When media giant Gannett Corp. splits into two free-standing, publicly traded companies next year, the bigger one will not be the fast-growing, high-margin broadcasting and digital divisions. It will be the low-margin, revenue-bleeding division built around newspapers. Even though the broadcasting division doubled in size to 46 TV stations with Gannett’s acquisition of Belo’s properties last year and the digital division is much bigger with Gannett’s recent 100% ownership of cars.com, the media company’s newspapers remain its top revenue producer.
The publishing division — whose 99 daily newspapers include USA Today and 17 regionals in the U.K. — generated 70% of the Gannett’s revenues last year. Yes, that percentage will go down with the expansion of the broadcasting and digital divisions — it already has in the 3rd-quarter financials announced Monday. But newspapers will remain No. 1 in revenue for some years into the future. Not only that, the new publishing corporation — which will keep the Gannett name — will be almost debt free, creating opportunities for right-timed acquisitions in the highly competitive but under-capitalized digital community news space, which is crowded with cash-tight entrepreneurs.
In the news media’s digitally focused 21st century, newspapers are often dismissed as an “industrial-age” product. But it’s not clear that they’ll become what whale oil was to the 19th century’s petroleum or the buggy whip to the 20th century’s automobile. Gannett’s print newspapers, like others in the industry, continue to lose circulation and advertising, but publishing division losses have been slowed by massive reductions in personnel — close to a third of the division’s workforce.
Whale oil and buggy whips were doomed because there was no way they could match what their competitors offered. But newspapers don’t face that dead end. Even if their print versions shrink into niche operations, publishers can put their resources in the still-wide-open digital space, especially local and community news. That’s exactly what Gannett is doing as it prepares to uncouple its publishing operations and let them fight for their future without corporate media buddies.
There are three parts to Gannett publishing’s strategy. The first is metered paywalls — on average about $10 a month — to turn free-riding Web and smartphone news consumers into subscribers. The second is to create digital platforms that give users a whole lot more of what they want when they want it, but without throwing out and maybe even reinvigorating the First Amendment mission of company founder Frank Gannett. The third part is to improve the print versions of the too-often lackluster 81 community dailies in the U.S. and 17 in the U.K — which still have 3.1 million subscribers daily and 4.7 million on Sunday — by letting them share in improvements focused on the digital platforms.
The paywalls which are being implemented at all Gannett dailies except USA Today are off to a slow start in their first two years. They have captured only a tiny fraction of freebie users on the community paper websites, falling short of goals set by CEO Garcia C. Martore. But Gannett is now launched on what looks like the beginning of a long-promised transformation of its newsrooms to make the sites a better value for digital-only subs (and their younger users). The goal is no more newspaper versions of whale oil and buggy whips. As the new president and publisher of Gannett’s Nashville Tennesseean, Laura Hollingsworth, said in an April speech (as reported by Romenesko): ”
“The only choice that is left for my business is that WE must change and we must change dramatically and urgently to meet the new demands of consumers if we are to survive and thrive. We are going to have to figure out a new business model and how to scale and structure our businesses for a new era.”
Last week, Street Fight took a micro-look at what one Gannett paper — the Asheville (N.C.) Citizen-Times — was doing to create this new model. For a macro-look, I put these questions to Gannett Publishing’s Senior Vice President for News, Kate Marymont:
How does Gannett’s new “newsroom of the future” (announced last August differ from its 2008 newsrooms of the future?
We were committed to being newsrooms of the future before 2006 and will be into the future. Our core message in 2008 was to focus squarely on readers’ changing interests and needs. That message hasn’t changed, but now journalists have sophisticated new tools that give them insight into those constantly changing readers. The work being done now is to train journalists on use of those new tools.
There have been editorial staffing cuts at the six pilot dailies (August 2014). What percentage of editorial staffing do the cuts represent?
While there are fewer editorial positions overall, we have increased the number of reporters creating content.
Editorial staffers who were not laid off in August, were invited to apply for any of the 16 new positions created in the newsrooms of the pilots. Do these new positions represent, overall, salary reductions compared to the previous newsroom structure?
No. Journalists who move into positions of more responsibility will be paid more. Journalists who stay in jobs similar to those they held previously will not face pay reductions.
Since the “newsrooms of the future” were launched in August, what initial results in content quality and community feedback have you seen?
It is too early for much community feedback. Journalists are being trained and settling into their new roles. The results that we have clearly seen so far is that journalists feel free to focus on meaningful, unique storytelling that readers respond to.
Is a primary goal of your newsroom transformation to make Gannett newspapers sustainable as they continue to transition into the digital space?
Certainly. Our ongoing transformation is intended to keep us invaluable to our readers.
* * *
To me, it’s significant news that Gannett finally appears to be serious about bringing its community papers into the digital age, and without blowing off its print subscribers. Years of editorial axings combined with half-steps beyond 20th-century journalism resulted in products that were alienating print subscribers and failing to attract digital news consumers. The result was — in the candid words of Asheville Citizen-Times Executive Editor Josh Awtry — a “slow slide” to nowhere. More reporters, equipped with 21st-century tools to connect them more closely to the community, is not just corporate PR. What new-generation Gannett leaders like Awtry and Hollingsworth and Marymont are preaching and starting to do might just save Gannett from becoming the whale oil and buggy whips of news publishing.
Tom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of the in-development hyperlocal news network Local America that rates communities on their performance across a broad spectrum of livability — Local America Charleston launched earlier this year.