The Register heavily covers high-school sports and publishes two pages of color photographs of the games in each weekly edition. It also started a weekly section called OC Varsity Arts that spotlights the non-jocks. Kushner is enamored with the idea of readers cutting out pictures from the paper and sticking them on the fridge. “You can’t put an iPad on the refrigerator,” he says. “You can’t put it in a scrapbook. You can’t tape it to your locker.”
That Kushner thinks he can get smartphone-obsessed teenagers to pick up an old-fashioned newspaper—even if their friends are in it—signals that parts of his plan are a stretch. Because Freedom is privately held, it’s unclear how much money Kushner and his partners are investing. The media analyst Ken Doctor estimated earlier this year that the annual tab for the newsroom hires and new print costs was roughly $10 million, and that revenue gained from increased subscription prices could offset that. The Register has since hired another 50 journalists, adding perhaps $4 million to $5 million to that stunning number.
The big question is where the growth needed to counterbalance the ad decline will come from. The Register raised its print subscription rate to a dollar a day and installed a hard paywall, which has been unsuccessful most places it’s been tried. The price for digital access? A dollar a day. “Our content’s incredibly valuable, and our focus is on subscribers,” Kushner says. “For the people who were in essence cannibalizing our business, they can make the decision: Either our content is valuable enough that they want to pay a dollar a day, or they don’t, and we haven’t done our job to convince them.”
The New York Times and others have showed how a metered paywall model can work, preserving digital ad dollars while adding a new stream of subscription revenue and at the same time discouraging print readers from dropping the paper. The Register has gone another way. Its managers say they’re charging for the content, not the medium, but it’s clear that this is a big bet on print. Yet the most conceivable future for newspapers, 10 or 20 years hence, is one in which they have converted print and hybrid subscribers to digital-only subscribers, shedding much of the cost of production and distribution. The Register will pick up few digital-only subscribers at $30 a month, particularly when its website and tablet apps are so weak. If the bet is truly on content and not the medium, digital will require serious investment, too.
Kushner is also banking on the idea that advertisers have been fleeing print in part because readers have been fleeing it. Win them back and advertisers—not all, but some—will return. But will they? There are many other factors. “I suspect that a lot of what’s happened in the last 20 years is that the journalism has suffered,” says John Morton, a veteran industry analyst. “But how much of the decline in newspaper circulation can be attributed to that, and how much can be attributed to the Internet—who knows?”
Still, much of Kushner’s model does make sense. American newspaper operations are still quite profitable, with operating margins that average between 8 percent and 10 percent, according to Morton. The rash of bankruptcies in the last three years was primarily due to debt loads tacked on by Wall Street mergers and acquisitions. Those bankrupt newspaper companies still posted significant operating profits, which exclude debt-service costs.
The profit margins are constantly pressured, though, by declining ad revenue. What’s changed in the last two years is that many papers are offsetting most or all of those ad declines with money from subscribers.
Freedom Communications President Eric Spitz told Mathew Ingram in April that the Register was making its aggressive print revenue targets for the first two months of the year. The paper’s next circulation report—due by the time you read this, at the end of April—will give an early indicator of the plan’s potential. A relatively flat report would be good news. A sharp decline would not.
Kushner has already rolled out creative new ways to add value for readers and advertisers. The Register gave each subscriber a $100 voucher to give ad space to their favorite charity, for example. The paper also signed a deal with the Los Angeles Angels to give subscribers unsold tickets to games, nudging the Register toward a membership model.
While it’s far too early to tell whether Kushner’s plan will work, it’s fair to say that the odds are against it. Print advertising is—barring a miracle—in an inexorable tailspin. Readers have more sources for news and entertainment than ever, and print-loving stalwarts are aging rapidly. Print isn’t picking up readers under 30, and it’s unclear how successful charging them full freight online will be.