Sands of time

sandsoftime-144

The winds of change are everywhere
And all the world must be aware
There’s nowhere left for man to go
The sands of time are running low.

— Judas Priest lyrics

 

It’s not unusual that a widely anticipated business deal collapses shortly before consummation. Such an event occurred last week when the sale for a rumored $400 million of the second largest newspaper company in terms of circulation in the country was called off. The holdings of Digital First Media, owner of 76 daily newspapers and 160 weeklies, include the Daily and Sunday Freeman of Kingston. DFM estimates its total audience at 67 million people.

The same DFM press release announcing that “it has been determined that a sale of the company as previously speculated is not in the best interests of shareholders at this time” disclosed that chief executive John Paton was stepping down.

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So far, there’s been little news about what might have aborted the deal. Ken Doctor, an unusually opinionated but usually knowledgeable commentator, speculated that the failure to agree on valuation scuttled the sale from one hedge fund, Alden Global Capital, to another, Apollo Global Management (which has $146 billion in assets). “Apollo wouldn’t meet DFM’s number,” wrote Doctor. Facing continued erosion of its print business, he predicted, DFM would now proceed with further budget cuts.

The same day an article in the Albany Times Union reported the layoffs of six staff members at The Record (Troy) and The Saratogian, two of the four papers in the New York cluster of 21st Century Media, a DFM subsidiary. The other papers are the Daily Freeman and the Oneida Daily Dispatch. Among those laid off were a photographer, city editor, digital editor, assistant sports editor and advertising staffer.

The Freeman has been printed at the Albany Times Union plant in Albany since August 2013, as have the Troy and Saratoga papers. All were printed in Troy previously. The Freeman was last printed in Kingston in December 2010.

 

 Technological disruption is having as profound an effect on the information industries as elsewhere. More and more readers, and especially young people, are getting their news digitally. The impact on the news landscape and its revenue model has been profound. An age-old form of presentation, the print newspaper — the vehicle most of you are inhaling here — is facing radical disruption.

“Every newspaper chain talks about getting digital faster. The plain truth is that despite almost two decades of effort most aren’t close to where they need to be,” wrote Doctor last week. “All these companies still find themselves more dependent on print than on digital, and they haven’t weaned themselves off of it fast enough to absorb the now-brutal print losses.”

Management of the slow decline of print is a continuing task, but it’s not necessarily a hopeless one. Advised Penelope Muse Abernathy, a journalism professor who has recently written a book called ‘Saving Community Journalism,’ “Publishers have an option of managing that transition and tailoring it to fit the needs of their markets, provided they simultaneously pursue a three-pronged strategy that (1) sheds legacy costs associated with the print era; (2) builds community across multiple platforms; and (3) aggressively pursues new revenue opportunities.”

The idea, say Abernathy and others who have studied digital disruption in the newspaper industry, is to organize digital content in such a way as to provide access to communities of special interest as well as to the geographic communities that have previously been central to most papers. Print readers will browse, often flipping pages until they find a subject of interest. On-line readers, Abernathy said, want to go straight to the topic or subject they care about.

The market is still there. It just wants information in a different form on a variety of platforms.

 

Yale management professor Richard Foster, who has studied industries struggling to adapt to disruptive competition, has come up with a yardstick for change in community newspapers as they transform themselves to cross-platform delivery of news and information: a six per cent a year reduction in legacy costs and a six per cent annual increase in revenues. Change at that pace for five years, Foster said history shows, and chances of survival and prosperity are much higher.

The difficulty for chain newspapers, in my opinion, is that they’re good at following management prescriptions for cost-cutting but lousy at understanding their opportunities for innovation, which need to be finetuned for different markets and pursued imaginatively.

As Ken Doctor pointed out in a May 14 update of a previous Newsonomics column, “National advertising continues to weaken, preprints face pricing challenges, and digital disruption takes an ever-bigger bite of ad revenues overall.” These factors, he says, make it “tough to invest in new products and to travel with the audience as it moves to mobile.”

DFM will soldier on with its strategic review. Having detected considerable positive company momentum in a tough environment, it has told its employees they’ll be the first to know when something new comes up. “We will keep you updated on our plans,” outwardbound CEO Paton and new CEO Steve Rossi promised, “including when the strategic review process has concluded.”

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