T&G, then, has suffered worse-than-average circulation losses and has managed to generate little in the way digital revenue to offset declines in print, all while being contained within a contracting parent company.
But -- that’s not the whole story.
For one thing, in a backwards race, it is actually catching up to the once-dominant Projo. Here is a side-by-side graphical representation of the two paper’s circulation losses since 1999:
And in an otherwise-unenlightening interview with publisher Gaultney, we learn that overall readership, including digital, is up to “390,000 people” last year (the metric is not explained), from 358,000 in 2009. Understanding that these figures must be taken with huge grains of salt, upward readership is worth noting.
And while John Henry has said little about his plans for the Globe, let alone for the T&G, he has said he’d rather boost revenue rather than slash costs. And while those are just words, they’re the right words.
Realizing that there’s no magic bullet, the T&G still, even today, offers an interesting opportunity for its new owners. Circulation and advertising losses show signs of tapering off, and we’re nowhere near the perilous free-fall of a few years ago. Its market, while not exactly thriving, is doing slightly better than Providence in terms of its unemployment rate.
Plus, we know this area is hungry for quality news.
The T&G’s ace-in-the-hole, if it has one, is its newsroom. The stewardship of the Times company was enlightened as these things go, and, despite very tough economic times, levied far fewer cuts to the newsroom than other newspaper companies.
According to the BBJ, the New England Media group employed 447 people at three newsrooms (including boston.com), down only 2 percent, or 7 jobs since 2009. With 339 journalists at the Globe, that leaves 108 between Worcester and boston.com. I count at least 62 news staffers on the T&G’s “contact us” page.
The newsroom is, after all, the main asset that a newspaper has.
There’s a lot of experimentation going on around the country, but these days, for my money, the most interesting one is going on at a legacy newspaper in at the Orange County Register, where a new owner, Aaron Kushner, has adopted a strategy of reinvesting in, of all things, the printed paper (where most of the money still is), including, and importantly, dramatically beefing up its news gathering capabilities.
The Register is charging a premium--$1 a day, with no discounts for digital. But the paper is trying betting that a better quality product will win over readers.
So far, by most accounts, the strategy is working. See this story in the Columbia Journalism Review for the details.
Kushner, at least, is bullish enough to be expanding. He was the buyer of the Riverside paper from Belo.
But whatever the strategy the T&G adopts under Henry, the way forward is clear and starts with investing in the main asset the paper has left: its newsroom.
Changing Newspaper Industry
In a column entitled, The smartest guys in media give up on print, Alan Mutter, the former editor of San Francisco Chronicle, writes "For all the corporate-speak accompanying the dramatic restructurings of Twenty-First Century Fox, Time Warner and Tribune Co., the simple reason these diversified media giants are jettisoning their publishing assets is that their leaders fear for the future of print."
Throughout New England and across the country there is a dramatic decline in the print newspaper business.
The New York Times Company sells the Boston Globe for just $70 million - a loss of more than of more than $1 billion dollars over 20 years.
The new ownership - John Henry - a majority owner in the Boston Red Sox may have purchased the Globe for the value of the real estate. Estimated to be $40 million to $50 million.
New Bedford's newspaper is now is flux as its parent group, which was own by Ruppert Murdock's Dow Jones Local Media Group (a subsidiary of News Corp) has been sold off and is being merged into the same company as Fall River's Herald News.
The newco will be merging both the spinoff Dow Jones Local Media and the bankrupt Gatehouse into one media company.
Circulation is now just above 20,000 during the week.
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