Peter Worthington: Patriot, Warrior and Journalist

My first editor, Peter Worthington, died today at age 86.

He fought in WW II and Korea. Spent 15 years as a foreign correspondent covering various civil wars in Africa. He was posted to Moscow as bureau chief in the 1960s.

He was an eyewitness to Ruby shooting Oswald.

He was a co-founder of what became Canada’s largest newspaper company. And he was the founding editor on a daily we launched in Canada’s capital.

His politics and mine never met. He was a dedicated Cold War warrior having witnessed countries in Africa being used as proxies in that war.

On his deathbed he said this to his daughter:

“There’s nothing left I want to do; there are only things I want to know.”

This is what counts – the passion. The rest is just business models.

Godspeed Peter.

Read: Peter Worthington, founding editor of Toronto Sun, dies at 86

The Subscription Project – Or A Paywall By Any Other Name

Paywall.

Even the name is debated so contentious is this subject in the news industry.

The Pros and Cons of some form of online paid access for newspaper websites have been argued in such extremes that nuance and accuracy have been the first victims of the debate.

The Columbia Journalism Review links paywalls to higher quality journalism and argues the free web, supported by advertising, does the opposite – labeling the results “hamster wheel” journalism.

DFM’s Steve Buttry’s blog captures some of that argument – Pro and Con – here.

I have stated I think they can be a dangerous management distraction to the real job of adapting a legacy business to the realities of an Internet world.

To paraphrase Clay Shirky, you can’t fix a business model the Internet just broke. To which I would add you don’t transform from a broken model by tweaking it – you build something else.

I think paywalls, meters if you like, are exercises in tweaking not transforming.

Most paywalls in the US are simply initiatives in subscription price hikes – bundling digital with print with no clear plan for sustainable growth.

But I’m a Chief Executive, responsible to my employees and my shareholders. So, I can’t work on theory alone. I have to try paywalls.

So, welcome to the Subscription Project.

When I took over as CEO of MediaNews Group in September of 2011 – one of the companies we operate under Digital First Media – the company was launching paywalls, meters if you like, in 22 of its smaller dailies.

I watched them for a year. Their performance was abysmal bringing in gross revenues of about $300,000 in their first year. To put this in perspective, MediaNews Group has 57 dailies and has total annual revenues of about $1 billion.

We now internally call that failure Paywall 1.0.

We then circled back with the paywall provider PressPlus to find out from them what we could do better. And we spoke to others in the industry to get their feedback. A couple of months back we launched,at the same 22 sites, Paywall 2.0 incorporating all of the identified best practices.

At about the same time, we launched a project experimenting with the concept of “pay”.

We installed at all of DFM’s 75 daily newspapers an experiment in partnership with Google. On each Media Center section of our sites we placed a Google Consumer Survey that pops up after every 10 images.

Want to see the next image? As a visitor you have to “pay” by answering the survey question. We are now tweaking that further on some other sites with an interstitial ad instead of the survey.

It’s early days yet but so far the Google survey experiment is beating the paywall experiment in run rate revenue. Both the paywall and Google experiments cause traffic issues.

We are also planning a further test dubbed Paywall 3.0 which will combine digital subscriptions for print and mobile apps with the Google survey experiment.

It is too soon to say what will work and what won’t.

But I think we can say that emotional arguments over what something is worth in a market economy is a near worthless waste of time at the expense of finding real solutions to the problem.

We will report back from time to time on the Subscription Project as the numbers roll in.

Another Tough Step

Folks,

Today Digital First Media announced Journal Register Company has filed for Chapter 11 bankruptcy and will seek to implement a prompt sale.

We expect the auction and sale process to take about 90 days, and I am pleased to tell you the Company has a signed stalking horse bid for Journal Register Company from 21st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC.

So why file Chapter 11?

The Company exited the 2009 restructuring with approximately $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that are now unsustainable and threaten the Company’s efforts for a successful digital transformation.

From 2009 through 2011, digital revenue grew 235% and digital audience more than doubled at Journal Register Company. So far this year, digital revenue is up 32.5%. Expenses by year’s end will be down more than 9.7% compared to 2009.

At the same time, as total expenses were down overall, the Company has invested heavily in digital with digital expenses up 151% since 2009. Journal Register Company has and will continue to invest in the future.

But also from 2009 to 2011 Journal Register Company’s print advertising revenue declined 19% and print advertising represents more than half of the of the Company’s revenues. Print advertising for the newspaper industry declined approximately 17% over the same time period, according to the Newspaper Association of America. As well, both print circulation and circulation revenue have also declined over the same time period.

