What went wrong for the Star Tribune and Pioneer Press: An illuminating case study
An ad exec from Knight Ridder sums up the newspaper industry's problem thusly:
"We believed our own b.s."
Although he's talking about Knight Ridder in particular, the lessons pertain to the Star Tribune and the St. Paul Pioneer Press, both of which have been buffeted by layoffs, debt hemorrhaging, and an ever-shrinking news hole.
Doctor divides the current media business crisis into three phases:
* Phase I, maybe 1995-2004: “The Internet Won’t Hurt Our Business, and We’re Making Prudent Investments in the Internet.”
* Phase 2, about 2005-mid-2007: “The Internet is Changing Our Business, but We Believe our New Internet Revenues Will Make Up for Print Losses.”
* Phase 3, mid-2007 on: “We Can’t See the Future”.
Gary Pruitt, the CEO of McClatchy, which sold the Star Tribune, says “visibility is limited.”
Pruitt is one the good guys in the battle to hold on to as much journalism and community service as the company he heads has lost more than 90% of its market value in 2 years – now valued by Wall Street at a laughable $350 million. “We’ll become a smaller, more efficient company,” he told analysts last week. No one wanted to ask the most obvious journalist’s question: how small, how soon?
Doctor goes on to ask some very pertinent questions, all around the theme of: Now what? And a local journalistic experiment gets tossed off as among the new contenders for a much smaller throne:
* What exactly does this new "local media" company look like? What are its products? How many journalists and ad sales staff does it have, in each city served and centrally? If newspaper companies used white boards like those upstarts in Silicon Valley, what would be on the white board -- and what wouldn't be?
* How big is this company in revenue? That's a question investors and financial analysts really want to know, but seldom ask and never get answered.
* What kind of local market opportunity does the rapid shrinking of the DFKAM (Dailies Formerly Known As Monopolies) leave for new entrants? If putting together a mainly online (with niche, focused print) business is the way to go, look for an explosion of new, expanded and better-funded regional and local efforts as some kind of economic recovery sticks. There is a widening cast of those watching dailies' demise and wondering where they might fit into this emerging new world order. They include: the portals (all talking up the value of local media) to early entrants MinnPost, Pegasus, Voice of San Diego and Crosscut, to Arianna Huffington (launching limited forays into "local"), to local broadcasters ramping up their digital businesses and to the now mostly print alternative weekly press. It's the delta between shrinking Old Media and aspirational, if so far tiny, new media that's worth watching, as we figure out a journalistic future.