Tumblelog by Soup.io
Newer posts are loading.
You are at the newest post.
Click here to check if anything new just came in.

June 18 2013

17:44

“Having compelling content is one thing, but if you provide that, the reader will have to pay more”

Paul Godfrey has been CEO of Canada’s largest newspaper chain, the Postmedia Network, for three years. In that time he’s cut more than 2,000 jobs, made two-thirds of content replicable across papers, hiked the cost of subscriptions, and rejiggered the business model toward earning roughly 50 percent of revenue from ads and 50 percent from circulation. In Canada’s Marketing magazine, he discusses his plans for his next three years in charge.

“We will continue over the next three years to downsize the legacy costs [and] outsource where we can,” said Godfrey. “We are going to be a much smaller revenue company and a very much smaller expense company by living with a smaller number of staffers and people doing more. Hopefully we’ll be a more profitable company as a result.”

Postmedia, which owns what used to be the Canwest chain of Canadian newspapers, owns major papers in Vancouver, Calgary, Ottawa, and other Canadian cities, along with the National Post.

July 18 2011

16:00

Alden Global Capital drops a shoe: Is the Journal Register acquisition prelude to more consolidation?

On Thursday, Journal Register Company announced that it had been acquired by Alden Global Capital, a secretive hedge fund that specializes in “distressed opportunities,” such as companies emerging from bankruptcy — including newspaper groups. The acquisition may foreshadow additional moves by Alden, which is interested in two strategies to add value to its investments: (a) it wants its newspaper holdings to aggressively develop digital capabilities and revenues, and (b) it wants to see consolidation (mergers) among newspaper groups.

In its capacity as a distressed-opportunity specialist, as I detailed here in January, Alden acquired stakes not only in JRC, but also in MediaNews Group, Philadelphia Media Network, Tribune, Freedom Communications, and the Canadian newspaper group Postmedia Network . Among publishers that avoided bankruptcy filings, it has stakes in A.H. Belo, Gannett, McClatchy, Media General and Journal Communications. (I detailed those investments in this post in March.) In addition to its newspaper holdings, Alden has other media investments, including in Emmis Communications and Sinclair Broadcast Group. Only the investments in public companies are detailed in SEC filings — they add up to about $210 million in media holdings. Together with the non-public investments in JRC, MediaNews, Freedom, Postmedia, and Philadelphia, Alden may have as much as $750 million of its total assets of $3 billion invested in newspaper and broadcast media properties.

At the time of that January post, Alden had just asserted itself at MediaNews Group by shaking up the executive suite and naming three new directors to the seven-member board. (Disclosure: I spent 13 years as a publisher at a MediaNews Group newspaper.) That move was important because it enabled Alden to use MediaNews as a platform from which to drive consolidation in the still-fractured U.S. newspaper industry. (The largest player, Gannett, owns only about 13 percent of the industry in terms of daily circulation.) Under SEC rules, by taking a position on the board, Alden was no longer allowed to speculate in MediaNews stock; hence, their assumption of board seats signalled an intent to use their MediaNews holdings strategically rather than speculatively. Until the JRC acquisition, Alden had not done the same at any of the other firms in which it had invested.

The first strategic move MediaNews made after the January shakeup was to make a bid for Freedom Communications, publisher of the Orange County Register and other papers and owner of broadcast properties, which put itself up for sale in March. Alden is believed to own about 40 percent of Freedom, a stake similar to its MediaNews holdings, but by not taking board seats, it had remained on the speculative side of the fence at Freedom, and therefore could not influence Freedom’s choice of an acquisition partner. But clearly, the ideal marriage from Alden’s point of view would be between Freedom and MediaNews.

Last month, the Wall Street Journal reported that talks between MediaNews and Freedom had broken down, with a Freedom valuation of about $700 million at issue. Other suitors, including Tribune (in which Alden has a stake), may be in the picture, but with its relatively debt-free post-bankruptcy structure, and its heavy presence in the California newspaper market, MediaNews was in the strongest position in the bidding for Freedom. As Denver-based Westword (which keeps a close watch on MediaNews) said about the talks breakdown, “expect MediaNews Group and Freedom to sit down again in the coming months despite the current state of negotiation interruptus.”

