Wednesday, March 12, 2008

Gannett 101: The strategic plan for dummies

Combine a generous helping of Kool-Aid with 46,100 humor-filled employees and -- voila! -- you've got profits. (Confidential to Corporate: We're not laughing at you; we're laughing with you!)


  1. Jim: You were once and for a long time known as a great investigative reporter in Gannett...that's why you got recruited from Boise to Louisville and then USA Today....but respectfully I say your blog sometimes tends to fall into silliness and leaves big questions (that should be crowd-sourced as you say...where are the other serious reporters) A question was raised recently about the prospect that Gannett's #2 Gracia was on her way out. True of False?

    Whatever we love you and wish you well in this endeavor.

    But this blog needs to toughen things up please for the sake of our remaining seriout reporter ranks.

  2. You are entirely correct -- and I'm not kidding. I think this blog has a lot of potential, and I'm doing my best to, as you say, toughen it up. But I'm also trying to keep it from becoming a full-time venture.

    I now get as many as 50 comments and e-mails each weekday. I read every one. I also do as much primary research as I can -- including reading through SEC documents and quizzing my sources.

    But that alone takes as much as four hours a day -- even though I planned for this year to be a sabbatical.

    Now, if readers take a more active role in toughening up this blog -- i.e., sending me more tips I can check out -- I'll invest more time in it.

    Re: the CFO. I only reluctantly let that one through, hoping I'd get more information. But nadda. (You got any ledes?)

    Re: silliness. Yes. But it doesn't take much time to post. And, the traffic on it is often huge, because it sparks a serious debate.

    Rant over!

  3. Take a look at what the Editor and Publisher is reporting as circulation declines in the last four years. The full article is an interesting read: Apparently Gannett is not the only company that has terrible management if you take circulation as any kind of measurement. It’s like some sort of mass psychosis in the media industry. They all decided to do crazy bad things at the same time. The idiots at the SF Chronicle must really be selling their Cool Aid based on their numbers. Wasn’t Jim Jones based in San Francisco?

    PAPER -- Daily (M-F) Sept. '07 - Copies, Gained/Lost Since Sept. 03-- % Change

    USA Today -- 2,293,137 -- 46,141 -- 2.1%
    The Wall Street Journal -- 2,011,882 -- (-79,180) -- (-3.8%)
    The New York Times -- 1,037,828 -- (-80,737) -- (-7.2%)
    Los Angeles Times* -- 794,705 -- (-201,133) -- (-20.2%)
    New York Daily News -- 681,415 -- (-47,709) -- (-6.5%)

    New York Post -- 667,119 -- 14,693 -- 2.3%
    The Washington Post -- 635,087 -- (-97,785) -- (-13.3%)
    Chicago Tribune -- 559,404 -- (-54,105) -- (-8.8%)
    Houston Chronicle* -- 502,631 -- (-50,387) -- (-9.1%)
    Newsday -- 387,503 -- NA

    The Arizona Republic*, Phoenix -- 385,214 -- (-47,070) -- (-10.9%)
    The Dallas Morning News -- 373,586 -- NA
    San Francisco Chronicle -- 365,234 -- (-147,406) -- (-28.8%)
    The Boston Globe -- 360,695 -- (-89,843) -- (-19.9%)
    The Star-Ledger, Newark, N.J. -- 353,003 -- (-55,669) -- (-13.6%)

    The Philadelphia Inquirer -- 338,049 -- (-38,444) -- (-10.2%)
    Star Tribune*, Minneapolis -- 341,645 -- (-38,709) -- (-10.2%)
    The Plain Dealer*, Cleveland -- 332,894 -- (-32,394) -- (-8.9%)
    Detroit Free Press -- 320,125 -- (-32,589) -- (-9.2%)
    The Atlanta Journal-Constitution -- 318,350 -- (-64,071) -- (-16.8%)

  4. One thought, after I published this post: Gannett spent a lot of money publishing Craig Dubow's frequently self-serving five-page letter to shareholders. This post -- and, for that matter, this blog -- are all about equal time for everyone else.

