SAN DIEGO – Executives from Adams Publishing, Hearst, AIM Media and A. H. Belo shared ideas and advice on acquisitions, investments and operations at the Key Executives Mega-Conference, held in late February in San Diego. Overall optimism, a belief in local community coverage and a strong, educated sale team were common themes in the session, as was the sentiment to build newsrooms instead of destroying them.
Here's a sample of some of their comments.
Jim Moroney, A. H. Belo chairman and CEO, Dallas Morning News publisher
Moroney stressed the need for relevant, differentiated and local news and information in the market. "Because most markets have a local television station that has a website and apps, they are not going to put a paywall up anytime soon," he said. "When the consumer who is actually pretty smart starts looking and says here's a website that I have to pay for and here's a website with the same news, which one am I going to visit? It's about local news and information, so newspapers have to have more resources than the TV station and make the effort for better coverage."
Mark Aldam, Hearst executive vice president and COO
"We believe that newspapers are a growth business but it's not easy one," Aldam said. "At our best performing newspapers, digital ad revenue represents greater than 50 percent of our total ad revenue base. The culture of cost cutting without innovation or reinvestment is a death sentence in our opinion," he said. "Cost cutting is easier than building. And what we are trying to do at Hearst is to build size, capability and talent with our journalists. The number of newsroom employees has grown by over 20 percent over the last three years. In addition, the size of the local ad sales team is costly, but so vital."
Jeremy Halbreich, AIM Media chairman and CEO
"There remains a driving need for what we do as local content providers," Jeremy Halbreich told attendees. "The model we use at AIM today is investment in newspapers, and we believe newspapers have a great future. We continue to believe in print. It's still very profitable; it could be better. We believe in e-commerce as it's one of our legs in the media toolbox. We are not big believers in shoppers anymore," he said.
Session moderator Penelope Muse Abernathy, University of North Carolina Knight Chair in Journalism and Digital Media Economics
"We've lived through more than a decade of extraordinary change in the newspaper world," Abernathy said. "The bottom line: Today there are fewer newspapers, fewer readers and fewer owners. Over the last 13 years, we lost more than 1,400 newspapers in the U.S. to closures, mergers and the downsizing of smaller free-standing newspapers that become editions of larger regional papers. There's been a net loss of 70 some dailies, and at least 1,300 weeklies. During that same period, more than 100 newspapers have shifted from daily to nondaily, or online-only, publication. Today we count roughly 7,200 newspapers, of which the vast majority, 6,000, are non-dailies. Total print circulation has been halved from 117 million to 67 million, with the biggest drop among dailies. The average print circulation of a daily newspaper in 2018 is 20,000, 7,000 for weeklies."
"Since 2004, more than a third of all newspapers have changed hands, and many of those have had two or more owners. When you calculate size based on number of papers owned, not circulation, the top 25 newspaper companies own a third of the nation's 7,200 newspapers. No surprise, the largest is GateHouse, which counts 446 papers among its 600-plus publications.
"In early March, New Media Investment Group announced that it has agreed to acquire the Austin American-Statesman and its niche publications and companion websites from Cox Media Group for $47.5 million."
Mark Adams, Adams Publishing Group CEO
Adams Publishing Group was founded in 2013 and has purchased more than 100 papers in just three years. "This was a space we wanted to invest in," Adams said.
"We believe our brands are strong with good seasoned management. The community service component is important to us. … We want to buy in good markets. We do traditional analysis on retail and population trends, we see if there are educational institutions, if it's a county seat, etc. The best way to understand a market it to just go there, see it, drive it, talk to folks and get a feel for it.
"We like buying from other 'like-minded' families. They share the same values and haven't stripped down their newsroom.
"This is a reoccurring theme that I've heard (since) I got into this business. We all understand that taking a machete to the newsroom is a bad business decision and we simply won't do it.
"We believe in more sales people on the street and more investment in the newsroom. Something we found out early on was that traditional newspapers are very good at distribution, but not that great at marketing and promotion, so we've invested in heavily in that. We like to purchase a newspaper at four to five times earnings.
"We also like to take a long, hard look at the press assets. We found that commercial printing is a nice source of revenue. Lots of companies have decommisioned their presses, so we are building that business and investing there where a lot of companies are deferring investment in their pressroom, and hopefully they will have to outsource. Call me. I think I'll have a deal for you.
"We are streamlining systems and software. Leave the newsroom alone. The newsroom needs some bodies, some professionals.
"Not just hire more sales people, but upgrade the sales force. We need seasoned, good and solid professionals and we need to pay them what they are worth or they won't stick around.
"One of the benefits of being a private company versus public or private equity company is that we don't have to live quarter to quarter or worry about an analyst call. It allows us to think in the long term. We have a board made up of my father and sibling. (Concerning the) companywide operating margin goal, we are not there yet.
"One thing we have found is that people like billing to be mailed from their hometown and not from a regional center outside the area.
“What's in the future? More digital and hopefully the private equity folks will go away," Adams said.