Wednesday, September 14, 2011

Analysis: GCI lost 1.3 million in circ in 2005-2010; figures paint detailed portrait of industry decline

It's no secret Gannett lost thousands of print readers during the industry-wide nosedive over the past six years, when the economy sank into the Great Recession and the Web boosted competition like never before.

2010 annual report's cover
Now, my new analysis of the company's annual reports reveals the true toll. Weekday circulation losses across the mostly small U.S. community dailies totaled 1.3 million from 2005 to 2010, a decline of 27%. That's well ahead of the industry-wide average of 16%, according to the most recent six-year period, 2004-2009, available on the Newspaper Association of America's website.

Certainly, those print readers didn't disappear entirely. Many shifted to the newspapers' websites, Facebook pages and Twitter feeds. And like many publishers across the industry, GCI voluntarily gave up significant circulation in areas far from core markets, where advertisers are most interested in reaching customers. Plus, GCI sold eight papers, including The Honolulu Advertiser, which cost a combined 366,000 in circulation.

Dubow
Still, the figures -- which don't include GCI's top title, USA Today -- offer a window on the dramatic shift in readership and revenue that's roiled the 105-year-old company. And they're one measure of the performance of Craig Dubow in the years since he became chief executive in July 2005. (Spreadsheet shows paper-by-paper numbers.)

My analysis is based on year-end weekday data published in annual reports to shareholders; it doesn't include Sunday circulation. (For the newest circulation figures, go to the ABC's lookup database.) This was an A-Z study, literally, covering community papers from Alexandria, La., to Zanesville, Ohio. The largest is The Arizona Republic in Phoenix (332,577 copies); the smallest, the afternoon Port Clinton News Herald in Ohio: 3,430.

GCI's biggest paper overall, USAT, had about 1.8 million in circulation at the end of last year vs. 2.3 million in 2005. That's a decline of 22%.

Imagine 37 papers -- gone
To frame the 1.3 million loss, that was the combined circulation of GCI's three biggest dailies in 2005: the Republic, the Detroit Free Press and The Indianapolis Star. It is as though they suddenly evaporated. Or consider this: The median circulation of the dailies GCI owned in 2005 was 33,660 copies. Based on that figure, the 1.3 million is equivalent to 37 papers going out of business.

Across GCI, some of the biggest losses were concentrated in Ohio New Jersey -- it accounted for half the top 10-losing papers -- and New Jersey. Ohio is The Cincinnati Enquirer plus 10 very small dailies. Since 2005, both states have consolidated news-gathering jobs, especially at three N.J. papers, where combined newsroom employment fell nearly 50% in February.

Worldwide since 2005, GCI's employment across the company fell 38%, to 32,600 from 52,600. Last year, the U.S. papers alone employed 22,400.

Of course, newspaper revenue has taken a huge hit, too. GCI reported $3.8 billion in advertising and circulation revenue from publishing last year; that's mostly the U.S. community papers. That was down 42% from $6.5 billion in 2005.

Smaller formats, print outsourcing
There have been other noteworthy cost-cutting moves at papers with big circulation losses.

In Cincinnati, which lost about 30,000 copies -- 16% -- the Enquirer announced last month that it's considering switching to a much smaller format, and outsourcing printing to the Columbus Dispatch next year. Cincinnati's losses came despite the December 2007 demise of the competing Cincinnati Post, owned by E.W. Scripps.

At The Journal News in Westchester, where circulation declined 38%, layoffs have been especially heavy, including during the last round of job cuts, in June. Also, like more than half of GCI's papers, printing has been outsourced.

Related: the annual reports for 2005 and 2010.

36 comments:

  1. NJ is a newspaper- and media-rich state. GCI has discovered that if it's going to slash quality there, readers will make it pay a price; they will migrate elsewhere. To blame this all on the Internet and shifting habits makes a very convenient scapegoat. Some of those papers had very strong traditions and respect in those communities. The readers will not tell you they quit the paper because of the Internet. They will tell you they quit because there was nothing in those papers anymore.

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  2. Superb work, Jim. Stunning numbers. It is difficult to believe how executives can rationalize all this.

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  3. So what happens when you compare the same years - '04-'09?

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  4. I am so happy to see these numbers spelled out clearly, Jim. Fascinating work. Numbers never lie. It's interesting that Gannett's overall loss percentage is much higher than other newspaper holding companies during the same period. Wonder how this equates to employee loss? Did Gannett on average shed more or less employees than other holding companies during that time span? It would be interesting to see if Gannett shed a higher percentage/number of employees on a per-paper basis compared to other newspaper holding companies.

    AND, during this period how exactly did top executive compensation compare to those other newspaper publishing companies? Did Gannett on average pay more or less in bonuses/salary and other benefits compared to those other companies.

