The Falling Knife in Newspapers is … Rising?

In a booming year for the stock market, newspaper stocks actually more than DOUBLED the return of the S&P 500.  Newspaper stocks rose by 79% in a year when the S&P 500 rose by just under 30%, a whopping performance few would have predicted.newspaper stocke

While there are many one-off reasons for this, including solvency concerns at the two companies at the extremes, Lee and McClatchy, the bottom line is that Wall Street thinks the long term decline of revenues may be near bottom as print declines are close to being outweighed by consumer and digital revenue increases.

Rick Edmonds at Poynter also points out that Gannett, Journal Communications, and E. W. Scripps also benefited from their re-surging local TV businesses.  But, take a look at the graph below from Google finance– the growth in stock prices was broad-based and steady throughout the year, with every newspaper company except McClatchy beating the market.Capture gchartWith Warren Buffet and Jeff Bezos buying into the industry as a long term play, the broader financial markets are following suit.  The newspaper industry is getting some of its most positive signs in years.

But what is the reality?  Newspaper companies are increasingly refusing to share their detailed revenue data, so the fact base is thinning.  And many newspaper executives still do not see the end of inexorable revenue declines.

Falling Knife

Falling Knife Rising?

But there is a growing optimism that a new, stronger, multi-media newspaper is emerging, building upon a resilient core of loyal print readers, and that the falling knife in newspapers can, indeed, be caught by the best operators who can pick and own the best markets, and discard the rest.  As we begin 2014, this is the prevailing belief of today’s newspaper investor. The challenge is on to see which newspaper operators can deliver.

Implications for Local Digital Entrants.  The strongest newspaper companies have the lead position in local digital content in their markets, with some even pursuing a broader footprint like from the Star-Ledger.  As I wrote about five years ago, the consolidation of the newspaper industry is inevitable and ongoing, and now is extending to a consolidation of local online with the retrenchment of Patch and others.  Local digital entrants face a choice:  build your own local sales channel, or partner.  For those players who thought the knife would fall through the floor, and newspapers were headed to fast destruction, the choice was clear — go it alone…why partner with a loser?  If, as some of the “smart money” seems to believe, the knife’s decline is slowing and about to reverse, then local digital entrants’ best route to scaling may be finding the right legacy partner.

Here’s How Hyperlocal Can Work

With the highly visible explosions at AOL’s Patch over the past week, a deeper dive into other sites reveals several success stories, albeit at a small scale.Westchester_Chappaqua1-527x375

The common themes:

  1. Local ownership, local scale, low overhead
  2. No National Ads
  3. Only local advertisers with fixed banner positions and sponsored content.

Some examples, from Ad Age:

Plus my local favorite:

This isn’t the formula for a big business, but it is a model for local communities and an opportunity for national service providers with useful and low cost offerings to the local sites.

How the GeoWeb Will Change Consumer and Business Behavior

Reposted from Street Fight.

How the GeoWeb Will Change Consumer and Business Behavior

30 JULY 2013 BY 

The new Google Maps personalized interface.For about 2000 years, ever since Ptolemy wrote his treatise Geographia, maps and geography have helped humans understand their surroundings in the context of their neighbors, their town, their country, the Earth, and the Universe. For about 400 years, since Mercator figured out how to portray the curved Earth on a flat piece of paper, not much changed in the world of geography — until the launch of 24 GPS satellites by the U.S. Department of Defense about 30 years ago.

Digital location-based technologies are now a transformative force for consumers and businesses, particularly when coupled with the rapid adoption of mobile and the growth of big data. I’m a big believer in the future for “GeoDisruption” — the potential for consumers and businesses to interact in fundamentally new ways to take advantage of increasingly precise location-based technologies.

This is the debut of a column I’ll write for Street Fight exploring the growth of the “GeoWeb” and the emergence of GeoDisruptive trends and companies. When I’m not writing columns, I am the CEO/founder of On Grid Ventures, an investment and advisory firm focused on digital and location-based technologies.

GeoDisruption:  Where we are
Location-based technologies have already been a dislocating force in many industries.

