Moving On From Thunderdome


Media changes very fast these days and nothing changes faster than digital.

Make a change, then get set in your ways and become reluctant to make other changes and you get left behind.

Today, we are going to be making some changes to our Project Thunderdome activities and go in a new direction.

In the past two years we have learned a tremendous amount from Project Thunderdome much like others that have come before it like our Ben Franklin Project.

We have explored, experimented but more importantly we have learned and have a much higher level of digital skills than we did before. And, best of all, a higher level of confidence in our digital abilities across our entire Company.

Our skills in data journalism, video production, website and mobile developments are all the better for Project Thunderdome.

But what once were fairly isolated skills located in one place are now skills shared by many in our Company. Where once initiatives, like Project Unbolt were led centrally, we now have divisions taking their own Digital First initiatives.

And that means it is time to change again.

Going forward, some of what happens at Thunderdome today will continue; some of what Thunderdome does will be redistributed to our staff in the field to continue and some will be stopped.

Over the coming days and weeks DFM Editor-in-Chief Jim Brady and Project Thunderdome Editor Robyn Tomlin will be putting those changes into effect.

While our Company will continue to invest heavily in digital development, increasingly our focus will be in local where we are the news and information leader in our markets.

Those efforts will total millions in the coming years and will include everything from innovative partnerships like Tout for video and Rumble for mobile to the continued improvement of our digital products.

There a lot of people to thank for Project Thunderdome but I want to single out two in particular.

First is Robyn.

Robyn has invented new hours in the work day to bring our Company to the fore in our digital skills and products. We are all the better for her efforts and her example of endless grace under pressure.

And I want to single out my friend Jim.

As Digital First Media’s Editor-in-Chief, Jim, a recognized digital news leader around the world, agreed to take on the thankless task of leading 75 daily papers and more than 2,000 journalists into the future.

Both have been a big part of Digital First Media’s success.

Jim and Robyn have chosen to move on as a result of these changes.

I can’t thank them enough.

Until next time, John.

Now What?

Presentation to the Online Publishers Association

Miami, January, 23, 2014

NEW_Paton_OPA_2014-1Good morning.

It’s a very strange thing for me to be preaching to the converted as I am doing here today.

I am used to rooms full of print journalists and newspaper executives searching for any flaw in my pro-Digital speech.

Many of them usually hoping that the Internet isn’t going to get to their town and they won’t have to change what they do.

But perhaps – as the digital leaders of your own companies – you will recognize some of the same issues we face.

You will certainly recognize them if you are from an old line legacy business – newspapers, radio or television – and your corporate leadership believes they have a digital strategy because they stuck the suffix – dotcom behind the brand name.

Or created a digital division, put you in charge and then gave you the equivalent of peanuts to run it.

And you will more than recognize the phenomenon of sitting in meetings with the same corporate leaders who starve you for resources and then ask: “Why aren’t we more like Buzzfeed?”

Unfortunately, in the newspaper industry – or any other legacy news media business for that matter – digital, for the most part, still only represents the thin edge of the wedge.

Thin on talent, thin on resources and thin on leadership.

And while much of the corporate brass is too afraid to take the risks you need, it can be even tougher convincing line managers to change.

Once, during a presentation to senior managers a few years ago, I was asked to go back a slide so that a manager could make this point:

“Aha! Right there! I see we don’t have much revenue in social media.” And then a big pause so the room could hear his big finish: “So why do you make us do it?”

I have witnessed several similar “Aha!” moments around video and mobile initiatives as well. I am sure you have too.

How do you deal with that level of stupidity?

In my industry, we have been stupid about this for a very long time.

Have a look at this. It’s a report from a San Francisco TV station in 1981:


“We’re not in it to make money,” says the editor.

Well, we got that part right. Nailed it perfectly.

We didn’t expect to make any money and we have lived down to that expectation pretty much ever since.

And despite every part of the business model outlined in that 1981 report – from advertising, to customers, to print sales – is now on fire and burning to the ground, I still get this:

“Print. There’s still a lot of life there.”

Really? Look at this.

NEW_Paton_OPA_2014-3All businesses spend some time looking at the past to try to determine the future.

For newspapers this is a fatal attraction.

Our future isn’t going to look anything like our past.

In the newspaper game, or broadcast television for that matter, if you rely upon the past for your future projections the only thing you are truly determining is the date and time of your demise.