  5. Gannett employees would be well advised to understand the concept of "Disruptive Innovation". A good general overview can be found on Wikipedia:

    They should then acquaint themselves with the five stages of grief. Once again, Wikipedia to the rescue:

    To be plain, if you haven’t noticed, the world is changing. Newspapers are no longer the monopoly that they were even 5 years ago. Costs and business practices that were practical for a monopoly don’t work when literally everyone, yes even Gannettblog, has the ability to publish. How many afternoon papers are still left? Change or die.

  6. And, it's both good AND bad to note, virtually all the software I use to power this blog is free. No expensive offset presses for ME to maintain.

  7. You guys make an interesting point. Why would I buy a newspaper when I can get my information for free and for the same reason why should Gannett keep you employed when their revenues keep on going down. Journalists are not able to come up with stories that sell and if they do, we are able to get it for free. Now if the Journalists adapt and change and keep a positive attitude, than we should be able to engage our customers and sell advertising based on this engagement. We need to get smart about this.

  8. 10:33, here, hear. Great observation. Change or die. And change can be messy, certainly sometimes unpleasant.

    to Jim and all readers, I have one question, though. Comments like 11:28 and 10:33 and others suggest Jim and the readership of this blog advocate transforming the company into a digitally-focused one.

    That transformation also means reducing expenses, especially on the print side, because you can't have it both ways. Examples discussed recently here include consolidating a lot of the old 20th century stuff that is becoming less important -- like local operations for circulation customer service, ad-building, etc.

    So, why is it that whenever Gannett does *anything* -- including things that indicate its shift from print in the past to digital today and in the future -- this blog and its readers respond with derision?

  9. This reader responds with derision because it is not the choices Gannett makes but how they make them--which is basically by awarding a very few with a whole lot, by moving in one direction and then changing course, by ignoring the product (newspapers) that got them to their peak and allowing them to disintegrate to a point that they can no longer sustain the growth new ideas.

    And, just where is the "disruptive innovation" you talk about coming from? Surely, you cannot mean the DIG which has done what for you lately?

  10. Craig Dubow likes to use the word transform, which suggests big change, when talking about the company's strategic plan. But there can be no transformation if the company clings to a central premise of the old business model: 20%-plus profit margins.

  11. Yes, it takes money to make money, to use a cliche. In many places, the company is in the process of strip mining to keep those profits up at all cost. We no longer have the resources to cover our communities properly -- and as we hear, community reporting is the future. Heh.

  12. I keep hearing journalists must do this, journalists must do that. And I don't disagree.

    But something tells me Paper X could put out Pulitzer-worthy material daily and still befall the same declining revenues and eroding circulation that affects the entire industry. The Pony Express could have hired the handsomest, fastest riders and used only world-class racehorses and it wouldn't have done anything to change its fate.

    What does concern me is that nobody talks about how the business side of newspapers must change. No one's figured out how to make the digital revolution pay yet, so it doesn't matter if you have bylines from Ernie Pyle and William Allen White in your paper ... ads online still don't pay.

  13. In response to TJ's comment, I'll have to disagree. And USA Today also disagrees. This is from one of their articles ...

    "Google and Yahoo dominate the booming online search advertising business, which is expected to grow to $5.6 billion in 2008, from $2.7 billion in 2004. Profit from search advertising enabled Google to more than double its revenue in 2004, to $3.1 billion."

    ads online obviously DO pay. Gannett and most traditional media just haven't figured out how to make them pay for their websites.

    Is it irony that this blog is hosted for free on google?

  14. come on people. if this company wants to "disrupt" itself, then dubow and martore should fire themselves. moon should take over and run the company and while we are disrupting, we can dump newsquest all together.

