All the news that's fit for an app

All the news that's fit for an app

What shrinking The Times-Picayune could mean for The Advocate and Louisiana's other daily newspapers.

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When the corporate owners of New Orleans' 175-year-old daily, The Times-Picayune, announced last month they were going to scale back publication to three days a week and gut the paper's newsroom staff, it sent shock waves through a state that treasures its traditions and clings fiercely to its historic institutions.

Crescent City residents reacted with predictable and passionate outrage, holding public rallies, fundraiser concerts and press conferences. Local business leaders even vowed to exact economic revenge by withholding their ad dollars from the publication if the move goes through as planned this fall.

The news touched a nerve upriver in Baton Rouge, too. Though the Capital Region has something of a love-hate relationship with New Orleans, the loss of the state's legendary, largest newspaper hit many hard—and set phones ringing off the hook at The Advocate. Might the local paper move into the New Orleans market and help fill the void? More importantly, is The Advocate in danger of facing a similar fate?

For now, The Advocate publisher David Manship says neither is an option. On the contrary, what will now be the largest daily newspaper in Louisiana is sitting on the sidelines, reacting with the kind of cautious conservatism that is characteristic of its corporate culture and approach to news coverage.

“We're not very adventurous,” says Manship, the third generation publisher of the paper. “We're going to watch and see what other people do."

But media analysts say it's just a matter of time before all newspapers in the U.S. are published digitally. The numbers just don't make sense any other way. Newspaper advertising revenues have been cut by half in the past seven years, thanks to online competition. Not only are readers getting more of their news from the Internet, but advertisers are spending their money there, which explains why The Times-Picayune can have one of the highest market penetrations in the country and still be on the chopping block.

What it doesn't explain is what the changes in the industry will mean, from either a business or a journalistic perspective. On the business side, making money is proving difficult in a digital world where news content has, for the most part, been given away from day one. On the journalistic side, the challenges are even greater. How do you produce serious news for a medium that offers no economic incentive to do so and is inherently ill-suited to lengthy, in-depth coverage of complex subjects to begin with? Moreover, what does that mean for a state that grapples with poverty, political corruption and natural disasters, and needs as many watchdogs as it can get?

“Everybody should be weeping about the fact that the changes at The Times-Picayune amount to a death by 1,000 cuts,” says Princeton, N.J.-based media consultant Tom Baker, who was co-founder and general manager of The Wall Street Journal Online. “They're right to be worried. You can find serious journalism online, but there's not a lot of it—and that's not what you see when you go to local, for-profit newspaper sites.”

Follow the money

So far The Times-Picayune isn't doing much to allay fears that it is going to forsake serious investigative news for eye-catching Web briefs that generate hundreds of thousands of page views. Advance Publications, the Newhouse corporate entity that owns the paper, wasted no time giving layoff notices to more than 80 reporters and photographers—a full 50% of its news staff—just weeks after announcing the changes to the publication.

It has also redesigned the website, which now prominently posts considerably more national sports and entertainment news than it did before. On a recent afternoon, the top two news stories on the home page were about the previous night's episode of Mad Men and a poolside fashion show at the swank W hotel.

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But then, the site has a lot more ads than it ever did, which is the whole point. Like all newspapers around the country, The Times-Picayune has seen its revenues shrink dramatically, and it has to do something to bring in more money. Since just 2005, newspaper ad revenue—which have traditionally accounted for between 60% and 70% of a newspaper's total revenues—have shrunk by half nationwide, from $50 billion to some $25 billion. It's been a long time coming and there is no end to the downward spiral in sight.

“It began in the very early 2000s, when Craig's List came along and offered free employment, classifieds, automotive ads, and so on,” explains Bob Ritter, former editor of The Denver Post and a professional in residence at the LSU Manship School of Mass Communication. “That made a deep dent in classified ad sales.”

At the same time, retailers began cutting back on their big display ads. Their industry was undergoing changes of its own, with closures and consolidations of local department store chains. Meanwhile, big-box stores—which don't do much local advertising—were increasing their presence in many markets.

“It used to be that if you had two or three viable department stores in a market, there was great competition, and they used to drive newspaper ad sales by taking out big ads in the paper,” says Ritter. “But in the 1990s you saw those stores merge and consolidate. Then the big-box stores came along, the Walmarts and Costcos, and they do very little advertising in local papers.”

Nowhere was this more true than New Orleans, which saw the demise in the 1980s and 1990s of longtime, local department stores like D.H. Holmes, Maison Blanche, Krauss and Gus Mayer. Hurricane Katrina in 2005 just made things worse. The storm robbed the city of 30% of its population—a fact reflected in the sharp decline of The Times-Picayune's circulation, which went from 257,000 a day in 2005 to 134,000 today—and took still more ad dollars from the paper.

That's why even though The Times-Picayune still has a lot of readers of its printed edition, relative to other daily papers in the country—it had the fourth-highest market penetration in the country last year, reaching 65% of New Orleans adults—it doesn't necessarily make sense to publish the paper seven days a week, at least not for a company looking to make a profit.