Meanwhile, the Alden takeover of JRC gives it a second operating platform for its consolidation goals. Its JRC investment is now strategic rather than speculative as well; it can call the shots. Clearly, it likes JRC CEO John Paton, one of the prime exponents of a “digital first” strategy. Paton has also had a relationship with Alden’s Canadian interest, Postmedia, including a spot on its board and a role in recruiting its CEO, Paul Godfrey.

Since Paton took over JRC as it emerged from bankruptcy in 2009, he has built a reputation as a visionary by replacing old proprietary systems with open source software and cloud-based services. In 2010, the company said it earned $41 million in cash flow and increased digital revenues about 70 percent.

JRC, with Alden backing, could now become an east-coast consolidator by scooping up other newspapers and newspaper groups — perhaps even acquiring the East Coast holdings of MediaNews, papers in Pennsylvania and New England which, although dear to the heart of chairman Dean Singleton, are mostly a distraction to its Denver-based, California-centric holdings.

Obviously, the Philadelphia newspapers could be part of the reshuffle/consolidation, and other owners, including Gannett, could join the fray. (Gannett already is partnered with MediaNews in California.) It’s not hard to imagine an east-west strategy, with newspaper properties flowing into a western-U.S. consolidation led by MediaNews and an eastern grouping led by JRC. Even without mergers, there are places where Alden could encourage strategic partnerships between companies it owns or has invested in — for example, between JRC and the Philadelphia newspapers.

Shira Ovide of the Wall Street Journal noted, in response to the Alden acquisition of JRC, that there hadn’t been much action in the newspaper acquisitions market for some time. But the market could be loosening up. During the recession and beyond, owners held on, remembering the inflated values of the 1990s and early 2000s. It’s now clear both that those days will not come back and that Alden has its fingers on key factors that could build value: digital first, and consolidation. And Alden seems to have a nice cash pipeline.

Nostalgia for “local newspaper ownership” notwithstanding, the market will push owners into sales and mergers until there are just a few major owners of newspapers across the country. Even if this happens, daily print publication may still not be sustainable in many markets for more than a few years — but that’s another topic. The gamble for Alden and others is to accumulate a stake in a consolidated newspaper industry in the hopes that its local brands can retain (or regain) value as mainly digital enterprises.

Still, neither JRC’s digital-first focus nor industry consolidation strategies are magic bullets. Alden’s money chases risk in order to earn high rewards, and there’s a lot of risk in this picture.

On the digital-first side, we’re still waiting to see if newspapers can catch up and increase their share of the online ad market. JRC may have grown its online revenue by 70 percent, but in 2010 digital revenue for the daily newspaper industry as a whole grew just 10.9 percent, and still showed less online revenue than it had in 2007 ($3.042 billion in 2010 versus $3.166 billion in 2007). And much of what newspapers count as digital revenue is sold in print-dominated packages, not as pure online advertising.

As for consolidation, as I noted in a comment to Ken Doctor’s March post, “The Newsonomics of roll-up,” we could be looking at a classic industry mop-up operation — where the consolidator knows it’s all downhill from here, but is able to buy assets so cheaply that just milking them until they run dry produces a nice return. I wrote at the time in that comment:

While newspaper values have bounced back from rock bottom, you can still buy newspaper assets for a fraction of what they were worth at the peak six years ago (20 to 25 cents on the dollar, at most, depending on the company), with cash-flow paybacks in the range of 5-6 years, plus the consolidation benefits, plus, in many cases, valuable real estate that can be flipped. And with some luck, a digital spinoff or residual asset a few years down the road. So without much risk, maybe you can double your money over five years. (And if you’re really lucky, the economy keeps improving and you can find a bigger sucker and double your investment in just in a couple of years.) I believe that’s the Alden Global strategy. They have put their people on the board at MediaNews (and nowhere else) in order to use it as a launching platform for consolidation.