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  5. Good question. I wanted to focus on Gannett's most recent five-year period. I'm hopeful that 2005-2010 industry-wide data will surface today. I'm surprised that NAA's spreadsheet hasn't been updated through last year. (As I post this, it occurs to me that I need to check with ABC.)

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  6. Take a look at the work by the Gannett New Jersey brain trust: Steal talent from Bridgewater, East Brunswick and Morristown, and the numbers tumble. Ignore Cherry Hill and Vineland, and the numbers aren't nearly as bad. While Asbury Park gets the best in life support to fall in between Cherry Hill and Vineland. Brilliant work.

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  7. Exactly. The powers that be set it up to happen this way, so it happening this way. Maybe they should change direction if they want to stop this company from collapsing. Or they can let it collapse if that is what they and the board of directors want. It's not our choice, it is all theirs.

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  8. Where is the roar that we should be hearing from Dubow's bosses about these numbers? I've been saying this for years: IF the people who have held stock in this company between those years, knew the actual level of gross neglect, incompetence and basic malfeasance among the leaders of this company, they would be attempting to recoup some of their losses.

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  10. During my tenure with Gannett, I saw two products that were systematically dismantled by an advertising director and executive editor who clearly couldn't handle the fact that these titles they had "neglected" in the past were overshadowing (on a percentage basis in an already troubled state) the financial and reader growth of a daily. Never any sour grapes here; just awe.

    On a larger scale among the totality of Gannett, I can't even begin to imagine the level of negative personal emotions which were permitted to fuel bad business/financial decisions over the past five years. It must be staggering.

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  11. But...you present those circulation numbers to the loyal Gannetters and they will point out the number of page views and unique users of the various Gannett websites. They will state that those numbers make up for the lost circulation numbers. Just sayin'. Personally, I don't care. Just give me my check every two weeks and when you finally turn the lights out forever at Gannett, I'll go do something else.

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  12. It took more than a 100 years in most Gannett markets to build titles with deep links to the community. It's taken less than five years for a management team to accelerate their doom. Impressive and breathtakingly depressing at the same time. And stupid. Mainly, just stupid. You can't stop the inexorable shift to digital. You can slow the process so that your digital revenues begin to catch up to print revenues in a meaningful manner. Gannett has lost that ability by recklessly imposing policies that look good on a spreadsheet in McLean, but often don't come close to delivering promises or do anything to enhance long-term viability. No matter how may vice presidents you hire to say otherwise, the outcome has been predetermined for the company and a number of others in the same situation.

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  13. "But...you present those circulation numbers to the loyal Gannetters and they will point out the number of page views and unique users of the various Gannett websites."

    I totally agree. I think a lot of those on the management team have lost the will, courage, interest or a combination of the three to see anything else. At the very least, it's not politically sensible — or feasible — to attempt to "paddle the 'raft' upstream on those 'level 5' rapids." It appears that the current system has fostered a climate that frowns upon the all-too necessary — and common — business approach of self-reflection, -critique, and -correction. Of course this climate didn't just pop up overnight, rather the "darkness" of times just emboldened it.

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  14. One might think that there is a connection between laying off journalists, reducing the size of the paper and shipping reader services to other states/countries and these circulation declines. Naw...that couldn't be it.

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  15. An interesting bit of data would be how the papers Gannett sold are performing.

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  16. The JournalNews is not a Gannett paper and the information posted about this is completely inaccurate. There weren't layoffs there and they are not outsourced for their printing.

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  17. Jim, what's really important about this post, and other recent posts and comments about the deterioration of Gannett newspapers, is found in a presentation that John Paton gave last December to the INMA Transformation of News Summit. (http://bit.ly/dIyuAU)

    Earlier this month you wrote about John Paton, the new chief executive of Digital First Media, and CEO of both Journal Register and MediaNews. In his Dec. 2 presentation, he stressed the need for newspapers to move into the digital space, using cheap or free technology. He also stressed the importance of newspapers to capitalize on their reputation for quality, unbiased news - their "brands."

    To quote from his talk:

    "But there is hope.

    "And it is just where you might expect it – in our core business of news and on the backs of our reputation – The brands themselves.

    "The Web is a crowded place for news. Compelling journalism is key to standing out and it is the power of our brands – our reputation – that can spotlight for our audience where they should look for journalism they can trust.

    "Vint Cerf – called by some the Father of the Internet – and Google’s Chief Evangelist is very direct about this: 'People’s trust in journalism has always been about branding.'

    "... And always, it comes down to the journalism.

    "Lousy journalism on multiple platforms is just lousy journalism in multiple ways."