“There are days of the week where newspapers simply do not make any money because there aren't enough ads in them to cover the cost of production,” says Jerry Ceppos, dean of the LSU Manship School of Mass Communication.

How much money Advance Publications will save by laying off so much staff and doing away with The Times-Picayune on Monday, Tuesday, Thursday and Saturday—which are less attractive days to advertise than Wednesday, Friday and Sunday—is anyone's guess. But percentagewise, the savings should be substantial.

“They'll save a ton of money by not having to print,” Manship predicts. “Paper and ink are about one-third of a newspaper's expenditures. People account for the rest.”

For its part, officials with Advance Publications decline to comment. Its parent company, owned by the Newhouse family, is privately held and keeps its numbers a fiercely guarded secret. But published reports have put the paper's revenues at around $66 million, and industry estimates suggest it could be generating as much as a 12% profit, which is much higher than the industry standard.

“Most dailies have a 5% to 10% profit margin, but that has only been attained by serious cuts,” says Ken Doctor, a national media analyst and author of the book Newsonomics. “Without deep cuts, a newspaper is unprofitable.”

Filling the void

While The Times-Picayune may save a ton of money by cutting its publication days to three, it will leave a void that many in New Orleans are looking to fill. Some believe The Advocate would be a natural fit, especially given its already strong coverage of two subjects near and dear to New Orleanians—LSU football and the Saints.

“If The Advocate came down here and put the word out they were going to have a full package of sports coverage on a Monday morning after a Saints game, who knows how many subscriptions they could sell,” muses one reporter for The Times-Picayune, who asked not to be named. “The ads would follow,” he adds. “Our business community is pissed off. If there was an alternative, they would step up and advertise on whatever day you asked them to.”

For now, Manship says he's not interested. Whatever promise New Orleans might hold for The Advocate, which has certainly seen its share of financial hardships in recent years, the paper has barely a presence in the Crescent City—a paltry 100 or so readers a day. To make publishing there economically feasible would require at least 5,000.

“If I had 5,000 readers, then I could go to JCPenney or Macy's, which already run in both papers, and cut a deal,” he says. “Otherwise, it wouldn't be worth the cost of distribution.”

Not to mention the cost of ramping up staff and hiring enough New Orleans-based writers to give a Crescent City edition of The Advocate enough of a local identity that local readers would want to buy it. After all, Monday morning football stories are a dime a dozen on the Internet. What endears readers to a local newspaper is the local perspective it brings to issues and events.

“If we published The Advocate down there, it would have to have a very different look from The Advocate here,” Manship says.

Few would argue with that assessment. Whatever one may think of The Advocate—and, like most metropolitan dailies, it has its share of detractors—The Advocate is a distinctly Baton Rouge brand paper that knows its market well and gives at least its longtime and elderly readers what they want. It is true to its self-appointed mission of being the state's paper of record, recording the discussions at public meetings and the happenings at the State Capitol as a chronicler of history. Like the city it covers, it is risk-averse, plodding, cautious and a bit old-fashioned, with more local advertisers and more news stories than most newspapers its size.

“I'm surprised by how much advertising I see in The Advocate,” Ritter says. “But my sense is that the technology and digital world has not come here to the degree it has in other places.”

Which helps explain how The Advocate has managed to stay afloat, despite industry changes and economic downturns. Like other papers, The Advocate's circulation has fallen in recent years, from as many as 120,000 to 88,000 a day. Revenues are also down, though not as much as they were during the recession of 2009 and 2010. Manship declines to discuss specifics but says 2011 and 2012 have both seen growth, and he confirms industry estimates that put the paper's revenues somewhere between $50 million and $70 million.

The other reason The Advocate has weathered the industry challenges thus far is because it has cut expenses by a lot. In 2009 it laid off more than 50 employees, or 10% of its workforce, and left unfilled many vacant positions. It has also pared down roughly two-thirds of the $80 million debt it has on its Siegen Lane printing presses. Though no onlookers can say with certainty how profitable the paper is—and Manship won't say—observers believe the Manship family is probably living comfortably off the paper's margins, however slim they may be.

“If you're a paper like The Advocate, you can get by with a 4% or 5% margin and still have an airplane and a sailboat,” Ritter says. “On the other hand, if you're a giant public company like Gannett, Wall Street is always chomping at the bit, always asking for another 10%.”

As for The Advocate's future, Manship says that despite persistent rumors his family's paper is for sale, he has no plans to sell. Not that he wouldn't, if the price was right; but he doubts a buyer would offer enough to cover the remaining debt on the presses—close to $30 million—and still make it worthwhile for the family to sell.

“Back when things were booming, maybe we could've gotten $200 million for this paper,” Manship says. “But you look at The Philadelphia Inquirer, which got $60 million when it was sold [last year], and they're a lot bigger than we are. Plus we have the debt.”

Brave new world

But inevitably change will come to The Advocate, as it has now to The Times-Picayune and a growing number of newspapers around the country. Industry experts are uncertain at this point as to what the brave new world of online news coverage will eventually evolve into. But they are quite sure of one thing: It will happen.

