Thursday, December 11, 2008

Detroit to address reports of 'significant changes' Big print, circ shift rumored | Stock plunges 12%

Gannett's Detroit operations early next week will address newly published accounts of a secret project, designed to save the city's two struggling newspapers. Speculation is focused on a rumored plan to end home delivery of the Detroit Free Press and The Detroit News for all but two or three days a week.

This would make the 300,000-circulation Free Press and the 177,000 News by far the biggest U.S. papers yet to drop, or effectively drop, a day's publication, Editor & Publisher is now reporting. Such a switch, I wrote this morning, would represent an enormous gamble by Gannett and its partner, MediaNews Group, to stanch multimillion-dollar losses in a city whose economy is cratering around the auto industry crisis. Hanging in the balance are the jobs of perhaps 2,000 employees.

Wall Street investors weren't happy: Gannett's stock plunged 11.9% this afternoon, closing at $7.59 a share, down $1.02. Meanwhile, the widely watched S&P-500 index fell a smaller 2.9%.

Hunke: 'Reposition' for growth
In a memo regarding a plan reportedly named "Project Griffon," CEO Dave Hunke said the Detroit Media Partnership has been "exploring various scenarios'' to "ensure two strong newspaper voices in the community." Gannett has controlled 95% of the partnership through a joint operating agreement, reorganized in 2005.

Hunke's memo: "In the past 24 hours you have no doubt heard a lot of rumors and several news reports about significant changes at the Detroit Free Press and The Detroit News. Clearly, over the past months we have been exploring various scenarios to reposition the companies for growth and to ensure two strong newspaper voices in the community. We plan to share details early next week with you, as well as with readers, advertisers, unions and the community. In the meantime, let's continue to focus on doing the best job we can and on building the strongest relationships we can among ourselves and with our customers."

Tuesday announcement?
Hunke's memo follows my post this morning, speculating that an announcement on Project Griffon could come as early as Tuesday. Looks like this story has legs after all.

A tipster says the vice president of circulation also advised employees: "Just wanted to remind everyone that all inquiries from media should be directed to Susie Ellwood's office." (Gannettland is an even smaller world than I thought: Ellwood and I worked together at The Arkansas Gazette in the late 1980s, when Craig Moon -- now USA Today publisher -- was the Little Rock paper's chief executive. Of course, back then, she had a different surname.)

Earlier:
Motown, Project Griffon -- and that secret PM code

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: this morning's Freep and News, Newseum]

38 comments:

  1. This is going to be huge. Thousands of layoffs and reshifting everything to the Web. Publication only Thursdays and Sundays. That is the Freep. What is not clear yet is the future of the News. It does not look good on that front, as rumor has it that Singleton gets an annuity for his ownership and goes away.

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  2. If Hunke were a smart dude -- cue smart-alecks -- then he would convene the meeting RIGHT NOW.

    But, no, let's not learn anything from how other industries try to spin the media. Let's give two newsrooms full of journalists four or more days to work on breaking the story ahead of the announcement. We iz profeshinul communikaters.

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  3. They would rather stew and be angry about getting beat. There are many ironies at play here.

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  4. If this is accurate, then wouldn't they have already notified the state of Michigan?

    And, if so, is there a way to get access to it?

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  5. I love how in the middle of chaos, Free Press arrogance always resurfaces. Despite the worst newspaper co. in the universe buying (and then gutting) the Freep, it never goes away.
    Hint: Hunke uses the phrase "two strong newspapers" in his statement.
    You can wish, and hope, and dream, but the new setup is for both papers, not just your holy Freep.

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  6. If they do publish only on Thursdays and Sundays, it appears Gannett is making the Detroit Free Press a guinea pig. And that's a shame for a newspaper that once was a gold standard and is in the running for a Pulitzer next year.

    What doesn't make sense is how this plays off of competition with the Detroit News. The Free Press has a much bigger circulation, but it's web hits are comparable to the News'.

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  7. Hey, 11:29 a.m.: Please don't waste people's time by repeating the same old the News-is-going-out-of-business rumor. IF that were the case, the company would have been required by law (the WARN act) to tell the unions at least a month in advance. The unions have heard no such thing.
    And if the News were about to be shut down, the Detroit Media Partnership would have to notify the U.S. Justice Department because it oversees the JOA. By all accounts, the company has done NO such thing.
    Besides, 11:29 a.m., the Detroit Media Partnership needs the News to continue. Its Web site gets about as many hits as the Freep's. And the News has a circulation that is about 62 percent the size of the Freep's. If the News were shut down, you can be sure that those readers will NOT go to the Free Press. When the News dropped morning home delivery in 1989, those readers disappeared.
    Gannett is ruthless, but it's not dumb.