  • Automobile marketing at the local level used to be all about newspapers and television, and companies like, and Autobytel have used geo-based lead generation to irrevocably shift in-market auto buyers and local car marketing spending to the GeoWeb.
  • GPS has made paper maps obsolete.
  • General B2C platforms like Yelp are changing the way we evaluate local services.
  • Vertical B2C platforms like OpenTable are changing the way we find and book nearby restaurants.

The major portals and aggregators are all making increasing bets on the potential for GeoWeb.  Google, with Google Maps and Places; Yahoo, with its leadership position in local news and content aggregation; IAC, with CityGrid and UrbanSpoon; and AOL with Patch.Google’s recent acquisition of Israeli startup Waze for over $1 billion is a high-water mark in the development of the GeoWeb as it affirms the importance of user-generated, location-based content.

GeoDisruption:  Where we’re headed
While the growth ambitions of Google, Yahoo, and others will continue to be fed with more acquisitions of GeoWeb companies, the application of location-based technologies is increasing more broadly in three areas: Business-to-Consumer, Business-to-Business, and Consumer-to-Consumer.

  1. B2C marketing (i.e., GeoMarketing) will continue to be transformed as innovative companies apply location-based technologies to how they acquire, transact with, and retain customers. GeoMarketing will be essential for most local retail and service businesses, and the landscape is ripe for vertical players in areas beyond automotive and restaurants, across the entire local landscape. Early stage companies like BeautyBooked are already trying to become the dominant search and booking platform in verticals like place-based salon services. ReachLocal and Yodleare growing fast as companies that help local businesses reach consumers, and national marketers are increasingly shifting dollars to locally targeted digital marketing and promotion.
  2. C2C interaction (i.e., “GeoSocial”) can also be further shaped as individuals increasingly become comfortable with sharing their location with family, friends, colleagues, and people with similar interests. Foursquare has jumped to an early lead as the platform for consumers to share their location, but Facebook, Google, and others are gaining fast.
  3. B2B companies that enable location-based innovation (i.e., “GeoInfrastructure”) continue to be a hotbed for venture investment.  Location itself is nice, but it needs to be in the context of an individual, the surrounding locations, time of day, and other factors.  This all needs to be accomplished respecting an individual’s privacy. Companies like Jumptap and Place IQ are finding new ways to provide marketers with context that makes location relevant.

While I have a background in computer science, I’ve never been a fan of pure technology. I am a believer, however, in the potential for increasingly accurate digital, location-based, real-time data to better inform the decisions we all make every day on where to go, with whom, what to buy, and other areas. The rapid proliferation of mobile devices is certainly an enabler, but the greatest innovation will come from insights into how a consumer’s behavior varies based on his or her specific location. We’re now a long way from zip-code targeting, and more GeoDisruption is on its way.

Jason E. KleinJason E. Klein is the founder/CEO of On Grid Ventures, and investment and advisory firm focused on the startup and reinvention of businesses capitalizing on digital and location-based technologies.  Follow him on twitter @JKNews.

Portland’s Oregonian Shifts to a Digital-First Newspaper Model

oregonian-logo2 (1)Advance Newhouse will shift another of its daily newspapers to a new digital-first publishing model starting October 1, 2013.

According to company statements, two new companies will be formed:

The Oregonian Media Group will publish The Oregonian (and its related print products) will operate  This new, digitally-focused media company will expand news and information products in Oregon and Southwest Washington using about 90 reporters, the same number as today.

Home delivery will be Wednesday, Friday, and Sunday, plus a “bonus” edition will be delivered Saturday with have news and a strong emphasis on sports content, along with classified advertising. [I wonder if this is a total market product with inserts, but the reports were not clear.]  Home delivery subscribers that choose the three-day subscription option will also have access to a digital edition seven days a weekThe Oregonian still will be published and sold daily, and will be updated throughout the day.

Advance Central Services Oregon will be a shared-services company providing production, circulation, IT, purchasing and human resources to the OMG as well as other companies.

With this new model, The Oregonian will be profitable again this year, the company said.

A Ray of Light for The Future of Print News. The Time Spent Apocalypse?

Sometimes, the common wisdom, is wrong.