“The economics of the business are in permanent long-term decline, so it's inevitable. It's just a question of when,” says Baker, the Princeton consultant. “You just have to accept that in 10 or 15 years most cities won't have a daily in the way that most cities have thought of one. It's just the way it is.”

Newspapers by the numbers

A quick look at some of the realities facing all newspapers:

Advertising sales have traditionally accounted for 60% to 70% of all newspaper revenues—and in some cases as much as 80%.

Since 2005, newspaper advertising sales have plummeted by half, from $50 billion to $25 billion.

In that time, newspaper profit margins have shrunk from 20% on average to 5% to 10%.

One model that will likely emerge, for a while at least, is a hybrid, like The Times-Picayune is attempting to become: a scaled-down newspaper published just two or three days a week and existing primarily online. In theory it sounds like a good idea, and some say the numbers can work if—and this is a big if—the paper can hold on to the advertisers on the days it prints and keep them subsidizing the operation.

“If they can hold on to 85% of the advertising revenue, then, yes, we will see more companies doing it,” Doctor predicts. “A lot of companies will look at how Newhouse is doing in New Orleans.”

So far, it's not doing so well. The business community is outraged by the pending changes to The Times-Picayune and the way Advance Publications has handled them. It has vowed not to support The Times-Picayune in print or online with advertising dollars. Whether these businesspeople make good on those threats remains to be seen, and officials with Advance Publications, for now at least, appear unfazed.

Another model for digital content delivery that is gaining steam around the country is to make readers pay for content. About 400 of the country's 1,300 newspapers have gone to pay walls, most notably The New York Times and The Wall Street Journal. But both of those papers are exceptional in terms of their role and scope as national papers.

In the case of The WSJ, it's also important to note that 80% of its subscriptions are paid by company subscriptions. Would readers at home be so willing to pay for content behind a firewall were it coming out of their own pockets?

Several papers in Louisiana will find out later this year. Gannett, which owns the Alexandria Daily Town Talk, Lafayette Daily Advertiser, Opelousas Daily World, Monroe News Star and The Shreveport Times, has announced it will begin putting up firewalls in all of its papers later this year. In public comments earlier this year, Gannett's top brass said the move is an economic necessity and will increase revenues by 25% and swell earnings by a whopping $100 million.

But other markets around the country have had mixed results when they've tried to restrict content.

“I don't think anybody yet has been able to make it work. You hear different stories about how different newspapers are doing to transition to a paid Web model,” Baker says. “The Dallas Morning News puts out numbers that says they're doing great, whereas you look at Milwaukee and they're pathetic. You don't quite know whom to believe.”

If there are uncertainties about the economic future of the newspaper industry, there are gut-wrenching questions about what it will mean to the kind of serious, investigative, political and business journalism that newspapers in this country for the last century have strived to produce. In-depth, complex and thought-provoking copy doesn't lend itself well to the fast-moving, scroll-down and intentionally distracting interface of a Web page. Nor does it draw readers in—with their clicks and shares and Facebook likes—the way a story does on the Jerry Sandusky sex scandal or American Idol's season finale.

“Business success will not necessarily equate with journalism success,” says Robert Travis Scott, executive director of the Public Affairs Research Council and a former bureau chief of The Times-Picayune. “The biggest challenge, as I see it, is how a newspaper can do what The Times-Picayune is planning to do and still provide the kind of community forum and broad-based community information source that the daily newspaper is valued for.”

When you consider the major news stories that have consumed the state in general, and New Orleans in particular, over just the past decade—and the role The Times-Picayune played in covering them—that question is particularly relevant. Corruption scandals and federal investigations of a former governor, a sitting congressman, and just about the entire Jefferson Parish judicial system have been ongoing stories, to say nothing of Hurricane Katrina and the rebuilding of New Orleans. Then there are the meat-and-potato stories about things like public education reform or the eroding coastline and the critically important efforts to rebuild it—the kinds of issues that may seem dry and dull but that affect every citizen in Louisiana. What kind of placement do those topics get on a Web page when competing with a movie trailer for Moonrise Kingdom or an Associated Press story about Bill Clinton and Barbra Streisand co-hosting a fundraiser?

In a video posted on the website June 12, editor Jim Amoss reaffirmed the paper's commitment to being the “journalistic watchdog of our communities.”

“We're committed to the high quality of journalism our readers have come to expect from us, produced by a formidable news staff. And we're committed to deploying by far the largest news-gathering team in the region,” Amoss said in the video.

But media analysts aren't buying it. How can you provide better, more comprehensive coverage with a newsroom staff diminished by half, questions Rick Edmonds, a media business analyst with the Poynter Institute. In a medium that inherently rewards the kinds of stories that generate page views and clicks on a thumbs-up icon, how do fewer reporters produce a higher caliber of journalism?

“Better coverage online? I'll believe it when I see it,” Edmonds says. “That's not the way online works, especially when you're laying off half your staff.”

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