    The circulation clearly illustrates that newspapers - and the information they provide - are becoming less meaningful in people's lives. Their "brands" are threatened.

    As Gannett continues its rush to prop up profits by cutting staff and resources, it is damaging its brand, its reputation for quality local journalism. It is the only edge it has over digital competition such as Patch.com and the thousands of hyperlocal Web sites popping up like dandelions in spring.

    But as the reputation of Gannett newspapers deteriorates, all the digital efforts will be diminished also.

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  18. Anyone planning to celebrate USA TODAY's 29th anniversary tomorrow?

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  19. Time to roll out the ubiquitous carrot cake.

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  20. 2:42 I believe you are confusing Gannett's Journal News in Westchester, N.Y., with Cox Media's JournalNews (spelled as one word) in Hamilton, Ohio.

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  21. John Paton should be talking about his own awful company, Journal Register (owned by a hedge fund), when he says, "Lousy journalism on multiple platforms is just lousy journalism in multiple ways." Big G is racing them to the bottom.

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  22. PG and JJC, thanks for making the Courier News #1 in lost readership! I am shocked, shocked, shocked that JJ's columns aren't boosting circulation.

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  23. Thanks, Jim. As always, you are the consummate business journalist who crunches the numbers and comes up with the real story. If only Gannett had more of those... still.

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  25. Suggested epitaph for CD's crypt:

    Here lies Gannett CEO Craig Dubow
    Lord of all things for which he didn't know
    Ruined thousands of careers,
    Reviled by his peers
    Paid millions for leading the show

    (Wanted to end with "circus", but it didn't rhyme, sorry!)

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  26. Dear 9:41, no if you want to blame people for the demise of C-N, go to CN himself and JF, people who came up with idiotic pandering subject area titles such as "How We Live" and decided that education in Suburban NJ wasn't worth having a dedicated reporter for. (Hmmm sounds like Passion Topics)
    They presided over the slow gutting of a once great newspaper that won NJPA general excellence awards 7 years in a row.
    CN had the nerve to stand up in a staff meeting and imply that it was OK to rewrite items from the weeklies and press releases. Put the blame where it belongs.
    And while we're at it, Mr. Dubrow should resign after producing numbers like this.

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  27. Re: 9:31's post of:
    "It took more than a 100 years in most Gannett markets to build titles with deep links to the community. It's taken less than five years for a management team to accelerate their doom."
    ---
    One of the best comments ever on the G-Blog!

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  28. Wow, Prof Blair. It scares the pants off me to think you are teaching students. Consummate business journalist? Comparing a mismatched set of numbers ('04-09, '05-'10). No nod to how like, or unlike, the national papers are compared to Gannett's portfolio (have you seen how many afternoon papers there are still?)? No expert opinion solicited, no quotes of any kind from anyone? So Jim takes whatever numbers he wants, makes whatever point he wants, gets no outside input, gets no editing, just the world according to Jim, waxes poetic and you go all gaga? And I'm not saying that he's necessarily wrong in anything he reports. It's just that the reporting is as thin as it could be. I'm guessing you think student papers that rely solely on wikipedia are just grand then, huh?

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  29. 11:25. Thank you for your comment, which included the following: "I'm not saying that he's necessarily wrong in anything he reports. It's just that the reporting is as thin as it could be. "

    I would be delighted to see your data, and to read the expert opinions you have gathered, in your research on Gannett's circulation trends in recent years.

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  30. I love it when you get your panties in a twist. Are you going to say something nasty about my mother next? Geez Jim, grow a skin. This is your blog, and as such this was a good blog post. Interesting numbers. Food for thought. But I am old school, and if this post was judged by traditional business reporting standards, the reporting was thin. As I said: the numbers were off by a year and I would like to see if that skewed the results any. I would have made you compare the same set of years, or not at all. If I were editing, I would want to know how Gannett's papers generally compare with the national list, to make sure comparing 27 percent and 16 percent is valid. And, if I am editing this, I want to hear from some outside experts, if there are any, to give some perspective on these numbers, to point up unusual circumstances, give context. To make this a fuller, richer report. And also because I believe you are biased anti-Gannett, and I want to make sure this report is as straight up as possible. Really Jim, what is there to argue in any of what I suggest? That's how reporting has always been done. You crunched numbers and wrote it. Nice, for a blog post, but thin. And, lest you twist your knickers some more, I was digging the professor. She was the one praising the wonderful reporting. Last thing we need in the industry are more voices who take a small piece of information and give us the big ESPN or Glenn Beck-style commmentary on it. So, I think she should ask more of her students. Guess you disagree with that?

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  31. 11:25,
    As an old researcher once said to me, "the numbers are the numbers." You have an obvious problem with the messenger, that's fine. But, it is what it is.

