Last Friday, 60 former Knight Ridder reporters and editors released an open letter to Knight Ridder’s management arguing for a change in the direction of the beleaguered company, which — despite a 19.4 percent profit margin last year and recently announced editorial cutbacks in Philadelphia and San Jose — has now been forced into a corner by the demand of its largest shareholder that it be sold to recoup its value.
Knight Ridder’s routine “double-digit operating profits” have clearly proved founder John S. Knight’s creed that “excellent journalism is good business,” the alumni wrote, adding they remained confident that would continue to be the case in the future — if Knight Ridder remembered that it was not just another public company but “a public trust” which “must balance corporate profitability with civic purpose.”
Polk Laffoon, spokesman for the company, responded, “I wish there were an identifiable and strong correlation between quality journalism as we all define it and strong and growing newspaper sales. If that were the case, we would not only know how to meet some of the challenges we would face today, but we would thrive on doing it.”
In fact, Laffoon could have found one such identifiable and strong correlation if he had looked to one of Knight Ridder’s competitors, the McClatchy Company. By taking a long-term view of its newspaper business, McClatchy has managed to produce both quality journalism and a string of 20 consecutive years of circulation growth — as total daily national circulation has fallen from a peak of 63.3 million at 1,688 papers in 1984 to 45.2 million at 1,457 papers this year. Building circulation through quality, says Howard Weaver, McClatchy’s vice president for news, is “part of our DNA around here.”
Even so, McClatchy’s daily circulation will decline by about 1 percent this year, though that drop is still considerably less than the 2.6 percent industry-wide average. That dropoff, the sharpest in any six-month period since 1991, seemed to indicate the hastening decline of newspapers. “The votes are now in: Newspapers are officially dying,” Michael Malone wrote on ABC News’ Web site. “[M]ost of the nation’s major newspaper companies could be on the block within the next 24 months, few with any chance of finding a buyer. And if that isn’t the End, you ought to be able to see it from there.”
But are newspapers really dying? The long (and now accelerated) circulation decline might suggest yes — but various industry leaders and observers argue that simple measurement is outdated. Newspapers are reaching new audiences through free dailies (with RedEye in Chicago and Quick in Dallas two of the most visible examples) and online, where Nielsen/NetRatings reported last week that the number of unique visitors to papers’ Web sites grew by 11 percent between October 2004 and 2005 (compared to 3 percent growth across the Internet as a whole). When those online and print offshoot figures are brought into the equation, these leaders say, newspapers’ readership is actually growing. Says Weaver: “What that says is more people want us today than wanted us yesterday, and that is not the profile of a dying business.”
Certainly, classified ads are being displaced by online bulletin boards, print advertising revenues are slowing, and media stocks have taken a tumble this year. But rather than finding ourselves near newspapers’ deaths, we are at “a tipping point in the life of public newspaper companies,” as the Knight Ridder letter’s creator, James Naughton, said last week — and a tipping point in newspapers’ long-range planning.
Often lost in coverage is what Alan Mutter, author of the blog Reflections of a Newsosaur, says are newspapers’ three great strengths: They have widely known, good brands as monopoly or near-monopoly operators in their market; they have longstanding strong relationships with major local advertisers that no one else can duplicate; and they have an unparalleled local newsgathering staff and capability, with other media in their cities largely following the agenda they set.
I confess to being a bit puzzled by the Knight-Ridder situation. When I first heard of it, it sounded as if a large stockholder was angry at the editorial direction the chain was taking. It had done an excellent job of detailing the Bush Administration's missteps and falsehoods. On the heels of this came the stockholder's demand that the chain be sold off.
What stockholder can realistically expect his investments to earn over 20% yearly? Isn't this demand nakedly punitive? As I understand it, this investor has never wanted to be on the Board of Directors, so what does he really want?
If he doesn't like the earnings, maybe he should sell his stock to someone else. If he doesn't like the editorial policies, he should get on the Board.
Posted by Jim3K on Thu 24 Nov 2005 at 01:28 AM
Colby cites as one of newspapers' leading strengths--"good brands as monopoly or near-monopoly operators in their market"--as a reason they'll survive. This, I believe, is one of the key reasons they are now flailing around like sabre-toothed tigers in the LaBrea tar pits. Most papers' success in driving out competitors (check out how the NYT destroyed the NY Herald-Trib, which, at the time, was arguably the most inventive paper in the country) proved the truth of the Law of Unintended Consequences. American papers became quasi-public utilities--their monopoly status dooming them to being all things to all people, at a time when the nation was fragmenting, politically, culturally, religiously, etc etc.
By contrast, UK papers thrive precisely because they wear their biases and viewpoints on their sleeves. Ruthless compeition has strenghtened most of them and has led to exciting experiments in size, format, etc. that not one US paper has had the guts to even contemplate.
Also, remember that KR was one of the first and most rapacious newspaper consolidators. The strategy worked fine until the founders and immediate heirs dribbled down to the likes of Tony Ridder. The problem with corporatization isn't so much the owners, but the generally colorless play-it-safers who are selected to run these properties. Read the signatories to the KR letter and you will find some of the most oddball geniuses in late-century US journalism (if you've ever had a 'conversation' with Gene Roberts, you know what I mean). Significantly, all have left or been hounded out of daily journalism. You wouldn't want to suffer through a dinner with most of their replacements.
Dull bosses equate to dull, take-no-chances, ruffle-no-feathers journalism. Dullard bosses select dullard, non-threatening underlings, who inexorably move up the greasy pole, displaying little journalistic innovation or an inclination to actually comprehend or cope with the challenges--which should NOT be life-threatening--facing newspapers.
Bring back the crazies. Let them create new entities. If the older product faces obsolescence, have the guts to create the new products that will kill the old. That's probably too much to ask of the geniuses now running ChiTrib, KR, Gannet etc...but if they don't do it, someone will.
Posted by rchev on Sun 27 Nov 2005 at 04:24 PM
Delivering quality news is definately a key consideration. Perhpas if media executives could better understand the changing media consumption habits and tastes, they could boost their profits, without degrading the quality...
Here is a great resource, both for the media executive, and for the media buyer, to better understand the changes in media consumption behavior, and tastes:
http://www.neomarketing.tv/archives/invaluable_resources_for_the_media_buyer_and_the_media_executive.php
Posted by kabadayi on Tue 29 Nov 2005 at 01:32 AM