Have a look at this calculation.

There all kinds of apocalyptic calculations out there for the newspaper industry. This is mine. You can all do your own for your own legacy news media industry.

Mine is based on the 2012 performance of three US newspaper companies – the one I run – Digital First Media and two others – about $3B in revenue. A pretty good substitute for the US newspaper industry.

It solves for the percent of dollars in print advertising, digital advertising, subscription revenue and all other revenue plus expenses and, of course, profit.

It then applies the industry average as calculated by the Newspaper Association of America for what happened to print and digital advertising from 2006 (the peak year for US newspaper advertising) to 2012.


And this is what it says:

For every $1 of operating profit today:

– If what happened in the past

– Happens in the future

– And we don’t do anything to change that future

It says that $1 of operating profit will turn into $0.56 of loss in 5 years.

That’s what no risk taking will get us.

That’s what relying upon what we knew – our past – will get us when applied to building companies of the future.

Our past won’t buy our future.

But this just doesn’t have to happen.


The numbers for 2013 are not in yet so these comps will have to do.

And let me just say, while each of these companies does certain things well, all I am trying to point out here is that doing well in digital and following a digital first strategy means you will do better overall.

My industry doesn’t like this.

Critics, both internal and external, voice concerns that by focusing on digital we are accelerating the death of print advertising.

Look, more than half of all newspaper print advertising has disappeared since 2006 in the US. Print doesn’t need any help from me to continue its relentless decline.

And here’s why our success to date is only a fraction of what we need to do.


While it’s great to have profit up 40%-plus over the last three years.

What that actually means is 2012 profit is down almost 60% since 2006 – the peak year for newspaper advertising in America.

That’s how ugly transition looks even when it’s working.

And here’s what happens if we continue this “success” we have been experiencing.


Over the next three years if we repeat the successes of the last three years:

-       Our digital revenue goes up again around 87%

-       And digital costs go up again about 73% because mobile, video, digital sales and content don’t come free

-       Then profit will be down 37%.

-       Not up but down.


Because print is dying much faster than anyone anticipated.

And because the profound changes in digital revenue streams will require huge investments in digital products and people.

We can no longer treat digital as a bolt-on to our strategy and protect the legacy business.

Whatever life there is in print – and, of course, there is some and it must be preserved just as it must also be used to fuel our investments in our digital future.

Too often the focus on print is used as an excuse to maximize profits by not investing in digital. And too often companies are doing just that with the excuse that there isn’t enough profit in digital right now to justify the expenditure.

Just like the last few seconds of that 1981 report.

Are we determined not learn?


The past doesn’t buy the future.

The future has to be built.


So, now what?

Many, as you know, have just quit.

Lots of newspapers have closed up shop.

That’s not acceptable. Journalism matters. Community journalism is a vital component of any community’s future.

I would much rather we pick ourselves up off the mat and start swinging again

Because the prize – journalism – is worth the fight.

And there is a lot we can do to win this thing if we are willing to take the necessary risks.

We have to at least put as much energy into that fight to change as we do emailing Romensko about every layoff, no matter how small, at every news outlet across the country.


If legacy news media wants to win this fight and successfully transition to a more vital future then in my part of it -  newspapers – we need to start with this:

Acknowledge Print is dying.

Accept it and plan for it.

News isn’t dying. Newsrooms are not dying. Just Print.

And if we acknowledge that fact rather than putting an effort into ridiculous press releases about how there’s still life in the old girl yet we can start to plan and invest for our future.

A future for news coverage.

A future for newsrooms that are vital.

But also for newsrooms of the future not just our present newsrooms dragged kicking and screaming into the future.

Because there is a big difference between the two.

There is certainly a financial imperative to do so.

Most of our organizations are not equipped well enough or are planning nearly enough and few, if any, are investing enough to build what our customers want.

And that is not only bad business it is just plain dumb.


My company is closing in on $200 million in digital ad revenues – less than 20% of that revenue is from mobile, video, SEO and programmatic.

Our plans call for us to double that by 2015.

But by 2015, those same categories will represent more than half of our digital ad revenue. Banner advertising will only be about 15%.

Our past experiences and our legacy cost structure just won’t buy that future.

We will have to build it.

And that means building the digital products in content and sales to get there.

And, yes, continuing to cut those costs we used to have because we can now only invest in what will get us to where we need to go.


