the audit

Audit Notes: Tabloid Chutzpah, Paywall Performance, The Fed and Dividends

March 8, 2012 By Ryan Chittum

Rebekah Brooks, former head of Rupert Murdoch’s UK tabloids, which were rogue even by the viciously sensationalist standards of that industry, has her attorney Stephen Parkinson take to the pages of the Telegraph to argue that “The flaws in the design of the Leveson Inquiry have undermined the judicial process” and asking “can these journalists really get a fair trial?”

Here’s Parkinson on the effect of the Met’s testimony to Leveson on News Corp.’s actions:

Understandably, the press reported this extensively. Instantly, stories appeared about various individuals who had been arrested as part of the inquiry. The publicity was huge, dramatic and sensational.

All that needs to be said about this has already been written by the Financial Times‘s Ben Fenton on Twitter:

MAJOR IRONY ALERT *** MAJOR IRONY ALERT***

— Ken Doctor writes for the Nieman Journalism Lab on what we know now about the economics of paywalls. It’s well worth a read:

Sign up for CJR's daily email

While The New York Times is on a double-digit circulation (print + digital) revenue trajectory, other papers are having a hard time reaching that number. Columbia points to a 5-6 percent lift, enough to cover several newsroom positions for the small daily. Minneapolis points to a 3.75 percent lift, based on its new $1.5 million revenue stream, earned at $100 a year (or $2/week) from 15,000 digital subscribers. Others say the circulation revenue is flat to a little up.

One little secret of the trade: the opt-out. Build in higher pricing for combined print and digital access, and allow readers to take print only — if they affirmatively opt out. Eighty percent or so won’t opt out, and so we’ve seen high retention rates among newer subscribers.

And here’s Doctor on the importance of loyal readers versus junk traffic:

That said, it’s useful to pay attention to a new emerging metric: what percentage of a newspaper’s site unique visitors are signing up for digital access-only subs. The New York Times broke the 1 percent barrier last year, 390,000 subs compared to 33 million U.S. unique visitors. The Commercial Appeal is at .8 percent; The Star Tribune is at .25 percent with its four-month initiative. The Columbia Tribune is at .2 percent. It’s just one metric, but one that tells us about comparative traction. Though, it seems like a tiny number, it’s not. Fly-by traffic, supplied by Google and now Facebook, supplies so much traffic that about 3 percent of most newspaper sites’ unique visitors equal their paid print circulations. The digital-only conversion metric provides an apples-to-apples comparison, even as overall print/digital circulation impact remains key — and is measured in that old standby, dollars, euros, and pounds.

— ProPublica’s Jesse Eisinger has a tough story reporting that the Federal Reserve allowed bailed-out banks to resume paying dividends over the objections of the FDIC and some of its own staff:

Among their reasons: Allowing banks to return capital to shareholders weakened American banks’ ability to withstand a major shock. Whether they are too weak remains debated, but dividends and buy-backs matter. From 2006 through 2008, the top 19 banks paid $131 billion in dividends to shareholders, according to SNL Financial. When the financial crisis hit, the banks were weak in large part because they didn’t have those billions. Indeed, in the fall of 2008, the government invested about $160 billion in the top banks.

This is good context:

The Fed’s decision cannot be understood in isolation. It continued a series of actions — by the central bank and other arms of government — that were generous to the banks. When the government invested hundreds of billions in the banks through TARP, banks didn’t even have to lend out the money, and bankers could pay themselves bonuses. To keep the financial system from collapsing, the Federal Reserve provided more than $1 trillion to the banks in low-interest loans and loan programs, which were highly profitable for the recipients.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.