  15. To 10:02:

    I should have been more specific. Online ads tied to media sites don't pay. As a well-respected colleague of mine has pointed out, Google is the most successful Internet company ever, and what is its primary purpose? To send its customers AWAY from On the flip side, I can't imagine there's one media site out there that has a goal of sending readers AWAY from its URLs. They want to draw them in, because that's how their ad structure brings them revenue.

    Heck, selling them is a pain. If an ad guy makes 8 percent commission, which is he more likely to sell, a $1,000 print ad or a $100 Internet ad? You can't blame him. I know this fundamental issue is being addressed with Web-only salesmen with different commission structures, etc., but it hasn't been solved.

  16. tj, I agree with your points about how the business side must change. Journalists aren't to blame for the failings of this company, which is cutting and putting more demands on a group that increasingly has less experience and skill.

    But I strongly disagree with you on one point. You say you can't imagine one media site that has the goal of sending readers away from its URLs. Did you forget about the Drudge Report? That is clearly a media site that makes lots of money by sending readers away from its URLs. And one doesn't have to venture too far into the medium of online porn to learn that there are tens of thousands of sites that are nothing but links to other Web sites. Seems to be working there.

    Gannett is way behind the times and shows no sign of catching up. Video cameras in the hands of amateur college graduates isn't going to get it done.

  17. Nice to know that the journalists aren't responsible for the state of newspapers. must be everyone elses fault.

  18. For those interested, the NAA has a very good readership study available free on their web site. The study if for 2007. It can be found at:

  19. How could journalists be responsible for the state of newspapers? These days we write what we're told to write. Cover the community events we're forcefully urged to cover. When there's less than a dozen metro reporters at 60,000 circulation paper that has trotted out 4 TMCs, 3 communities sections and 40 special sections a year, how exactly is it the journalists' fault.

    I call bullshit. If readers want quality enterprise and hard-hitting investigative reports, then they sure as hell haven't said so. Or, if they have, then Gannett sure hasn't lisetned. Or, doesn't care.

    Don't you dare blame the writers.

  20. 12:32, to quote myself: "I keep hearing journalists must do this, journalists must do that. And I don't disagree." Don't give sarcastic responses to things I didn't say.

    11:47: The Drudge Report isn't a media site in the traditional sense that newspapers' sites are, though. It generates very little of its own content. Drudge, Google, porn redirects, etc., all link TO the content. They're signposts, not destinations. The destinations are generally traditional media sites: CNN, newspapers, Bloomberg, etc. That's why people go to Google and Drudge first, to scan headlines that may interest them.

  21. As a former advertising director with Gannett, I won't write the business plan for you. I'll give you a few facts. First, the profit margins at individual titles used to be more in the 30-40% range and higher.

    Sales reps are under incentivized...and often poorly trained and managed. And their age, can, can work against their orientation to the web. We never had enough bodies...but that's history too.

    The web. Get Williams out...he's a dunce in the old world order and not a visionary.

    Google and Yahoo are making beaucoup bucks with sponsored links, hits, positioning, etc. Advertisers can be paying $50-$100,000 a month for the traffic created to their site. They have the "brand" position nailed down. Gannnett and their papers do not.
    It's about "critical mass."

    Gannett is selfish...they still want that nifty ROP...which is mostly gone.

    Ah yes, the marketing budgets have been slashed to shit. Hard to tell people what you've got...when you exist in a vacuum. But first you've got to develop the product.

    By the way, what is the Gannett "brand" these days? Other than outsourcing ads to India.

    Hard choices...and years behind in getting on the ball.

    Plastics friends. It's all in plastics.

  22. Drive the traffic to the site...ala the New York Times and Mr. Spitzer. Instead of eyeballs, you need fingers...and mass marketing recognition.

    Finance 101 here has twenty far.

    As Mr. Mike Coleman, said in Rockford, "its not rocket science."
    But, today in 2008, it is.

  23. Jim, you might want to think about adding a "forward" email to this that friends and other colleagues can see topics and responses. And this was not meant for purposes of emailing to the McLean hq. They have enough on their minds.

