I presume most of you are aware of the recent announcement that GateHouse Media and Gannett are seeking to merge, with the lesser-known GateHouse being the majority owner and the new entity operating under the highly identifiable Gannett name.
If shareholders approve the deal, the new Gannett would have more than 260 daily papers in the U.S. along with more than 300 weeklies.
By comparison, McClatchy, owner of The Kansas City Star since 2006, owns 29 daily papers.
Analysts, as well as leaders of GateHouse and Gannett, say the main motivation for the merger is for the combined companies to save hundreds of millions of dollars a year by reducing overlapping costs and buying time to implement the long-sought plan of a “digital transformation.”
(GateHouse C.E.O. Mike Reed said he expected the bulk of the savings to come from reducing business-side headcount and buying out duplicative vendor contracts, but with all the editorial-side layoffs that have taken place the last 15 years, it would not be surprising to see many more reporters, editors, photographers and graphic artists getting axed.)
All the big chains, including McClatchy, have been banking on “digital transformation,” but it is really working for only three papers — The New York Times, The Washington Post and the Wall Street Journal. It’s no coincidence that those papers are dedicated primarily to national (and, in the case of The Times, international) news and business. I know of only one major metropolitan paper, The Boston Globe, that has had any significant success in the realm of “digital only” sales.
Chain executives’ dreams of “going digital” are now going on 20 years old, and yet all the chains have been losing more and more money. As leading newspaper industry analyst Ken Doctor said in a story on the Newsonomics website, “In a deal that is all about cash flow, the merger partners face the fact that, on an operating basis, too much cash is flowing… backward.”
It’s been my contention that while chasing the elusive, and perhaps apparitional, dream of digital transformation, some chains — with McClatchy being the ignominious industry leader on this front– have let their print products go to seed.
The Star is a prime example. The print edition is treated almost as an afterthought, even though it probably continues to generate a majority of revenue. With a few exceptions, the reporting is now more superficial than ever; weekday papers are embarrassingly thin and unstructured; and virtually no effort is being made to augment stories with photos and graphics. (A Star photographer who got laid off last year wrote on this website recently that the paper is down to four photographers, from a peak of more than 20.)
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I believe turning its back on print has been a big mistake by McClatchy. The hoped-for digital transformation at the local level is looking more and more like a pipe dream, not just here but in almost every metro area. There are simply too many other ways for people to get whatever information — not necessarily news — they are interested in.
Is McClatchy too far down the “digital transformation” road to turn back now? Maybe. But I wish McClatchy or some other chain would re-dedicate itself to putting out quality print products. I believe McClatchy, or whatever chain it might be, would find that tens of thousands of people in a given community — maybe hundreds of thousands, even — would pay premium rates for high-quality print products.
Of course, that also means McClatchy (or whatever chain it might be) would have to commit itself to reconnecting with the communities it serves. That’s the biggest tragedy of corporate journalism — the loss of the proprietary feeling that people used to have about their local papers.
As Bernie Lunzer, president of the national union that represents journalists, told The Washington Post, “Creating real ties to the community — that’s the only way these things (local papers) are going to work.”
So, let me put the question I wrote above a different way:
Is McClatchy too far down the “digital transformation” road to double back and recommit itself to publishing quality print products?
The answer is “no.” But it won’t happen for two reasons. First, McClatchy leadership is rigidly flailing at the digital transformation that is not happening, and, second, McClatchy executives are not the least bit interested in reconnecting with the communities they serve. (And “serve” is putting it loosely.)
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So, looking into the crystal ball, I see McClatchy being acquired by another chain headed down the road of false hopes and idle dreams, with its print products dribbling to a halt and its websites focusing on crime, weather and sports (more Kansas City Chiefs news!) leading the way.
Oh, my, what a mess.
JimmyCsays: At the juncture of journalism and daily life in KC 
Jim: your predictions are right on target. McClatchy is too far on down the digital road to invest millions in a quality print product. By the way, the Gateway/Gannett deal adds $1.78 billion in debt, with interest payments at 13%.
It’s always reassuring when your former editor thinks you’re on target!
I sure wish there were more active newspaper-industry leaders like you today — leaders focused on the basics: Quality journalism and strong community ties.
(Ken Doctor says that gargantuan loan carries an 11.5 percent interest rate. Sky high, in any event.)
Today we learned that McClatchy asked the IRS to give it some relief on pension payments and folks with knowledge of this kind of thing tell me that they give McClatchy 18 months to burn through the money from the sale of their properties (maybe another week for the yard sale of the desks, etc.)>
The issue here is that the only people doing news profitably are those with a synergistic means of making money, i.e TV stations and cable providers. As I’ve pointed out before, check Facebook to see where people are getting their stories and who has the most followers and The Star is buried by even the lowest rated local TV station. So there is no way they can even compete on the digital level.
Personally, I find this very sad since I grew up in a home that took both the morning and the evening papers.