For years, media prognosticators have cited the vast disparity in time spent on print, and ad dollars spent on print, as a sign of the ongoing apocalypse in print.  For example, see Mark Meeker’s analysis which shows print with 7% of the time and 25% of the ad spend. Let’s call this the the “Time Spent Apocalypse.”

disparity-time-spent-ad-vs-medium-2011 (1)

There is some directional truth in this logic, echoed by many other forecasters.  However, this argument ignores the fact the readers tend to concentrate on print, and spend much time grazing other media — surfing the web, half watching the TV set, poking at their mobile devices in meetings.  New findings released from McKinsey look across client and other proprietary research and come to a vastly different conclusion with regards to news media.

While digital media are now 52% of time spent overall with media, this shrinks to 8% for times spend on news.  For print, in particular, the time spent overall is 5%, but for news increases seven-fold to 35%, as shown in the chart below, in red.

mckinsey time spend2

So with print having 25% of the ad spend, and 35% of the time spent, maybe the print advertising correction has gone too far?  That might be wishful thinking for print fans.  Of course, a better comparison would be with the percent of ad spend in news media.  This would probably show more balance, and if you have this data available, send to me and I will add it.

The McKinsey data is the best counter I’ve seen to the Time Spent Apocalypse.  Print continues to have an essential role in conveying information in any depth, particularly the news, and especially the news behind the news, and most especially the news behind the news for people who make the news.

Thanks to Rick Edmonds at Poynter for his post on McKinsey principal Michael Lamb’s presentation at the INMA World Congress.


The Rebirth of U.S. News and World Report…The Numbers…

usnewsHow do you remake an 80-year old money-losing magazine?

Take a look at U.S. News & World Report.

From almost 80 years as the #3 newsweekly, with right-of-center politics, and slipping into losses 2006 to 2008.  Peak circulation was 2.5 million.

To today:  Just the rankings

  • Revenue over $40 million, several million in profit in 2012, and possibly $10 million in 2013.
  • 20 million monthly unique visitors.
  • 130 journalists, staffers and producers. There are an additional 40 or so employees on the business side.
  • Revenue mix —
    • 20% from search for cars, hospitals, etc.
    • 30% online display advertising
    • 15% licensing the U.S. News “best of” badge
    • 35% from a hodgepodge of joint ventures, partnerships and digital products, including its Compass search engine that helps customers explore in detail a college or a hospital, an online store with e-books on the rankings, conferences such as the upcoming “Hospital of Tomorrow” conference.

Read more from the Washington Post.

Pew State of the Media 2013 Infographic


Source:  The Pew Research Center’s Project for Excellence in Journalism:

Paper is not Dead



A digital only world?  Is paper dieing?  Check out this 30-second spot “Emma” from Leo Burnett for Le Trèfle:

Clark Gilbert’s New Math

Deseret Digital CEO Clark Gilbert, at the Borrell conference this week, laid down the gauntlet in new metrics for newspaper companies:

Illustration from

Illustration from

  • Media companies should get 25% of their total ad revenue from digital.
  • 45% of revenue should come from “digital services,” including e-commerce.  {side note:  check out 72Lux and WSJSelect for some new developments}.
  • Clark said McClatchy Co. is over 20% of ad revenues from digital, The New York Times is over 30%, and Gannett Co. was 33%.

More here:

SMB: A New $2 Billion Business for Newspapers?

Selling digital marketing services to 27 million small businesses (SMBs) could become a $2 billion new business by 2016  for newspaper companies, according to Ken Doctor.

Some benchmarks:Westchester_Chappaqua1-527x375

  • ReachLocal, with $430 million in most recent 12-month revenue.
  • Hearst’s LocalEdge, a reincarnation of its Buffalo yellow pages business, with 1,000+ full-time salespeople.  Customers include the Minneapolis Star Tribune (Radius, averaging client paying $426 per month), and the Dallas Morning News (508 Digital), Morris Communications, Wehco Media, Newsday, and the New York Daily New
  • Dallas Morning News Speakeasy, a 12-person start-up, with an average client paying $3,600 per month.

Ken Doctor’s well-researched piece is here.

With ad revenue dropping by more than half in 5 years, to $22 billion, the $2 billion could make up barely 6 months of average industry ad revenue declines.