A Need to Survive Keeps Feuding Newspapers Together in New Marketing Venture

A month ago, four major newspaper chains were proudly announcing their founding of Nucleus Marketing Solutions. Today, one of the chains, Tribune Publishing, is threatening another, Gannett, with a “poison pill” strategy to prevent what would amount to a hostile Gannett takeover of Trib.

Tribune has charged that Gannett’s offer is a “low-ball price” that is a “desperate attempt to steal the company.” Gannett responded that the poison-pill strategy – under which Tribune would issue more stock to raise the cost of acquisition — “is yet another demonstration that Tribune’s board and management team are not listening to its stockholders.”

Gannett has offered to buy Tribune Publishing — whose major operations are the Los Angeles Times and the Chicago Tribune — for a net of $425 million after it paid off debt of $390 million.

Despite all their very public corporate feuding, the two companies have decided they need each other. Their alternative, which is never uttered out loud, is running the risk of being swallowed up in a deterministic digital world that is increasingly controlled by Google and Facebook.

News publishers have begun calling Google and Facebook, ominously, “The Platforms.” A Morgan Stanley analyst estimates that the search and social giants are now capturing 85 cents of every new digital ad dollar.

Gannett, Tribune and the other founders of Nucleus Marketing, Hearst Newspapers and McClatchy, think they can slow down Google and Facebook’s revenue creep in two ways. First, they can offer, collectively, 168 million unique visitors on their digital platforms in 30 major markets that include 80% of the U.S. population. The other half of their strategy is offering ad inventory that is surrounded by high-value editorial content – like more fact-filled forays into the revival of long-slumbering downtowns (as opposed to, say, videos of exploding watermelons). This news is presumably consumed by readers in the higher income brackets, who have attractive consumer behavioral attributes.

Nucleus Marketing’s scale is big enough to be sliced into a variety of demographics and psychographics for national advertisers, the primary target of Nucleus Marketing, One such slice might be 25-to-35-year-old “athleisure” millennials who are principally responsible for the rebound of the cities that are the core of the markets of the dailies making up Nucleus Marketing.

On paper, it looks good. But harsh reality is sure to intrude on the NMS business plan. The new partnership of papers will have to make the most of millions of unique visitors who, as non-subscribers, have to squeeze their way through increasingly maze-like paywalls plastered with a succession of popups, who are permitted to make only so many metered visits to sites per month or who get access to a limited menu of content.

A more serious challenge is the risk that publishers face in compromising the trust of their audiences. Nucleus Marketing will be taking its founders ever-deeper into programmatic advertising. This will potentially give questionable third parties, including those in or attached to the burgeoning industry of ad technology, more opportunities to siphon data about the participating papers’ users.  All it takes is a few well-placed pixels in the “cookies” that follow users around. Third parties will then target the users with more annoying, bottom-fishing ads when they browse other sites. The publishers from whom the data originally leaked get not a cent from those ads, even though they are providing the audiences for them.

These publishers could invite their users to employ anti-surveillance tools that would stop third parties from pirating personal data, but that’s a step that publishers, anywhere, have been reluctant to take.

Then there is Facebook competing with the publishers’ in presenting their very product — news. Facebook shrewdly calls news stories on its platform “experiences.”  Many of the stories are aggregated from newspapers. Facebook dutifully links them to the papers where they originated, but comments about the stories, including recommendations, stay on Facebook, and around this content flow ads that are part of a yearly torrent of $17 billion worth of revenue.

I sent some more questions about what’s next for Nucleus Solutions to its CEO and President, Seth Rogin, but he hasn’t replied. With two of his bosses facing each other off with poison pills and hostile takeovers, I’m not surprised.

In an interview with AdAge when Nucleus Marketing Solutions was announced, Rogin, a veteran of Mashable and the New York Times, where he was advertising VP for seven years (2006-2013), said: “I don’t just want to be another ad sales guy. I want to support journalism that matters. This is really an opportunity to do that that’s unparalleled.”

He can do that in ways that I think would make Nucleus Marketing a worthy competitor to Facebook and Google. There are editorially formidable papers in the NMS partnership. They could be deployed to find out whether major metro regions are mobilizing their economic resources to export products and services to the fast-growing middle classes of the developing world, especially in Asia.

The Brookings Institution, in its Global Cities Initiative, says exports are key to a more robust U.S. economic recovery that would mean re-employment for many of the several million working-class Americans who lost their jobs to workers mainly in Mexico and Asia and through automation. But many companies in some metro regions, Brookings says, aren’t focused enough, if at all, on exports. NMS could sell sponsorships to articles that the editorial staffs of its papers write about whether businesses are doing enough on exports.

Maybe exploding watermelons generate bigger audiences, but sponsored on-the-ground, community-based articles about whether the American economy is transforming itself and potentially putting millions of workers back on the job seem valuable and compelling enough to attract readers as well.

Tom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present, and future of Charleston, S.C.