Open letter to John Paton, CEO of Digital First Media

In the wake of the Journal Register's second Chapter 11 filing, Bill Grueskin writes a "Dear John" letter about its failed digital strategy

Dear John,

You and I have never met, but we have corresponded—a bit testily at times (more on that later). In light of last week’s news, I wanted to follow up with another round of correspondence, and this time I’m doing it publicly, via the Columbia Journalism Review. I hope you’ll respond, because I know you are a believer in transparency. If you do, the CJR editors promise they’ll run your remarks. (Update: See Paton’s response below.)

First, I want to make clear that I admire what you’ve tried to do, first at Journal Register Co. and now at the combined Digital First Media, which also operates the MediaNews Group. Many of the Journal Register properties you took over in early 2010 were an unenviable lot for a digital age. Some of them are in economically depressed areas, like New Haven, CT, and most of them lagged far behind the curve in adopting technology or adapting to the convulsive digital environment.

Still, you surrounded yourself with bright people, including two of the smartest editors I know. Emily Bell is one of your advisors; she is also my colleague at Columbia Journalism School, having come here after spearheading the phenomenal growth of the Guardian’s Web properties. And Jim Brady, your editor-in-chief, was editor at while I had that role at; for years he has demonstrated lightning-fast reflexes in understanding reader habits and media’s transforming economic model.

You put a great deal of effort into promulgating digital thinking throughout your newspapers. In your words, “if Print dollars are becoming Digital Dimes, then we better start chasing the Dimes.” You became a popular speaker on the Wherefore Journalism Circuit. And oh, those names your company assigned to its initiatives. First there was the “Ben Franklin Project,” and then the “JRC ideaLab,” and now there “Project Thunderdome.”

But last week you announced that Journal Register was filing for Chapter 11 again. This is the second bankruptcy in just a few years. The first preceded your arrival, and it seems that those in charge didn’t shed enough legacy costs. More distressingly, the new bankruptcy filing indicates that the decline in print ad revenues is speeding up at smaller papers, similar to what beset big metro dailies over the past decade.

The filing has led, predictably, to schadenfreude from those who hope print will turn around someday, and to anger from some current and former employees (one of them called it “horseshit” on Jim Romenesko’s site).

The former was predictable—partly because so many print publishers and journalists seem genetically predisposed against change, and partly because of comments you made that seemed to disparage an entire work force. “Stop listening to newspaper people,” you warned the media world. “As we have done at JRC, put the Digital people in charge—of everything.”

But the employees’ anger and the industry’s shock come from something deeper, I suspect. And here is where I need to air a bit of laundry.

In early 2011, I was working on a report about digital media economics for Columbia. (It would later be published at CJR under the title “The Story So Far.”) At that time, you were promoting your company’s results and getting a lot of headlines for your strategy. Journal Register’s ad performance was “three times better” than the industry’s, you told the trade group INMA. Sounds great, but what were the underlying numbers? Digital revenue in 2010 went from “negligible to 11 percent of ad revenue in November.” Okay, but is that because digital is rising or because print is falling? Or both, and in what proportion?

When we tried to dig deeper, we didn’t get very far. We wanted to know more about Journal Register’s “$41 million profit.” We wanted to learn what base you were using to say that digital revenues were growing by such impressive percentages.

Your company wouldn’t tell us. It didn’t have to, since it isn’t public and thus faces less onerous disclosure requirements than one listed on a stock exchange. But that struck me then, and continues to strike me now, as odd. In my 13 years as an editor at the Wall Street Journal, I can’t remember hearing a CEO talk so specifically about progress in percentage terms and reveal so little in hard numbers. Indeed, companies that don’t have to divulge numbers often don’t bother to.

Instead, it seemed like Journal Register wanted to have it both ways, promoting impressive growth figures while refusing to provide the data that would give those numbers context.

As a result, we didn’t give much ink to Journal Register in our report. We did say this: “The company does not provide data on revenue, costs, or other metrics as a publicly traded firm would. Paton says his investors don’t want to disclose too much.”

And, that got your attention.

Shortly after the report was published in May 2011, you fired off an email to me, saying it was “unbelievable” we would focus on your cost-cutting efforts, disputing a quote that we did use and noting that, as a private company, you couldn’t tell us more. You also invited me to look at your company’s internal data, but under the umbrella of a strict nondisclosure agreement (which I wouldn’t sign). Finally, you did email me this prediction: “We will be within 1 percent of replacing every lost print ad dollar this year with digital ad dollars. A first anywhere.”

That prediction didn’t come true, and I’m sorry it didn’t. You and your colleagues deserve a lot of credit for aiming so high.

I don’t think you erred in pushing your company so far, so fast. But I do think that your sell of statistics that were based in percentages, not hard numbers, provided a patina of optimism when a more realistic view—or even a less transparent one—would have better served your interests.

I am regularly amazed that so many journalists trumpet companies’ growth statistics with so little context. That tells me that reporters and editors aren’t pushing hard enough, and perhaps, journalism schools aren’t being rigorous enough. We need to do a better job of encouraging journalists to be skeptical, even when they’re writing about companies in the same industry that employs them.

I hope that Digital First can emerge from this latest challenge better equipped to cope with the significant headwinds that affect local media companies. That would be greatly encouraging to all of us who care about this business.

Best regards,

Bill Grueskin

(Further reading: Ryan Chittum digs out the numbers behind the JRC bankruptcy.)

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Bill Grueskin is former academic dean at Columbia Journalism School. He is now on the school's faculty and is also executive editor/training at Bloomberg News. Tags: , , ,