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  8. Hey, folks, here's one important thing to remember: The Detroit News is the strongest partner in a JOA in the U.S. For example, the San Franscisco Examiner had a circulation that was about 20 percent the size of the San Francisco Chronicle when both papers were under a JOA. The News, despite Gannett's incredibly stupid decision to make it an afternoon newspaper from 1989-2005, has a circulation today that is about 61 percent the size of the Freep's.
    And the SF Examiner did not have the advantage that the News does of a Web site that gets as many (and sometimes more) hits than the Free Press.
    And, finally, to those folks who insist on portraying the News as a "lowly" paper, please remember that that last Detroit paper to win a Pulitzer for its reporting was THE NEWS in 1994. The Free Press hasn't won a Pulitzer for its articles SINCE 1968, when the Beatles had just come out with the "White Album."
    The Freep might win a Pulitzer next year for its mayoral coverage. But until then, turn the Free Press arrogance/BS machine off.

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  9. WARN doesn't mean crap if you pay off everyone you lay off. There's a lot of 'either or' in the language of the statute - anyone with sense can close a building tomorrow without losing their shirt or getting sued.

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  10. No, no, it is Project Gryphon, not Griffon. It comes from Alice in Wonderland. Here is part of Chap. 9 of Alice:

    I couldn't afford to learn it.' said the Mock Turtle with a sigh. `I only took the regular course.'

    `What was that?' inquired Alice.

    `Reeling and Writhing, of course, to begin with,' the Mock Turtle replied; `and then the different branches of Arithmetic-- Ambition, Distraction, Uglification, and Derision.'

    `I never heard of "Uglification," Alice ventured to say. `What is it?'

    The Gryphon lifted up both its paws in surprise. `What! Never heard of uglifying!' it exclaimed. `You know what to beautify is, I suppose?'

    `Yes,' said Alice doubtfully: `it means--to--make--anything-- prettier.'

    `Well, then,' the Gryphon went on, `if you don't know what to uglify is, you ARE a simpleton.'

    Alice did not feel encouraged to ask any more questions about it, so she turned to the Mock Turtle, and said `What else had you to learn

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  11. looks like the stock market is pretty excited about the gannett news over the last 2 days. Over/Under one day dive is $1.00

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  12. Once again, Jim's blog has been ahead of the news on a major GCI development. I have been reading about this Project Grypon and Jack Lessenberry's hard work here for the last week or so. Now it comes true. Shows that crowdsourcing works. Don't discount blogs and their impact on business these days. Even when the p.r. people lie, as CareerBuilder, the truth comes through. Kudos Jim.

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  13. Thanks, 1:34 pm! But as you correctly note: Credit really goes to Gannett Blog's readers. You guys do all the leg work; I'm just the rewrite guy!

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  14. Demonstrates again why we need GannettBlog. Jim, my check is in the mail. Keep up the good work.

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  15. Crain's Detroit Business reports that the Free Press may cut up to 300 jobs. Interestingly, the business weekly interviewed the publisher (Hunke) in late November, and he denied a cut in delivery days. Now the DNP's PR firm is saying, “The Detroit Media Partnership is looking at everything right now. No decisions have been made,” Bassett said.

    Here is the link to the Crain's story: http://www.crainsdetroit.com/article/20081211/FREE/812119979

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  16. The story link got cut.
    http://www.crainsdetroit.com/article/20081211/FREE/812119979

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  17. Keep in mind that under the JOA, MediaNews pays nothing for the Detroit News ... all editorial costs are paid by Gannett, and the Detroit Media Partnership will pay MediaNews $51 million over the life of the JOA ... and MediaNews paid just $25 million for the News in 2005. Gannett keeps the News alive under the JOA to keep from running afoul of the feds. MediaNews pays nothing, and basically got a cashcow in the long-term, no matter what ad revenue and circ look like.

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  18. I can't possibly imagine that BOTH Detroit newspapers will convert to Thursday & Sunday delivery. One, but not both. There's no way a metropolitan area like Detroit will not have a 365-day-publishing printed newspaper. No way.

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  19. The News only prints 6 days. The 2005 JOA prevented it from printing on Sundays... Another reason why its circulation is much lower than the Freep's.