Since 2009, printing facilities have been reduced from 14 to 6; 9 of the 50 owned facilities have been sold and 8 distribution centers have been outsourced.

During the same time period, debt was reduced by 28% with the Company currently servicing in excess of $160 million of debt.

All of the digital initiatives and expense efforts are consistent with the Company’s Digital First strategy and while the Journal Register Company cannot afford to halt its investments in its digital future it can now no longer afford the legacy obligations incurred in the past.

Many of those obligations, such as leases, were entered into in the past when revenues, at their peak, were nearly twice as big as they are today and are no longer sustainable. Revenues in 2005 were about two times bigger than projected 2012 revenues. Defined Benefit Pension underfunding liabilities have grown 52% since 2009.

After a lot of thought, the Board of Directors concluded a Chapter 11 filing was the best course of action.

Journal Register Company’s filing will have no impact on the day-to-day operation of Journal Register Company, Digital First Media or MediaNews Group during the sale process. They will continue to operate their business and roll out new initiatives.

If you have questions just ask – you know how to reach me.

I know this announcement will leave you with questions – ask. Your managers, I and any member of senior leadership at Digital First Media will be available to answer.

And while I get this news may make some of you nervous, don’t let it. Concentrate on the job at hand and we will work through this. This really is the right decision for Journal Register Company.

John

John Paton
Chief Executive Officer
Digital First Media

In Defense of the Times-Picayune

Stop me if you’ve heard this one.

An old and distinguished business in New Orleans has seen more than half of its revenue disappear in five years and has decided to change how it conducts business – before it goes out of business.

It is going to sell its old line of products three times a week instead of seven times and will focus on selling a new product line. The owners believe the new product line, if successful, will ensure the business survives.

The business is not alone in its problems. Everyone they know in the same industry has the same problems. Everyone knows something has to change.

So, they start on their plan. 

They don’t handle it very well out of the gate. They poorly communicate the changes to their employees and to their customers.

They mis-step by not having their new product line anything close to being ready and clearly didn’t take the right steps to protect their top talent. The very talent that can make a big difference in the new product line.

They chew up a lot of goodwill all round. 

And no one believes the owners for a half-century or so suffered having to let go employees because the business of the future cannot support the same expenses of the old. These would be the same owners who used to try and guarantee employees a job for life.

But imagine the owners’ surprise when they are lambasted for not continuing with the old line of business that is driving them out of business. 

Imagine their surprise when community leaders  - politicians, musicians, restaurant owners – demand the owners sell their business to them (for a song surely, it’s a dying business after all) because they want to stick with the old dying business.

Imagine their surprise when their industry colleagues and critics lambaste them for changing when change is what is needed.

As for me, the owners are doing what they think right. 

Could they do it better? I think they could do it a lot better but they are attempting to dramatically change their business.

And it is a change largely directed at a future that focuses on the new line of business and less on the old.

Importantly, they remain committed to their core business and mission with what resources they have.

So I support them because their industry is my industry and it will not survive without dramatic, difficult and bloody change.

And like them I am willing to do what it takes to make our businesses survive.

Not Your Grandpa’s Old Newspaper Company

We are looking for people who want to transform the newspaper industry.

We’re looking for people with ideas, energy and the guts to implement them. And we’re looking for people who would rather fail trying to succeed than play it safe.

Is that you?

Wanna come play newspaper Digital First Media style? Have a look.

The ideaLab and the Amazing Photo Dept at the Denver Post

Denver Post ideaLabber and photog R.J. Sangosti, along with his colleague Eric Lutzens and their boss Tim Rasmussen, showed me today how they have figured out how to use the iPad to post to any site within minutes from remote locations.

Using very high quality cameras – much more capable than Flipcams and iPhone cams – they can shoot pix and videos; edit, infotag, write cutlines and post to a site within minutes. Amazing quality and extremely fast.

They demonstrated by asking me to discuss our Project Thunderdome. Shot, edited and posted within minutes. See the link below.

The ideaLab and Denver Post photogs – a great combination.

Thunderdome In Less Than 60 Seconds

A Lot Still To Do

Folks,

We asked our editorial leaders across all Digital First Media properties about the impediments to getting the job done.

Above is what came back.

Still so much to do. Not bitching. Not whining. Just saying.

And never giving up. We’ll get this done.

John.