October 01, 2014

#OCRegister continues to implode, as does #DFM (and now, the NYTimes)

The Orange County Register, whose Aaron Kushner made himself out to be a media savior just a year or so ago, is seeing his seeming Ponzi scheme continue to crash.

First, within Los Angeles County, he started a Long Beach paper to compete with the LB Telegram. Then, he started a Los Angeles paper to compete with the LA Times.

Well, first, the LB Register got folded into the LA Register. And now, the LA Register is being shuttered — along with cuts at the Orange County home office, too.

I call it a seeming Ponzi scheme because it seems that each expansion of the Register made little sense on its own, per Rick Edmonds' comment at the link, so I was guessing that each expansion was being done as an attempt to fund the previous expansion. More here from the alt-press LA Weekly confirms some of my suspicions. It also notes that both the LA Daily News and the Times could go on the auction block soon; both will probably be at fire sale prices. The OC Weekly has more, and yet more, on the seeming Ponzi scheme; among other things, Kushner was paying the LA Times to distribute both the LA and the OC Registers. Well, no; actually, he had contracted to pay the Times to do that, and hadn't paid his bills.

Digital First Media, owner of the Daily News and many other papers, is itself owned by a hedge fund, as are several other larger groups of newspapers, such as GateHouse. Some came under hedge funds' control as part of Great Recession-related bankruptcies. A few were at least partially owned by hedge funds before that. And a few became speculative buys by hedge funds after that.

Well, DFM's parent, the Alden Capital group, apparently is throwing in the towel on the possibility of finding further lemonade to squeeze out of lemons, and is reportedly ready to sell. Given all the LA turmoil, I think the Daily News sells for pennies on its theoretical dollar. The St. Paul Pioneer Press seems to be in similar shape. Given its Silicon Valley location, the print part of the San Jose Mercury News will surely be worth little. The Denver Post is the only "good" property on the list.

And, let's not forget that DFM crunched its own "content hub" earlier this year. GateHouse, this spring, created a design hub that it also talks about making into a content site; let's not count those chickens before they hatch.

Meanwhile, in San Diego, the old Union Tribune could become a nonprofit. This (other than its silly burning through money without a paywall) has worked for Britain's Guardian.

The Tampa Bay Times (formerly St. Pete Times) is a model but, per Romanesko, facing its own financial woes.

And, even before the latest cutbacks, already thin enough to run a header like the one in the picture. Yes, per a current or former Times staffer, it went out to less than 10 percent of its print run. But, that means it went out to more than 5 percent. And, an error that egregious never should have been made in the first place.

I know it's technically a correct spelling, but still. It should have been caught before it went out.

As for the future in the Florida bay? Doesn't look so good there, either.

The Times took out a big old $28M loan last December; it's a short-term note that matures in 2016.

And, Jeff Bezos is now, despite all that nice news about new hires, slashing at the Post, namely, slashing retiree benefits. Well, he is a libertarian; basically, he's converting a defined-benefit pension into a 401(k).

Meanwhile, for the industry as a whole? A Moody's report from earlier this week expects newspaper print ad revenue to decline another 7-10 percent or near that by the end of 2015. It expects newspapers (assuming this is print ads only) to have just 7 percent of total US ad revenue by 2016. That compares with 10 percent a year ago and 25 percent as recently as 2004. And, among major chains, Moody's still rates Gannett's overall financials as negative.

Update, Oct. 1: Looks like the Old Gray Lady is older and grayer, too. Guess those digital dimes on the circ side are flattening out, and on the advertising side, just aren't coming through, if its laying off another 100.

And, on that digitality, Editor Dean Baquet's claim of "promising signs" is just another case of peeing on my leg and trying to tell me its raining.

More here from a Baquet email to staff.
In a letter to the company this morning, Arthur and Mark described the financial conditions that are forcing us to make cuts across the company. While there are promising signs in digital advertising and digital subscriptions, the print business remains under pressure. And our new products are not achieving the business success we expected, even though they are journalistic sensations. 
So, regrettably, we are going to have to reduce costs in the newsroom. The masthead and I will be looking for every possible way to do this without harming our stunning report. I will use this as an opportunity to seriously reconsider some of what we do — from the number of sections we produce to the amount we spend on freelance content. 
But there is no getting around the hard fact that the newsroom will have to lose 100 jobs. We hope to meet this number through voluntary buyouts. But if we don’t get there we will be forced to do layoffs.

And, as the LA Times link about the story notes, Baquet resigned as LATimes managing editor because he feared the results of additional staff cuts there. Guess once you move from managing editor to editor or executive editor, though, you butter your bread differently.

Much more at Poynter. Interesting to see the take of Ryan Chittum at CJR. He, like me, has been a paywalls proponent, but I don't think even he saw them flattening out this quickly.

Meanwhile, the Times' right hand, and left hand, in the online circ world, apparently don't know what the other is doing. Or fingers on the same hand aren't communicating.

The Times is killing its Opinion app, the story said. Meanwhile, in an email today, the Times told me it was starting a Cooking app. Food porn in a place like NYC aside, is a Cooking app really worth more in circ revenue?

And, if it is, does that show how little the general public values columnists? Even with "Mark Bittman" jokes?

10 comments:

PDiddie said...

Such a dreary future for the newspaper industry. And such a shame that their wounds are self-inflicted.

Gadfly said...

I've got a follow-up for Saturday, warning community papers to wake up more than they already have, based on what they see out of the bigger papers already.

Ryan C said...

I actually predicted they would flatten out far earlier than they have. This is from July 2011: "The hardest-core Times readers online have probably already subscribed, and the growth rate has already started to slow. So don’t expect to see a half a million subscribers number in the third-quarter results. But subscriptions will continue to grow for a couple of years at least"

http://www.cjr.org/the_audit/the_nyt_paywall_is_out_of_the.php?page=all

Gadfly said...

What about the situation in LA, Ryan? You said earlier this year that you thought LA would be without a 7-day print paper by the end of 2014. I thought maybe it was a typo and you meant 2015, which would be dire enough.

Fair enough on the (NY) Times, which I had read earlier but didn't reference at the time of updating this piece.

I'm skeptical of mobile/device world in general, myself. Digital dimes are going to start becoming mobile nickels.

Ryan C said...

Wow, I missed the OC Register news. What a fiasco.
I don't recall writing that LA wouldn't have a daily by the end of this year, and I can't find it. Do you remember what that was from?
I remember saying something about the end of the decade somewhere, but not 2014.

Gadfly said...

This is Ryan Chittum from CJR, isn't it?

In a comment replay to one of my comments, on one of your stories at CJR, about six weeks ago, you said that you thought LA would not have a seven-day print daily by the end of 2014.

Gadfly said...

That said, your saying that you missed the OC Register news, maybe you're not Ryan Chittum?

Ryan C said...

it's me. I saw the LA Register news but didn't see all the new layoffs.

Ryan C said...

Ah, I see where I said LAT non-daily by 2014. That was a typo. I meant 2024. You had asked if it were possible that LA wouldn't have a daily in a decade.

Gadfly said...

Thanks for looking that up, Ryan.

That said, if we push back to 2015? I could see the LAT and Daily News killing Monday print editions by the end of 2015. Then, they'd no longer be 7-day dailies, at least.