Let me temper that with the benefit of the doubt. John Paton says that Alden believes in digital-first. But if that strategy doesn’t begin to deliver the returns Alden expects — at JRC, MediaNews, or any other media outfit where Alden chooses to exercise the influence that comes with its ownership stake — the mop will come out of the closet and we’ll see a consolidation that’s driven purely by financial strategists at Wall Street firms, with no particular concern for journalism, digital or otherwise.

April 14 2011

18:00

What works for news orgs on Foursquare? Opinion, reviews, evergreens, but maybe not the news

Editor’s Note: At the International Symposium on Online Journalism earlier this month, one of the most interesting papers presented was from Tim Currie, an assistant journalism professor at the University of King’s College in Halifax, Canada. His subject was newspapers’ use of the tips function in Foursquare to spread their content — what works and what doesn’t? And what does “works” even mean? I asked Tim to write a summary of his findings for the Lab; you can download the full paper here. I’ve also embedded his slide deck below.

Many news organizations, including The New York Times, the Wall Street Journal and Canada’s Metro chain of free dailies, began experimenting with the location-based social network Foursquare in 2010. They were adding editorial content — mainly restaurant reviews — as tips at locations that people could check into using the Foursquare app on their smartphone.

The newspapers were trying to explore what some social media editors have called a promising tool for news organizations. These journalists say Foursquare offers the possibility of targeted news distribution and finding on-the-scene human sources during breaking news events.

Online editors at these outlets were putting only a fraction of their paper’s editorial content into Foursquare; the number of tips left by each of these newspapers in early 2011 numbered, at most, in the low hundreds. So I was interested in determining what it was about the articles they did choose that editors thought worked well in this location-based service. I also wanted to know how editors were crafting the tips and what their goals were.

I chose Canada’s Postmedia Network as a case study subject because its member newspapers were among the most active in North America for placing editorial content into Foursquare. As of early March, Postmedia newspapers had 1,901 tips cumulatively in Foursquare. I studied three newspapers — the National Post, the Edmonton Journal and the Vancouver Sun — through in-depth interviews with the online editors that were responsible for putting content into this social network.

Asked to characterize the articles they placed into Foursquare, the editors used phrases such as “feature-y”, “evergreen”, “opinion”, “not hard-core news” and “useful to people over a longer period of time.” They cited successful efforts in using editorial content such as a film festival guide, a commentary on transit users and reviews of hip urban restaurants.

In general, the newspaper content they placed into Foursquare had at least one of these five characteristics:

An opinion, review, guide, or first-person account: The articles had a strong narrative voice and usually offered recommendations. The editors said they were using lots of restaurant reviews — but also travelogues and commentaries.

Described with the goal of inspiring action: The articles contained opinions selected specifically to inspire interaction. The editors chose editorial content likely to spark an emotional response in readers. They hoped this response would lead users to click the “I’ve Done This” or “Add This To My To-Do List” buttons in Foursquare — or begin a conversation in other social networks such as Twitter or Facebook. The editors said they crafted their tips to highlight these opinions. One or two worked specifically to link editorial content with Foursquare’s interactive buttons. Some editors cited relatively weak functionality within Foursquare for discussion and traffic measurement. Consequently, they looked to push conversation to social services that had more robust support for interaction — and analytics.

Timeless — or about an event lasting more than 2 days: The editorial content had an “evergreen” quality” about it that made it relevant for a long period of time. Foursquare users value immediacy, the editors said, and articles about long-past events have little appeal. The editors said they rarely placed articles into Foursquare concerning events that took place on a single day. Some said they had initially placed profiles of single-day concerts at clubs or concert halls but ultimately found the workload demanding in light of low user response. One editor had also come to worry about “clogging up” entertainment venues with multiple tips. A majority of editors said they used articles about music festivals or sporting events — as long as the events ran for at least three days. One editor said that’s enough time to attract adequate attention within Foursquare and to use other social media services such as Facebook and Twitter to drive traffic to Foursquare.

About a specific location or an activity typically done at a location: Articles left as tips were about locations with a street address, such as a restaurant or a school offering a cooking class. However, they were also about activities typically done by people at a specific kind of location. For example, they were about things people do at light rapid transit stations or about issues of interest to people who shop at an Apple Store.