  24. There is a little envelope icon, to the right of the comments link, below each post; is that what you're talking about? I also offer RSS feeds; see the link in the green sidebar, on the right. Otherwise, I'm not sure whether I understand your question.

  25. Changing the focus a bit - and I'm not sure how effective this would be considering the price of Gannett stock these days, but...

    How about the company try something along the lines of rather than paying stock dividends this year, re-invest all of that cash into the newsrooms?

    Stock owners would likely embrace the attempts of saving the industry and be understanding of the radical nature of the approach. It could go a long way toward reviving things internally (clearly not as long as it would have gone a few years ago when the concept may have really made a difference), but it's still worth a shot.

    The company has got to try something different. Giving away the product for free without finding a real way to build Web revenue is not going to work - no matter how many hits Web galleries or videos get.

    That's one idea. Anybody got any other concrete suggestions for the folks in the ivory/glass towers who are apparently reading this blog?

  26. @anonymous 7:16 - 98.2% of Gannett's stock is held by institutional investors. They will want to be paid.

  27. I've written that, if shareholders were truly serious about sharing the pain to save the company, they'd be lobbying for a dividend cut and demanding that it be reinvested in R&D -- which it should.

    But the company actually gave the dividend an extra-big boost a couple quarters ago -- clearly aimed at satisfying Wall Street. And during the recent conference call with analysts to discuss fourth-quarter earnings, I think Dubow or someone else spoke approvingly of the company's dividends.

  28. Since the SF Chronicle, progress or lack of, get mention a lot. The SF Chronicle , publisher, has a Gannett connection. The Chronicle, publisher, is "Frank Vega", from the Detroit's Gannett paper. Also, he was with the start, of USA TODAY. Strangely, enough, he has a Floria house right beside, USA TODAY founder Al.

  29. New poster here and GCI employee. A) I would argue that if you subscribe weekly to locaL paper. The coupons in newspaper (especialy Sunday) pay for the newspaper subscription itself. Example: I was in Kroger Grocery. They had coupon in paper. buy $50 or $25 in groceries. Save $10 or $5 off bill. Last day of expiration. I ent to use coupon and was suprised not alot of coupons being used (says something about circulation). At checkout I used $5 coupon and woman asked me if shecould have $10 coupon. Which I gave her. So yes may not be best reason subcribe but their is still a worthwhile reason from a financil point to subscribe. Paper subscription pays for itself. I get employee discount and fully subscribe. It angers me when I try to convince disgruntled co-workers to subscribe when it's our jobs producing the paper. They refuse and that makes no sense to me that you don't buy what you produce.

  30. Same new poster here. From Gannett's strategic planning. With their continued cash flow. WHY does Gannett not diversify it's business into other areas? Example Washington post derives a huge amount of it's revenue from the Kaplan educational business. Why doesn't Gannett look for opportunities such as this? You don't have to be just invested in Digital or print media. A website that I think would draw interest as an acquisition involving the stock market is website: "SEEKING ALPHA." It has alot of interesting information on stock market and in my view would be a great way for Gannett to invest in an information site with regards to the stock market. Commenting on a previous poster's comment about NEWSQUEST. Gannett wrote down their value mainly due to Newsquest. As just a dumb employee and seeing where print was going. Gannett could not see that it might be a good idea to sell Newsquest a couple years ago and get possibly a decent price for it. Then use proceeds to pay off alot of it's debt or allow money for better acquistiions for the new environment such as digital? These are not good ideas? It takes a dumba__ employee such as myself to mention these ideas? How about Gannett's $1 Billion dollar stock repurchase when the stock was in $60's a few years ago? Was that an intelligent move? Which brings me to my last point. Gannett Management fosters no creative ideas because it's hard to think creatively when you are not being judged on your creative ideas but rather if you are a company man in line with the current company view. Gannett should shudder the thought if a Carl Icahn type ever took interest in the company.


Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."

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