Sam Zell and the Re-Engineering of Newspaper Culture

I was reading this weekend in the Globe & Mail a long article about billionaire Sam Zell and his purchase and subsequent re-engineering of the Tribune Company, one of the large US newspaper groups. The article as a whole is very informative but I was especially intrigued by this excerpt:

Since taking over, Mr. Zell has attempted to raze the culture by replenishing the senior management team with trusted lieutenants and giving his properties more autonomy: Local papers will decide what they do in a particular market and they will also be responsible for creating and meeting their own budgets. Most importantly, though, in some people’s minds, he’s showed up. “I’d say when he came to visit our shop, what a lot of my managers came away with was we didn’t often get visits from executives before. And when they did, they couldn’t pronounce the names of the local cities,” said Digby Solomon, publisher of the Daily Press in Newport News, Va. “It’s not as though the people who have been running newspaper companies are stupid, but I think in any sort of business, you get trapped in a particular way of thinking, and it’s just very difficult to shake loose from that.”

Sam Zell

Flickr picture by William Couch.

The Daily Press fits the mould of what Mr. Zell has described as his “petri dish” model – using smaller papers as testing grounds, or incubators, for new ideas that could be rolled out to the chain’s larger papers. The paper has already taken one gamble, replacing its front page with virtually all local news, rather than the conventional format of national news being afforded the prime placement. It may not sound like much, but this is the kind of change that gives newsrooms pause: There were serious concerns about people cancelling their subscriptions. In the end, none did. “Everyone was afraid to test it,” Mr. Solomon conceded. “But this isn’t a heart transplant – if we screw it up, we can change it tomorrow.”

What it means: very interesting to look at the various strategic imperatives Zell is implementing inside Tribune Company. He’s obviously starting with a clean slate (and a now private Tribune Company) which gives him more freedom but the idea of having decentralized decisions centers, the whole local/hyperlocal angle, and the creation of a culture that rewards risk-taking are all steps in the right direction. Using smaller newspapers as a testing ground is also smart if you can iterate and migrate successes quickly to larger newspapers.

Newspaper Industry in Trouble: Online Advertising Growth is Slowing

According to the Wall Street Journal, the newspaper industry’s online revenue growth seems to be slowing down and might not be the lifeline they were expecting. Here are the highlights of the article:

Last week, that lifeline began looking frayed. New York Times Co. warned Thursday that online advertising growth this year won’t be as strong as the 30% it had projected. On the same day, Tribune Co. reported that the growth rate for first-quarter interactive revenue was sharply lower than a year earlier. Gannett Co. likewise said online revenue growth slowed in the first quarter from a year earlier.”(…)

(…) last week’s news came as the number of online news outlets proliferates. Rival media such as TV stations and magazines have beefed up their presence, adding to threats posed by Web giants such as Google and Yahoo and popular sites such as CNN.com. Even the social-networking site MySpace has added a news feature and is boosting its ad-sales efforts. (…)

One major issue for many newspapers online: Roughly 70% to 80% of their online revenue is tied to a classified ad sold in the print edition — known as an “upsell,” says Paul Ginocchio, a newspaper analyst at Deutsche Bank. And as newspapers see a sharp erosion in classified advertising for real estate and jobs, their Web sites are being hit as well. Analysts say papers need to find new categories of advertisers. “Newspapers need to move beyond the traditional classified sources they’ve relied upon,” says Borrell’s Mr. Cassino. (…)

Underlining this pressure is a shift under way within Internet advertising. The ad formats that have so far proved strongest for newspapers — banner ads, pop-ups and listings — are losing ground to formats such as search marketing. Ad buyers say automotive, entertainment, financial-services and travel companies — all major newspaper advertisers in print and online — are aggressively shifting dollars into search marketing.(…)

What it means: here are my two cents as an outside observer (and newspaper junkie): obviously, media fragmentation online is hurting newspapers but I believe their general reluctance to embrace content syndication as a distribution/marketing strategy might be hurting them more. If you have an authoritative voice nationally or locally, you need to allow content syndication everywhere to try to drive traffic back to your site(s). Because of the lack of aggressive syndication, newspapers are being removed from the equation by news aggregators and undifferentiated content offer. I’m also a firm believer that becoming either a hypernational or hyperlocal-focussed news source will position you for the future. Everyone positioned in the middle will suffer exactly like what happened in retail with Wal-Mart. The launch of specific vertical sites (with or without a local angle) could also improve their situation. Finally, newspapers need to embrace blogging technology to improve their SEO strategy.

Update: Rich Gordon, Associate Professor at Northwestern University, suggests similar solutions: “Instead of trying to build the best destination, build the best network.”

Topix Relaunches and Embraces Citizen Journalism; TF1 Does the Same in France

Via Mathew Ingram’s blog:

Topix, the local news aggregator that is owned by several big U.S. newspaper chains (Gannett, The Tribune and McClatchy), is doing what amounts to a relaunch of the site and adding “citizen journalism” or social media to the mix, as well as moving to a dot-com domain (it used to be dot-net). Founder and CEO Rich Skrenta — who describes on his personal blog how this came out of an attempt to “de-suckify” the site — has a blog post at Topix about the changes, and says: “We’re now inviting members from our hyperlocal communities to take over the controls and help us edit the news.” (…)

Skrenta says that Topix is getting about 37,000 posts a day, and the site was looking for a way of featuring the top 1 to 5 per cent of those contributions that actually add something to the story. Now, anyone can submit a story, or facts about a story, or an opinion, or cellphone photos, and they will be handled by what amounts to an editor. (…)

At the same time, my friend Philippe Martin sends me this news about TF1 (one of the top TV networks in France). On their 1pm newscast, they will ask viewers to send them local videos using the Wat.tv site (also owned by TF1), which might afterward appear on TV.

What it means: newspapers and TV news organizations are starting to clue in on the importance of hyperlocal news and citizen journalism. It is a key success factor for them in the future.