At our company that means spending up to a further additional $100M annually in digital within three years.

That’s a $100M more than the already $100M-plus we are already spending.

Transformation isn’t free.

It costs.

And if you want to survive you have to take the risk and invest.

For us, that means building products like Ad Taxi – our audience extension and programmatic network play.

Or investing in the new data team and editorial team at our Project Thunderdome – a multi-million dollar digital initiative which barely existed 18 months ago.

Or investing in our partnership with OwnLocal that allows our company to offer local advertisers digital solutions way beyond banner ads.

Or in our partnership with Tout – a fantastic tool where video meets social and mobile. And buying the more than 1,250 iPhones we issued to front-line journalists to allow them to use Tout.

It all costs money


And you have to take action.

While we have created many projects at Digital First Media to help us change.

I most excited by the latest. Led by Jim Brady our Editor-in-Chief and Steve Buttry who has a title I can’t remember but is probably best thought of as our newsrooms’ Educator-in-Chief, we are going to start the process to unbolt our newsrooms from print.

Starting with some test sites we will work through every process, every workflow step of what makes a digital newsroom digital and make that the very core of what we do.

And I hope this process moves us away from our focus on multi-platform content and gets us focused on story telling.

I hate that word content. It’s like saying cargo. Well, there are all kinds of cargo all with different value.

We don’t do content we do journalism and our cargo is precious.

And yes we won’t forget print but when we are finished this process it will be the bolt on to digital and not the other way around.

The newsroom of the future is not the current one dragged into it. It is going to be re-built from the ground up.


And like any other transformation initiative the money has to come from somewhere.

And the somewhere has to be from the legacy side of the business because our industry can no longer afford to do both.

News executives now have to choose.

They have to ask themselves if they are preserving the past or building the future?

And they must demand the same of their corporate leadership.


The road to the future can be built.

We have shown that. So have others.

For all of you digital leaders in the audience today you now have to hold your corporate leadership to account just as they do you.

You must demand that their efforts are focused on building the future.

Demand change of your bosses.

Demand the resources you need to change.

And if you don’t see the commitment to change you need and the resources it takes to get there.

And if you don’t see the kinds of tough decisions to cut expenses in what is not growing – such as print – and increased spending in what is growing – digital – then quit.

Get out and find another job because your company is surely dying.

Let me just end by saying, despite our stumbles in our past, I have great faith in our ability to build our future.

I have faith that every year brings a new crop of journalists who bring fresh ideas and new determination to succeed.

And I rely upon the determination, dedication and skill of the older hands like Brady, Buttry and our new Chief Operating Officer Steve Rossi to bring their experience to bear on our challenges and to best them.

And I know I can rely upon them to hold me to account.

Because the only way we win this thing is to do it together.

Thank you.

I would be pleased to answer any questions you may have.

The First Step On The Rest of the Journey

Sometimes a press release just isn’t enough to say what has happened.

Or can do justice on how important this new development truly is to our company.

That’s the case with today’s announcement that MediaNews Group and 21st Century Media (formerly the Journal Register Company) are merging.

What started as a transformation journey at 21st Century in January of 2010 for what became the Digital First Media leadership team is just about complete.

Now under Digital First Management, we will have a single local media powerhouse with 67 million customers coupled with a stand-alone, innovative digital division, Digital First Ventures, and its rapidly growing portfolio of partnerships.

In the past four years, we spun out a lot of our real estate into a separate company and shed many printing plants as we concentrated on the future and what we do best and link to the rest.

The soon-to-be-merged media company (we expect the deal to close in the next 30 days) will this year make more EBITDA than the combined companies did four years ago but it has been one very bumpy road. Very bumpy.

More importantly, we proved you can teach an old dog new tricks and what was a trickle of digital ad revenue four years ago is expected be more than $180 million by the end of this year. Some of that huge gain has been driven by innovative start-ups like our AdTaxi product now operating in four countries

None of this could have been achieved without you the employees who worked through so many difficult initiatives so we could have this moment – the first step on the rest of the journey.

Until next time,


The Subscription Project – An Update

Back in February, I wrote about the various paid digital subscription projects underway at Digital First Media.

Some of our newspapers had what has become known as a traditional paywall.

Others, experimented with finding other forms of “payment” such as asking users to fill out online Google Consumer Surveys as a way of continuing to use the site.