Placed at a location where people gather socially: Editors rarely placed articles at venues such as homes or small businesses. Instead they placed tips at venues where people gather in groups: at music and theater festivals, sports events, transportation hubs, educational classes — and restaurants. These are places where people interact in the real world and where the editors guessed people are likely to interact online as well.

News content rarely used

While most participants said they were open to the idea of putting news stories into Foursquare, few cited instances of doing it. One said it would be “jarring” to know someone had been robbed or beaten recently near where they were. This editor added that Foursquare’s nature as a tool for exploration (“unlock your city” is its slogan) was at odds with violent news content: “I think indicating where there have been shootings and where there are robberies would be indicating why you should stay in.”

The editors drew almost all of their articles from the newspaper or the website. They frequently used the headline or deck of a published article as their 200-character tip in Foursquare. Some, however, said they searched an article for vivid descriptions of physical surroundings or distinct flavours in a restaurant dish. They subsequently used these descriptions to craft a custom tip aimed at attracting a user who might be holding a menu or gazing around them.

A small number of editors said they were working with reporters to create content specifically for Foursquare — such as a guide to Christmas light displays in town or a list of travel tips integrated with Foursquare’s To-Do List. The aim was to prompt users to click Foursquare’s “Add This To My To-Do List” button or “I’ve Done This” button on each tip screen. However, some of the editors described these button-clicks as weak measurements of engagement. As one put it, “It’s an inaccurate term for what we have [published] because it isn’t really a ‘to do.’”

Here at the Lab, there’s been discussion about news organizations’ discomfort with the awkward nomenclature of social media sharing buttons, such as Facebook’s Like button. Buttons that signal agreement can be a tough fit with content from news organizations, which have been “traditional bringers of bad news.” There’s also been some emerging research, conducted by my colleagues at Dalhousie University and others, suggesting a link between positive emotion and online sharing.

The results of this study suggest editors have acknowledged this association. Their goal of promoting engagement seems to have influenced their selection of articles for use in Foursquare. They chose a narrow range of content that supported the mood of people out on the town, having a good time and looking to explore. In general, they indicated they looked for light-hearted recommendations users could mull over, not weighty, impartial reporting to digest.

This choice reflected an observation made by former NPR CEO Vivian Schiller at the conference at which this paper was delivered. She called the notion of platform agnosticism “misguided.” News organizations need to tailor their content to specific platforms, she said. In this study, there was indeed a certain type of newspaper content that Postmedia editors thought was suited to this particular social platform.

In other findings:

— Some editors said they formatted key points with bullet lists to help users view recommendations on small screens.

— None of the participants used Foursquare to find sources for stories.

— A majority said they regularly removed tips from Foursquare to avoid presenting users with out-of-date articles.

Goal is engagement, not monetization

None of the editors I spoke with had made any attempt to monetize Foursquare content. They all cited engagement as their primary goal, with one saying, “The ROI on this stuff is going to be five or 10 years. It’s getting people reading your stuff [now] who would never normally read it in any way, shape, or form.”

This study did not investigate audience numbers. All of the editors suggested their Foursquare audience was relatively small — in keeping with a study that pegged the number of Americans who use a location-based service with their mobile phone at 4 percent of online adults.

In general, the editors said their main goal was simply to be present where people interact with each other. They framed this presence in geographic terms: at venues where people use their phones while eating, playing, shopping, and travelling. They also said it was simply important to be present in the social media spaces populated by young, connected adults — such as Tumblr or Foursquare — even if those spaces aren’t yet crowded with users.

This study used a very small sample size — five editors at three news organizations controlled by a single company. One can’t extend these results to other location-based social networks or to the use of editorial content in location-based services generally. Much more research is needed.

Older posts are this way If this message doesn't go away, click anywhere on the page to continue loading posts.
Could not load more posts
Maybe Soup is currently being updated? I'll try again automatically in a few seconds...
Just a second, loading more posts...
You've reached the end.

Don't be the product, buy the product!

Schweinderl