Folks,
We recently finished the 2nd Quarter and the good news is we are ahead of plan and strongly on track to payout Profit Sharing for the year.
As you can see by the chart below, we finished the Quarter with an EBITDA of $12.6 Million on a goal of $12.0 Million. Combined with our 1st Quarter performance of $8.2 Million we finished the first half of the year with EBITDA of $20.8M on a goal of $18.0 Million or 15.6% ahead of our goal. Our goal is to pay out an extra week’s pay this year to all employees for hitting our annual target of $40 Million.
Our first half performance is a remarkable achievement in this economy and this industry. We have a long way to go to transform Journal Register Company into a modern, multi-platform news and information company from its reliance on print. But with this kind of financial achievement we are buying both the time and resources to make the necessary changes.
And while the numbers track the financials results of our change to date they don’t adequately tell the profound culture change underway at our Company as our employees forge a profitable path to the future. Our employees are experimenting with new tools, new ways of telling stories, new ways of selling solutions to our advertisers and re-connecting with the communities we serve.
Our Ben Franklin Project (http://bit.ly/apHRbA) has put the industry on notice that we will not be held hostage to expensive and inefficient proprietary production systems. Neither will we beholden to a tradition that says we know what’s best for the audience. With each day we are ever more harnessing the new digital tools to include our audience in creating the necessary and compelling journalism to better serve our communities.
All of this effort is necessary for an industry that has slid so deeply. The industry has lost half of its advertising base in the last four years. The new competitors have cost bases a fraction of the print industry. At least two-thirds of all newspaper costs are in infrastructure – areas such as printing, distribution and overhead. Only a third are in what we do – creating content and sales. Our competitors, small as they are now, are growing rapidly with costs mostly focused on the creation of content and sales.
We have tough choices ahead to reduce those infrastructure costs. But reduce them we must. In my 34 years in this business I have seen typewriters turn into closed-system Visual Display Terminals. VDTs turn into desktop computers and those into laptops and laptops into iPhones more powerful than the first computer I ever used. Each development brought gut-wrenching change but we adapted and thrived. We and the industry must do so again. But this time the change has to be different. Yes, we will have to reduce the infrastructure costs and that will be tough for those affected and their families. Not recognizing how tough and how necessary these changes will be is foolish.
We must also radically re-think about how we do business. The idea that we are dominant in the news business is gone. Moving forward we will have to be open to more partnerships and recognize that while we may be the core of any local news network in our communities we will no longer be the sole source.
The folks we used to call the audience are now our customers and competitors both. So we must continue to open our doors to them as we have with our Community Media Labs for bloggers if we want to remain relevant. We have to create more partnerships like our recently announced deal with GrowthSpur to help those community bloggers make money and survive. We need to welcome the start-ups in our communities like SeeClickFix who we now work with in 18 markets. And encourage the innovators like the folks at TBD.com who are looking for different ways to cover communities. No one can do it alone anymore. We must, as Jeff Jarvis has shouted from the rooftops: “Do what we do best and link to the rest.” To do so is to ensure a future of better quality products; lower costs and higher profits for us all.
Like our approach to Profit Sharing, if the Company wins the Employees win and by recognizing that we must partner with the innovators we will ensure the communities we serve will win.
Until next time, John.
John: Some triumphant notes in this post, certainly, but also some ominous ones. I know we all recognize there are necessary changes ahead, but I think the fact that I’m (seemingly) the first person to leave a comment here is telling.
I wish I had more to contribute to this comment, but in truth I think I’m still digesting the meaning of what you wrote. I guess at the end of the day (which coincidentally it is for me) I’m afraid of hearing the cliche mantra of “Do more with less.”
Awaiting the next step,
Stephen Shoemaker
Web editor, The Saratogian
@Steve_Shoe
Stephen, I have tried to be very consistent from my first day. In fact the presentation I made to the senior staff on that first day is on the corporate website. It highlights the need to reduce infrastructure costs.