I grew up in a home where my parents were contract Times/Star carriers and, as an adult, have started and canceled more KC Star subscriptions than I care to say. The Star’s insane sliding scale of subscription prices drives away even their most loyal subscribers. They make it nearly impossible to support them.
That is so true, Gayla…People will pay a premium price for a product — any product — that they like and is consistently good. But only a few will pay premium prices for products that have deteriorated to shadows of what they once were. Most people who now have print subscriptions have them because they can’t envision getting up in the morning without being able to hold the morning paper in their hands.
As I’ve said before, the only reason we take the print edition is because I get a $14-a-month retiree rate. (Personnel did not inform me of that rate when I retired, and for several years I paid the retail price.)
As far as I know, there’s no “sliding scale,” as such, just arbitrary rates based on consumers’ persistence and negotiating skills. It’s a prescription for failure.
The change happening in media/news delivery/social interaction is much like the change in music mid-century. The Star and old-school print-delivery systems are much like the old big band/variety show promoters, caught with an affluent older demographic still willing to pay some price for hard copy news. But the young — the next consumers of media/news delivery/social interaction — would rather consult the $1,000 computer/phone/media player in their own pocket than wait for a waste of valuable natural resources to show up on the front stoop.
Rock ‘n Roll won, and the cultural landscape changed. To survive, I think The Star has to separate into a print division and over-serve those who want the printed product and a digital side, emphasizing primarily local news, to serve the young, streaming consumers. There are two distinct audiences. Trying to serve both waters down and delivers a product no one is satisfied to use.
I think that’s a good analysis, Karl, and that you’re onto something with your proposed two-pronged solution. I doubt, however, that McClatchy executives have spent significant time reflecting on this; they are hell-bent on the digital transformation, which has a nice ring to it but isn’t playing out well at all.
Generally, leaders in the newspaper industry are a bunch of lemmings, following the latest trends with blinders firmly in place and no looking back or re-evaluating.
Maybe some chain will see the value in a two-pronged approach and digress from the pack. If such a movement produced even limited success, it could start a new and better trend the other chains would quickly jump to join.
My own bias is for a newspaper that is strongly oriented towards investigative pieces however, The Kansan under Roy Teicher tried that approach and only wound up alienating the local powers that be and in the end didn’t effect their readership at all. If anything, it hastened the paper’s demise.
So the question arises, how in a city JFK Jr called a top 10 corrupt city, who covers the corruption? Stories of that nature are not suited to local news broadcasts where a minute is considered a lengthy piece. Indeed, I was interviewed by KSHB about two weeks ago on a property tax story (good story, Missouri corporation given ludicrous tax breaks by the WYCO assessors office) and it just appeared. The reporter has it nailed, solid research and covered his bases and yet no air time available for over a week for the story to run.
https://www.kshb.com/news/local-news/investigations/just-not-fair-developers-get-tax-break-at-kck-subdivison
That is a good story, John.
I fully agree…And, John, don’t worry about it taking a couple of weeks for KSHB to run the story: It’s what we call an “evergreen”; it didn’t have to run immediately to have impact.
Maybe there is some comparison here with the book industry in the past 15-20 years. Despite audio books (which are great for long car trips), and electronic “books” such as Kindle and Nook (did I read recently that Barnes and Noble are giving up on Nook?) a fair percentage of people still want something solid to hold in their hands, even carry around with them? Something you don’t have to keep charging the battery for?
John, the agricultural deferment that is at the heart of Kansas’ tax inequity goes back decades. I spent months compiling data for a story I wrote for the Olathe Daily News back in late summer of 1996. The focus then was on ag deferments for undeveloped property in commercially zoned areas, but now the development lobby in Kansas has extended that to residentially zoned properties. Back then it cost the rest of Johnson County’s taxpayers more than $6 million in taxes that individual property owners had to make up through the shortage. One enterprising former Olathe mayor and his sons were planting pine trees on small vacant lots in the heart of Olathe’s commercial area to reap tax advantages of pennies on the dollar. I also pointed out that a property nearby was so small you couldn’t park a wheat combine on it, yet it reaped a hefty break. The Star did virtually the same story – even using the former mayor and his sons as an example – a few years later. The reporter didn’t do the research, however, as all of it had been done by me.
Gayla — A former carrier sent an email saying there is a sliding scale on subscription prices. It is based essentially on two factors — zip code (for income level) and how long you’ve been a subscriber. The idea on the latter is that the longer you’ve been taking the paper, the more you’ll be willing to pay and the less likely you’ll be to cancel.
Jim, thanks for that info. Too bad The Star’s algorithms identified me as someone who in March was willing to pay $165.46 a year for Wed & Sun delivery and by June, apparently, I’d come into some serious cash because my bill was $507.80 a year for the same two papers a week. That’s just insulting and predatory, in my opinion. They should also have known that I have a long history of canceling my subscriptions when they piss me off.
It all goes back to your original point: “They make it nearly impossible to support them.”
They’re so dumb. They ought to set a price and stick to it. They could establish categories, like The Times does, for subscriber discounts, such as teachers.