    Must by the Freep is going online and to the Thursday to Sunday publication. What happens to the News is still fuzzy. Doesn't make much sense or cents$$$???

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  20. What I state here is rumor, repeat, rumor only!! The buzz in my ear says the The News will be made into a daily insert/mag inside the daily Freep. The layoffs have already begun in Detroit; and, yes, mostly on The News side.

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  21. @4:19 PM: Your absolutism is baseless. Gannett knows this approach is a compromise. But what if they could still capture 75% of the advertising revenues with only 40% of the former circulation and production cost? You think they wouldn't go for that? What does the News have to lose? The only reason that paper is alive is the JOA.

    Besides, no one said that there will be no printed product at all, just that the two papers will no longer exist as they do now.

    What I was to know is who spilled the beans on this whole thing in the first place? Couldn't the people at this paper keep their mouths shut for another month?

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  22. 7:08 - What layoffs at the News? As of this afternoon, there were none.

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  23. The only layoffs I know of are 19 in circulation at the Freep. Those came last week.

    That's why this is such a surprise. Why wasn't the BIG announcement that's coming Tuesday made last week??

    To make staffers wait four days for the big "secret", just before Christmas is just downright cruel, although I wouldn't expect anything less from those bastards. I'm sure all the Gannettoids are getting their big fat CEO bonuses this year.

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  24. The failure in this plan will once again be the revenue projections and the sales plan. When was the last time Detroit hit its projections? 20% to 25% decline is the plan - but that was close to the reality if they had done nothing. They will under estimate the true impact of this change and the leadership there simply does not have what it takes to pull this off. Don't get me wrong they have the talent on staff but not the leadership.

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  25. Jim,
    Here is more scoop about this Freep thing. I heard that this is an IDEO experiment that has been spearheaded by Michael Maness and Laura Ramos. Apparently it has been a special project that had a bunch of Gannett executives show up when the IDEO consultants presented their idea.
    Can you imagine the DIG people marking their resumes with this type of "innovation"?

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  26. Hey, 9:25: A little bitter are we? The mayor coverage was as perfect as it gets. Leadership lacking? I think not.

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  27. 7:08 PM, you're an idiot. No layoffs at the News.

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  28. 9:51,
    What did the "leaders" at the Free Press have to do with the mayoral story? They got out of the way, period.

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  29. anon 9:29p, so what "innovative" ideas would you use to mark your resume? how about providing us some "scoop" on that before you start dropping names and talking about something you obviously have no real knowledge about.

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  30. Can Hunke at least verify how they spelled Griffon, Griffin, Gryphon? Come Tuesday, at least - that way the ideas behind the code word choice might make sense.

    Probably not, but there's always hope.

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  31. 9:55, You need to get a life. You're shortsighted, sad and bitter.

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  32. To 9:55 - the Freep's Mayoral coverage was enough for me to subscribe again. That coverage required substantial resources from a money-losing organization. One wonders how much longer newspapers will be able to make such investments in stories. When they do, I'll still call that leadership, and something more than just getting out of the way.

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  33. 6:50 AM - I'm in Detroit and it is spelled 'Griffon'.

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  34. 10:12-is it named Project Griffon after the 1600's boat -or what's the reason?

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  35. A little bit of history is instructive: The JOA that was launched in 1989 saved the Free Press from being shut down by Knight Ridder. And because Al Neuharth stupidly agreed to make the News the afternoon home-delivery paper and give the Free Press morning home delivery, the Freep gained a print circulation lead that it has held ever since. That lead was GIVEN to it by the JOA. Now, Gannett is about to strip from the Free Press for every day but Thursday and Sunday its home delivery circulation lead over the News. The papers are basically tied in street sales and in visitors to their Web sites. What the JOA giveth to the Free Press, it is about to taketh away.

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  36. I think it pretty obvious the current course isn't going to benefit us i the long run (even if we continue to survive the layoffs). That said, I am glad they are trying something, and better they gamble with a group on the verge of death anyway, then one of the papers that actually turns a profit...I mean did we really expect corporate to just play the violin ;;;while the titanic is sinking?

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  37. They should just close the whole thing down. I want a full refund of my subscription and then I am going to send the money to the Oakland Press and the Macomb Daily. At least they can deliver every day and make money.

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  38. You think the Macomb Daily and Oakland Press are making money? ROTFL ...just wait til you see what Journal Register has in store.

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