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  32. LMAO. Good response Jim to 11:25. He/she seems to forget or not know reporting basic information, such as posting the numbers, is also valid journalism. You didn't say it was a comprehensive report or that you were done. You're posting information ass it comes in.

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  33. 11:25, great comment. Ignore Jim's response -- he usually falls back on the excuse he offers here to defend his lack of sourcing, questionable motives, etc. Sometimes I am stunned he was ever a business reporter -- that in itself is an indication Gannett has been clueless for quite a while.

    Also, you'll come to discover that many of today's journalism professors are not very "street-smart" about how journalism should work.

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  34. 11:25. My comment was snarky, and I regretted posting it almost immediately. The issues you raised are fair and important, and deserve a thoughtful response.

    Many of my posts don't require an expert's opinion or perspective; they're one-offs that are self-explanatory.

    Many others do, however, and this post is a good example. Wall Street analysts following the newspaper industry would be ideal.

    But here's the reality of blogging and so-called citizen journalism in 2011. These days, newspapers as large as USA Today struggle to get analysts and other sources to return phone calls. They almost certainly aren't going to respond to media requests from small blogs with limited audiences. This may be the best-read blog about Gannett, but it's still one niche site with a relatively small audience. I don't take it personally. I'd do the same thing if I were an analyst with X hours a week to talk to journalists. There are few of them, and many, many of us. (Try your hand at interviewing Hollywood celebrities, and you'll know what I mean.)

    So, then, I face several choices. I can:

    1. Avoid the complex subjects that cry out for more authoritative, time-consuming reporting.

    2. Post only raw data, text of memos, or financial reports, with no interpretation -- then leave it to readers to reach their own conclusions.

    3. Report what I know -- and don't know -- including as much context as I can muster on my own, while adding all the caveats I think readers need to get the fullest possible understanding.

    In this case, and many like it, I usually choose that third option. So, for example, I anticipate what readers will ask.

    What's the national average circulation decline? Well, I can't find any for the period I studied, 2005-2010. I could have omitted any national data, but then the figure for GCI -- 27% -- would have just hung out there. So, I reach for the next best thing, data from an earlier period -- and make certain to alert my readers to that fact. They may then judge whether it's useful or not.

    I also try to anticipate what an analyst might say -- namely, Gannett is going through many of the same things other publishers are experiencing.

    "Certainly," I wrote, "those print readers didn't disappear entirely. Many shifted to the newspapers' websites, Facebook pages and Twitter feeds. And like many publishers across the industry, GCI voluntarily gave up significant circulation in areas far from core markets, where advertisers are most interested in reaching customers. Plus, GCI sold eight papers, including The Honolulu Advertiser, which cost a combined 366,000 in circulation."

    And then I include what we used to call the "So, what?" paragraph at USAT:

    "Still, the figures -- which don't include GCI's top title, USA Today -- offer a window on the dramatic shift in readership and revenue that's roiled the 105-year-old company. And they're one measure of the performance of Craig Dubow in the years since he became chief executive in July 2005."

    Then, to be as transparent as possible, I posted the dataset I built, and I linked to the underlying source documents: GCI's annual reports for 2005 and 2010. With those, readers interested in learning more -- and challenging my conclusions -- may do so.

    Finally, as always, I turned to my largest source of experts: my readers, including current and former employees at every level: press operators, publishers, marketing directors, news reporters, camera operators, and so on. From these thousands of people, I hope crowdsourcing will turn up more and better information that will improve what I've offered.

    To be sure, other independent bloggers face many of the same challenges. They must become their own experts, or risk missing important opportunities to keep readers informed. It is an imperfect system. But until a working business model emerges to support independent journalism, it is the system we've got.

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  35. "I turned to my largest source of experts: my readers, including current and former employees at every level: press operators, publishers, marketing directors, news reporters, camera operators, and so on."

    None of these people are identified, though. So how do we know they know what they are talking about, especially given the history of this site?

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  36. 7:14. Many of these people are, indeed, identified, because they write to me privately by e-mail, supplying their real identity. They are often my best sources of information, company documents and links to relevant stories.

    Via comments, I don't need to know someone's identity to check out the information they supply. That's especially true if they post memos and links to documents, stories and video.

    Plus, some of the best comments come from anonymous posters like you: The point to inconsistencies in my posts, point out spelling and syntax errors and ask questions that lead me to further investigation -- sometimes into an entirely new area.

    Only today, for example, I posted a long item about how much money Gannett would pay CEO Craig Dubow in the event he left his job because of disability. That idea came partly from a reader who, in a comment, wondered why Dubow didn't simply retire. I wondered if it might have something to do with disability benefits, and then headed to GCI's regulatory filings.

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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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