[Detroit bosses: Hunke, Singleton]
The CEO of Gannett's Detroit business, Dave Hunke, reportedly overcame reservations from GCI business partner William Dean Singleton, in order to reach this historic moment: A high-stakes plan to save the city's money-losing dailies by abandoning most home delivery. Singleton, CEO of MediaNews Group, wanted Hunke to first run the idea past major advertisers, I've been told. Those presentations apparently went well; unless Gannett gets cold feet, an announcement is expected Tuesday.
Gannett owns 95% of the Detroit Media Partnership, the joint operating agency that publishes the two papers: Gannett's Detroit Free Press and The Detroit News, which is owned by MediaNews. The Denver company owns the JOA's other 5%.
Even with that controlling stake, Hunke may have needed Singleton's formal OK because the plan is such a radical departure from Detroit's business model. (To be sure, Singleton could also have given in because he's gotten so distracted by problems in Denver, where he's locked in another JOA, with an increasingly desperate E.W. Scripps.)
Culprit: Auto industry meltdown
Gannett is one of untold businesseses threatened by the slow-motion collapse of the Big Three automakers, long the engine of Detroit's economy, according to this Freep video by Alexandra Bahou:
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Please post your thoughts 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.
Will single-copy distribution be changing?
ReplyDeleteApparently, as the plan is currently sketched out, they plan on continuing to print daily, but do home delivery only Thursdays, Fridays and Sundays. I wouldn't want to be managing the phones on the mornings the papers don't show up on doorsteps. People paid subscriptions for seven days a week, but now are only going to get three. So will there be some sort of rebate? If people are willing to go to the nearest 7-Eleven to buy their newspapers Mondays, Tuesdays, Wednesdays and Saturdays, then why not just kill off home delivery?
ReplyDelete6:25 - they do not want to lose the home delivery circ numbers which would dramatically hurt insert and other rop business they have on Th, F and Sun. There was much smaller risk on those other days. The true question will be, how upset will 7 day subscribers be and how many of them will cancel due to this? If most newspapers are decreasing approx. 5% a year in circ, it is possible to estimate at least a 10%-15% decline in the D annually.
ReplyDeleteNice video.
ReplyDeleteWhat are they saving by this plan? Isn't home delivery already contracted out? If it isn't, it should be. And if they are going to print the paper anyway, and distribute only in stores, etc., where is the savings? I can only see this pissing off readers even more. Do newspapers really want people not to read their product? I can also see a backlash from the distributors, who are going to see their salaries cut in half. Most in my area do this as a second or third job, and if they aren't going to get paid for it, they won't do it anymore.
ReplyDelete6:25: I'll bet this won't happen overnight and subscribers won't have paid for seven days only to get less. If customers are willing to get it SC the other days of the week they may not purchase every day where home delivery is PIA (paid in advance for you editorial types).
ReplyDelete7:19: you can bet they'll lose quite a bit with pissed off customers who feel they've been abandoned.
7:45: you must be in editorial and don't have a clue what expenses are like. First, you're printing a ton of papers (think a lot of newsprint), hauling a bunch of papers around, managing distribution centers, purchasing plastic bags, all with minimal advertising on the low days and high distribution costs regardless of if the carrieras are contractors or not. Most of the metro carriers are contractors but not wholesalers since the papers bills most customers. And contractors aren't employees so they aren't on a salary!
The trick will be to have contractors that will be willing to deliver two days a week only, along with all the employees this will take for just two days a week.
8:15 Yes, I am in editorial. But you still will have distribution costs without the home delivery portion mon, tues, weds and sat. because you are putting the printed version in the stores and on the racks. So you save on the plastic rain bags, but unless you are counting on a boatload of cancelations, you still have a similar press run. You will infuriate distributors who, although not payroll employees, are used to getting a certain salary level for what they do in rain or snow, etc. Looks like their paychecks will be cut in half, and if these contractors are like the ones I'm used to seeing here, they are not the sort who will take this at all well.
ReplyDeleteThe other question I have about this is what is in it for advertisers who even think about running ads mon, tues, weds and sat? They are guaranteed their ads won't be seen, so the papers will be virtually ad-free. I can already hear publishers saying we have to maintain the ad-news ratio, and just going Web-only on those days. So it will be a matter of weeks before there is an abrupt switch to just three days a week publication
Why don't they just charge a premium for home delivery on M-TU-W-Sat?
ReplyDeleteAs an observer from the outside, all I have to say is that I pray this experiment works. The Detroit region deserves TWO good, strong papers.
ReplyDeleteI can't believe that there isn't a "bigger" Gannett "vision" behind this one. Perhaps the goal is to wreck the two-newspaper franchise and be able to turn it into a one-newspaper franchise. Of course, an increasing number of Gannett's decisions these days are seeming more bizarre in nature. It just seems like they have a motive behind this type of plan. Maybe it will involve that combined USAT/local idea that has been floating around. A lot of these decisions just come across as erratic. Sinking companies make erratic decisions. I just don't get what's up.
ReplyDeleteThanks Craig, Dave. Eliminating certain days of the week in Detroit formally confirms what all weekly newspaper publishers have known (and savvy daily publishers too) across the country - that certain days of the week are virtually a total waste of money for daily newspaper advertisers.
ReplyDelete9:22: See, this is where you editorial types don't understand the business end of things (except perhaps the money reporters) and lose all perspective.
ReplyDeleteThose papers sell in round number 300,000+ copies of home delivery and perhaps 90,000 copies or so of single copy. Big difference in newsprint waste, distribution costs and the number of employees required for a 7 days a week home delivery operation compared to a 2-day per week operation.
Home delivery of one paper to each home is much more expensive than single copy distribution of multiple copies to stores on the main drags. It might cost .05¢/copy to deliver to a store or box but .20¢ or more to a home. $300,000*.15 = $45,000/day plus the cost of newsprint, another $75,000/day and you are up to $120,000/day. Cutting five days a week of home delivery represents over $31 million dollars a year in newsprint and distribution alone at a minimum. That's a lot of ad sales just to break even and it really sucks in Detroit these days.
Advertisers will be willing pay less for ads on the single copy only days of the week and will understand what they are paying for.
All that said, I think it's a stupid idea. This is a short-term way out until things turn around or top management either retires or finds another job.
9:43 if this works out the way I think it will, Detroit will have three.
ReplyDelete...and not just in Detroit 8:51 AM.
ReplyDeleteCompetitors are going to use Detroit as confirmation that ad dollars on those days are better spent elsewhere, i.e. their products.
And, it won't be the first time Gannett's made moves where others have profited. Though, this appears to be a big one that will create ripples all over the country.
Again, thanks Craig. Not.