JRC and our industry have to do things differently particularly in areas of infrastructure – production, distribution etc. That message hasn’t changed. Our industry has been in businesses such as printing and trucking because it had to. That business model is changing.
It won’t be more with less it will be doing things differently with priorities on content, sales, marketing and research. That is where our competitors are focusing and so must we.
Let me also say I am glad you posted. Thanks, John.
John, thanks for the response. I think what most struck me about this update is that it trumpets the next phase of the operation, the one during which, as you put it, “tough choices” will be made. The effect, at least for me as both participant and observer, is an almost reflexive holding of the breath.
But, I stress, not with a sense of foreboding (maybe “ominous” wasn’t the right word in my first comment); just anticipation. From my point of view we’re REALLY starting to drive into to the nitty gritty of this company’s transformation, and that’s both exciting and nerve-wracking. But I’m on board with you about the need to adapt, and hopefully my comments don’t convey otherwise. This year has been very transformative for me as a media professional, as well, and that’s been largely due to the changes you’ve implemented at JRC.
Boy, I’d really like some other JRC folks to chime in here, though …
Its great to see JRC turn around on the foundations of a more open and collaborative news platform.
Great work John and thanks for giving SeeClickFix the opportunity to work with your papers. It has been instrumental in the growth of our business and its been a pleasure to work with you guys in this first year.
Hats off to Jeff Jarvis who made the intro and John Cooper who pushed internally!
On the topic of profitability, the Kingston Newspaper Guild very much wants the Daily Freeman to remain profitable, and we have some concerns about a proposal currently being advanced of which we would like you to be aware.
In a letter dated July 27, 2010, attorney Michael Rybicki of the firm Seyfath Shaw informed the Kingston Newspaper Guild of the company’s intention to outsource newspaper production functions to Troy and lay off about 60 people in Kingston. The Guild would like to inform you that we do not believe this is in the company’s best interest.
Perhaps most importantly from your perspective, we believe the impact of this move will significantly harm the Daily Freeman’s print product’s content at a time when the company’s new leadership has emphasized the need for marketable, timely, high quality content. While late-breaking news will be posted online, the vast majority of our readership gets its news from the newspaper. As we continue to build online revenue and cultivate the online product, the newspaper is still where we make our money and will continue to be for some time. It is possible to commit to the present while building for the future, and in our opinion, necessary.
The result of outsourcing newspaper production will be more than 90 percent of the Freeman’s readers not having news they are used to getting and demand– ranging from election results to sports to news coming out of night meetings– in the next day’s paper. The newspaper faces competition from a larger newspaper that moved into Kingston when the JRC declared bankruptcy, a chain of weeklies based in Kingston, television, and radio. We may cut costs, but we may also be cutting a substantial amount of revenue if our readers begin to turn to other local media rather than wait for our print edition to catch up with news they need. This is not a gamble we should be willing to make.
Also on the revenue side, we understand the Troy Record recently was unable to produce its Sunday edition in time for subcontractors to deliver it. The result was no Sunday edition in subscriber’s boxes. It seems awfully risky for us to put all of our eggs in that basket when we currently have a system that works so well for us. Additionally, if we subcontract the work out and it doesn’t work out, we have set ourselves back several months.
Meanwhile, the press room employees for years have been trying to persuade management to allow them to generate revenue by using our resources to print publications for outside companies. In our opinion, this is exactly the type of creative revenue generation that our company’s new leadership has encouraged. It seems to us that generating extra revenue and bolstering our content is by far the superior option than refusing to explore a new type of market into which we have the resources to delve and significantly harming the print product in one stroke.
The Daily Freeman has recently made a significant investment in its printing press, which is much newer than the Record’s, and it also does not make sense to abandon that investment so early.
Our hard-working mailroom, press room, and delivery room employees deserve better than this, the local community which relies on the print edition and has watched an exodus of manufacturing jobs from the area in the last 20 years deserves better than this, and the company deserves better than this.
You know I believe in transparency, that’s why this post is on my blog.
