Good Til The Last Drop: The Future of Advance Publications and The Plain Dealer in the Wake of "Digital-First" Media

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Although he had infrequent direct contact with the rank-and-file, Times-Picayune employees had for years spotted the elder Newhouse at the newspaper's downtown headquarters during his regular business updates with Ashton Phelps, Sr. and Jr. Many Newhouse relatives and Advance executives had trained or worked at the newspaper over the years, including the younger Newhouse brother, the late Norman Newhouse, and the family's support of the newspaper following Katrina had strengthened employees' gratitude to the family.

Advance, however, had been operating for close to a decade in a very different era than it did in the heyday of the media empire amassed by Steven's grandfather and Donald's father, S.I. "Sam" Newhouse Sr. During the newspaper industry's financial zenith that began in the late 1970s and extended through the middle of the first decade of the new millennium, publishers almost printed money along with their newspapers, and few were better at it than Sam Newhouse. "It used to be that running a newspaper was slam-dunk easy. It was a beautiful business to be in," said Alan Mutter, a former newspaper reporter, editor, and columnist turned industry analyst and consultant who bills himself as "perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time." "You were the only one in town, you could raise rates at will any time you needed to, and back in the day, people didn't have a choice. You needed to hire a secretary? You took out a [help wanted] ad in the [local] newspaper for $600 because there wasn't another option. or Craigslist didn't exist. Now, the newspaper business is anything but easy. It's incredibly complicated. It has gone from being stupid easy to being almost unbearably difficult."

Newhouse newspapers, before the full-bore arrival of the Internet as an information and entertainment medium, routinely enjoyed profit margins among the best in the industry—between 20 percent and 30 percent, leading newspaper analysts John Morton and Ken Doctor estimated. Morton projected that Advance's profit margin is now probably half of what it was at its apex, while Doctor said the company's newspapers probably would fetch 10 percent of what they would have a decade ago. Because Advance is a privately held company—and a secretive one at that—it is essentially impossible to obtain financial information that provides meaningful insight into its performance.

While the company and the Times-Picayune released limited financial data after public sentiment developed so forcefully against them, it has by-and-large been cherry-picked information that supports their narrative or a particular position they are trying to advance. For example, NOLA Media Group president and publisher Ricky Mathews told the Wall Street Journal in the fall of 2012 that's online revenue grew 20 percent year over year, but he wouldn't say from what base, making it impossible to assess the website's relative performance, or evaluate it against industry standards. Even when executives do release figures, they don't always match up. In a January 2013 commentary published on that assessed NOLA Media Group's performance since the change, Times-Picayune editor Jim Amoss wrote that, "In 2012, 41 million viewers came to, 7 million more viewers than in 2011." "Viewers" is not a recognizedindustry metric, so in writing about the commentary for CJR, the magazine's "Audit" editor Ryan Chittum presumed Amoss was referring to unique visitors. Amoss' numbers averaged 3.4 million unique visitors a month in 2012, and 2.83 million in 2011. However, Mathews and Amoss presented numbers to an industry conference in New Orleans some six weeks later that were significantly larger than the figures Amoss cited in his commentary.

Although independently compiled figures often vary widely, numbers generated by nationally recognized web analytics company Quantcast indicate that both men overshot the runway, and that the website actually received hundreds of thousands of fewer unique visitors a month, on average, in 2012. (Full 2011 figures aren't available on the Quantcast site for a 2011 comparison.)

In a comprehensive story published by Columbia JournalismReview in March 2013 about the Times-Picayune since it became a less-than-daily publication, the magazine estimated that the newspaper and annually generate roughly $90 million in revenue and $9 million in operating profit, "which come overwhelmingly from the print side." In a report he wrote for the Nation that cited both publicly available and proprietary figures shared by employees, New Orleans author and freelance investigative journalist Jason Berry concluded that the newspaper probably made about $8 million in 2011. CJR estimated the Times-Picayune's circulation revenue at roughly $25 million to $30 million annually, which, if true, meant the print newspaper generated more than 90 percent of the company's revenue before the changes "and still likely brings in five of every six dollars in revenue," CJR concluded. "If NOLA Media Group were a standalone business with no newspaper to support it, its costs would exceed its revenue by many times." As mentioned earlier, global market research company Kantar Media projected that the Times-Picayune brought in $64.7 million in print advertising revenue in 2011, while earned less than one-tenth of that, or $5.7 million.

Given that the Times-Picayune has publicly acknowledged that it was still profitable before the changes were implemented, the situation is likely no better, and potentially far worse, at other Advance newspapers. For example, New York Magazine in 2009 reported that the company's largest newspaper, New Jersey's Newark Star-Ledger, may have lost as much as $40 million in 2008. The newspaper will lose a projected $51.6 million in 2011- 13, publisher Richard Vezza disclosed in June 2013, a figure the newspaper's three labor unions flatly reject. Mobile, Alabama's Press-Register—earlier nicknamed the "Cash Register" in journalism and Mobile business circles because of its reported historically high levels of profitability—saw its profits sink from $7.3 million in 2006, to about $4 million in 2007, and $313,000 in 2008, before its 2009 budget projected a loss of $200,000, according to information presented in the lawsuit former Press- Register publisher Howard Bronson brought against the newspaper and Advance in 2009. "No one in the [Newhouse] family believes the newspaper business is coming back," New York Magazine reported in 2009.

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