Most of our newspapers – 75 dailies in total – had unfettered access to their online sites.

The transformational journey from print to digital is a long one. And it is all uphill.

It’s a journey made all the more difficult when you carry the extra tonnage of newspaper companies whose cost structures were more than a century in the making and now need to be radically rebuilt – by yesterday.

Print dollars are becoming digital dimes. But costs are still in dollars and, like most newspaper companies, we are radically reducing those costs.

The future for most news media companies lies in selling a variety of multi-platform products and services to advertisers and marketers.

Marketing dollars in all forms are moving into digital. With a foot in both the past and future, companies like Digital First Media have to manage the decline of one medium while building for – and in some cases, waiting for – the new revenue streams to grow.

At DFM, the team has excelled at stacking digital dimes. From 2012 (our last full year) vs. 2009, digital advertising has grown more than 89 percent. Our comparators don’t come close.

Our digital advertising products – such as AdTaxi – are now used not just by us but by media companies around the world. And, through Digital First Ventures, we are partnering with some of the most innovative digital people in the world.

But we need more gas in the tank if we are going to complete this journey of print-to-digital transformation.

Back in February, I said I’d report back on subscription revenue.

Our experiment with Google Consumer Surveys, while initially a success, gradually fell off in its effectiveness and reduced our online traffic growth wherever the surveys were in place.

Our newspapers, which had basic, traditional paywalls, while initially reducing online traffic which slowly grew back, failed to generate any kind of significant revenue.

After a lot research by our team, we believe an All-Access print-digital subscription initiative is necessary to buy us that proverbial gas in the tank.
With the rise of digital and the fall of print, we’re at the point where we can launch a working All-Access subscription model.

Let’s be clear, paid digital subscriptions are not a long-term strategy. They don’t transform anything; they tweak. At best, they are a short-term tactic. I have said that often enough in the past.

But it’s a tactic that will help us now.

We will expand the meters from the approximately 23 MediaNews Group dailies that already had them when Digital First Media took over operating control of MNG two years ago to an All-Access program for all 75 dailies run by DFM.

We are also going to be offering more to the consumer.

While each market will be different, all of our dailies have just completed an upgrade to their websites. Earlier, we rolled out new and improved apps for tablets and smartphones.

There will also be changes in our products. Again, those offering will be different by market.

For example, in our Bay Area News Group new consumer-focused content offerings will include Sunday’s Eat. Drink. Play. section along with Real Estate Plus and Drive.

Just as before, we will report back on how all of this turns out.

In the past few years, if there is anything I have learned there is no single solution to the print-digital transformation.

You clearly have to be focused on digital, put digital first and heavily invest in your digital future – products, people, tools and training.

An All-Access subscription strategy is another of the many tactics needed on this necessary journey of transformation.

And, to be sure, we are going to do whatever it takes to make that transformation happen.

A Hill We Can Take

The transformation hill gets steeper with every step.

Employees are being asked to do more with each and every one of those steps.

Not just doing things differently but thinking differently as well.

And while we get ever closer to truly transforming our newspaper companies to a multi-platform company that puts digital first, it is one hard slog.

We wouldn’t be anywhere on that journey if not for our employees.

To honor and reward those efforts, we are announcing today a 2014 profit sharing plan across all companies operated by Digital First Media.

Employees should check their emails. You will find a letter from me and DFM President Jeff Bairstow outlining details of the plan.

But in short, the concept is simple. If the Company is successful in meeting its financial targets from July 1, 2013 to the end of June 30, 2014 then employees will share in those resulting profits.

If the Company wins then the employees win.

Every employee, full-time or part-time, is eligible for profit sharing. Union-represented employees are eligible to participate in accordance with the profit-sharing plan and we will be reaching out to our unions to take the necessary steps.

There is, however, one group who will not be eligible to participate in the profit-sharing plan – senior executives. Our senior corporate executives, including me are not eligible. Those folks, including me, already have a performance bonus component as part of their compensation. It’s enough already.

Our goal is to target up to one week’s extra pay as profit sharing for eligible employees.

To hit the payout we have to hit our corporate financial goals. And we can’t do that unless we all do our jobs.

Those targets will be communicated and we will be updating our progress on those targets on a regular basis.

It’s a steep hill we are climbing but it’s a hill we can take.

And it will be made easier with your help.

Until next time,