But I also have to be mindful of the rules of the road in any collective bargaining process – a process I support – need to be followed.
I am somewhat restricted in what I can say in this forum but let me say this:
That our industry is profoundly changed and the business model that has supported it is failing and must be change is a given. Who can doubt this with so many newspaper companies failing?
It is also a given that the new competitors for news do not have the same costly infrastructure as do newspapers. About two-thirds of all newspaper costs are in that costly infrastructure – such as printing – and we must find ways to reduce those costs if we want to have a shot at a future.
In some cases that will mean outsourcing/insourcing printing and in other cases that will mean using our production centers to produce others at a profit.
There will be many such conversations in our industry and in our Company over the next months and years as we all look for a solution.
No one here will make a decision before weighing – and discussing – all of those factors. In Kingston’s case we will be doing that at the bargaining table with full disclosure and an open mind. John.
Dear John,
After reading all your emails, I was thrilled to know that the future of our company was in the hands of people that were looking to move forward. However, I am part of the production infrastructure that will be affected by the upcoming changes. Now I am waiting to see how I will be affected and when – which is causing me great agida. I have requested web ad design training but have not recieved any. So at this point I feel it’s not “if”, but “when” I will lose my job.
Sheila, I am not sure who you emailed regarding your request for training but if you email me, I will make sure it happens. John.
Being on the web site of things like Steve and I are, we can feel more comfortable about this post than our colleagues in production like Sheila. I can certainly feel her insecurity and wonder what we are doing to help those staffers. John – you say it is “not more with less,” but “differently.” How does that apply to staff like Sheila who have asked for digital training and received none?
Folks, dare I copy Mr. Paton. John we are looking for your influence to take hold.
I’m employed by the Pacific New Paper Group in Vancouver Canada. We are in desperate need of change; the model is truly broken and not sustainable. Our paid circulation over the past 10 years had plummeted by 35%. Digital is only 7% of our revenue but steadily growing compared to our print products. Fortunately we are the only game in town with 2 paid titles; Vancouver Sun and Province newspapers.
I’m watching this blog with keen interest and look forward to change.
As a low level employee in one of your plants, I find this information to be comforting yet alarming. I know our plant is one you will be looking at, if you are not doing so now.
I am wondering what this means for us employees who don’t work in the offices. I do agree with moving forward, but our plant is so technologically far behind our competition that this has me concerned for our future..
I am proud, though, to say that every skill I have, I learned from working within JRC. I hope Mr. Paton can deliver on his promises while not forgetting about us non-salaried employees who work hard to produce the papers on a daily basis.
Hi John,
I love seeing the head of newspaper company openly explain the challenges this industry faces. It’s about damn time.
I spend my days making struggling newspapers more money online (and showing them how easy it actually is). The hardest part is breaking negative patterns and ways of thinking that routinely hold them back.
My company, Seeing Interactive, has helped the newspapers we work with radically increase their online revenue, generating at least $60,000 in new revenue for even our smallest newspaper customers.
While most of our competitors are out to kill newspapers, we only work with them. We’ve been backed by Y Combinator, Lerer Ventures (The Huffington Post), Baseline Ventures (Twitter), Paul Buchheit (Gmail, Friendfeed), Trevor Blackwell, and other awesome folks to bring the absolute best software to newspapers.
In the interest of openness, here’s my cell phone number (203) 449-7447 and e-mail jeremy@seeinginteractive.com.
Our paths are aligned. I’d love to talk with you about how we can help.
I’m not exactly sure what logic there is in the continual relocation of good paying jobs to third world countries. Perhaps it hasn’t occurred to any of the CEO’s who champion these cost saving measures, but not only do they generally reduce the quality of a product, but the lost wages domestically reduce the number of people with the financial capability to consume your product. With more and more skilled, well paying jobs being removed from our country, who, exactly, do you imagine will have the disposable income left for any spending?
