Tuesday, May 29, 2012

Newspaper publishing executive react to worsening P&Ls by cutting back print schedules; Canada's Postmedia announces an end to Sunday editions at several papers

The Globe and Mail today reported that a Canadian newspaper publisher, Postmedia Network, will be eliminating the Sunday editions of the Ottawa Citizen, Calgary Herald and Edmonton Journal. The chain will also stop printing the Monday edition of the National Post, the Canadian national newspaper.

“Well, we’re really not making any money at all in those markets, so we’ve decided to keep everything online there and do away with print copies to reduce legacy costs,” Paul Godfrey, CEO, told The Globe and Mail's media reporter Steve Ladurantaye.
Last week word came down that Advance would be limiting the print schedule for the New Orleans Times-Picayune and its Alabama newspapers to just Wednesdays, Fridays and Sundays. Most U.S. newspapers see their Sunday editions as their most profitable.)

Many media observers have immediately jumped on these announcements as proof that newspapers were moving towards digital; in fact, there is little evidence that these papers are making digital moves at all. Rather, they are simply reacting to deteriorating P&L statements by slashing costs. In neither the Postmedia nor Advance announcements were there any references to new digital initiatives. Instead, newspaper publishers are falling back on the web as a way of explaining to readers that they will not be losing content.

Godfrey did, at least, make a passing reference to the company's tablet apps and mobile optimized websites, describing them as "gaining traction". The term makes sense in that it reminds one of the image of a car stuck in the snow.

The loss of certain days of the print product is usually chalked up to the lack advertising to be found in these editions. I suppose many of these critics have never worked at a newspaper as the lack of advertising in certain issues is nothing new. Newspaper Monday editions, for instance, have almost always been thin in advertising. What changed over the years is the cost structures involved in distributing those issues. The use of independent carriers versus the neighborhood paperboy helped changed the cost dynamics, while only marginally improving performance. Other distribution costs have risen, as well.

What isn't being addressed in these moves is the fall in advertising. As the Globe and Mail piece immediately points out, Postmedia is only generating one dollar of revenue for every seven dollars of print revenue.

This situation is no doubt similar at Advance. Because of this, one might expect absolutely devastating layoffs at Advance – and explains why the company has established new entities to run these papers. One might say that everyone will be laid off, and a few rehired.