Continuously relocating jobs outside of the country may cause a short term profit increase, but it’s a downward spiral: Reduce your work force to increase profits, profits increase temporarily but quality declines and so does consumption of the product. Then it is necessary to cut deeper into the workforce to maintain the profit level, which again causes decreased profits and so on right down the drain.
This decision may cause a short term bump in the bottom line, but in time this company will pay the price for betraying it’s work force and by extension the community it claims to serve.
Tom, a thoughtful post. There is no simple answer to such a complicated situation. However, let me at least give you a direct one on why we at Journal Register Company are doing what we are doing.
That the newspaper industry is profoundly changed is a given. In the last four years half of all newspaper industry advertising has disappeared. Half. What took more than 200 years to build saw half disappear in four years. And it isn’t coming back anytime soon because how people want to access our core product – news – is also profoundly changed. And the way advertisers spend to reach our core customers has also changed. They spend less in newspapers and more elsewhere.
If we want to survive we have to adapt to that change. And that won’t be easy because the new revenue streams of mobile, video, widgets and web will take years to grow to the levels that support our current cost structure. And then there is the cost of building those new platforms.
We will have to cut our infrastructure costs – overhead, buildings, production, distribution, etc. – if we are to survive to enjoy that new future. So that means consolidation, in-sourcing and out-sourcing to reduce those costs. And training both current and new employees on the necessary new skills. If you think your job might be eliminated then get the training you need to be part of the future of news media. Tell us what you need.
So, yes, some of the jobs will be eliminated in that process and some added. All newspaper companies – including JRC – will be smaller going forward as they grow into more modern multiple-platform news companies preserving the jobs and fostering the careers of the vast majority of our current employees.
John.
I understand the need to survive and even though I don’t have a degree in business, I know in order to survive sacrifices must be made. I am getting prepared for when I am no longer employed. I wish I could move towards the office side of business, but in our plant anyone who doesn’t wear a suit is generally considered “beneath” the office workers.
I have the computer skills but never got an opportunity to use them as of yet.
If JRC were to offer a training course in a different position I would be more than excited to switch positions, but as of right now, there are no opportunities and I just go to work wondering when I will find myself unemployed
Let me know your training needs and we will get it done. John.
I once applied for working in our pre-press department, arranging layouts and printing out plates, It had some light customer service which I had done at a previous job.
I am currently certified in networking plus and am well versed, though not certified yet, in computer repair.
I am just not sure what JRC’s needs are pertaining to digital media so deciding what i need to focus on is rather difficult.
If you wish we can continue this conversation in private, my email address is gradyx2002@yahoo.om
Sure. Please email me at jpaton@journalregister.com.
Hi Grady,
I feel for you. But don’t take not having been given an opportunity as an answer.
You need no one’s permission to move in the direction of your dreams.
In 3 months, you can have as much or more digital experience as almost anyone at your paper. And no one can take that away from you. Even if you end up working somewhere else, you’ll have a whole new set of skills.
Step 1: Start a blog. Start publishing 3 times a week about any topic you want. http://www.posterous.com or http://www.tumblr.com are great places to start and it won’t cost you a penny.
Step 2: Get yourself on facebook if you haven’t already. See what happens when you share your posts.
Step 3: Get on Twitter. Link up your posterous blog with facebook and twitter. Watch everything get shared everywhere.
Step 4: Start networking. Meet the people who run businesses in your community. Don’t ask permission. Just figure out how you can help them find more customers. Make recommendations. Help them get a website started. Make your mission to help small businesses in your community make money.
Step 5: Start reading people like Jeff Jarvis, Jay Rosen, Seth Godin, Clay Shirky, and the people they read (you can check twitter to see who they’re following).
If you’re worried about these things, you don’t want to be trained by people in the newspaper world anyway. Mostly, they’re already operating two steps behind.
I’m a principal in a venture-backed company that works with newspapers every day to help them get up to speed. I don’t know you, but please give me a call and I’ll help you figure out the skill set you need and develop a roadmap to get there to be successful as print transitions to digital. No charge.
jeremy@seeinginteractive.com
(203) 449-7447
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