Tuesday, June 26, 2012

Dickey: With paywalls, weekday circulation volume is down nearly 7%, while Sunday volume is off 5%

But that's less than what Corporate expected when it developed plans for the paywalls that have now been rolled out across 38 of Gannett's approximately 80 U.S. markets.

Those volume declines are 5 percentage points greater than normal, U.S. newspapers division President Bob Dickey told the annual conference of the Media and Entertainment Analysts of New York on Thursday. In other words, weekday volume was already trending down 2% while Sunday had been flat.

Key to all these figures, of course, is that with the paywalls debut, the company has been simultaneously imposing price increases of 25-30% on existing and new print subscribers. They're now getting digital access, which has been free for more than a decade, bundled into their print subs.

That means the dollar losses from subscription volume declines are being more than offset by the increased revenue from the rate increases. Corporate has previously forecast -- and reiterated last week -- that it expects $100 million in additional earnings starting next year as a result of the paywall shift.

To put that in context, GCI reported $263 million in circulation revenue during the first quarter vs. $551 million in publishing advertising revenue. Overall quarterly revenue was $1.2 billion, including broadcasting and digital. (Here's the first-quarter financial report.)

Stock gives up gains
Applying Corporate's 25-30% rate increase figures against the $263 million, you can see why it expects to hit the $100 million annual target next year.

Since Thursday's presentation, GCI's stock has relinquished some of its initial post-conference gains. GCI closed at $13.20 yesterday, down 30 cents, vs. $13.05 the day before the conference. Markets as a whole took another drubbing yesterday, however.

[Updated at 10:50 a.m. ET.] In mid-morning trade, GCI is up nearly 3% to $13.55. Newspaper publishers' shares are mostly higher amid speculation that News Corp., owner of The Wall Street Journal and Fox News, may split itself into two entities. NWS recently traded for $21.55, up 6%.

This means that, barring actual paywall results that are better than those discussed last week, it's hard to see how GCI's stock will advance much when second-quarter financial figures are released the middle of July. Bottom line: Wall Street has already "baked in" the good news so far.

In his remarks Thursday, Dickey emphasized that the subscription trends have been holding up in the first six markets where paywalls were introduced. In other words, there hasn't been any drop off once the initial buzz faded over the new paywalls.

What's more, there's another vein of digital income GCI has yet to tap heavily: digital-only subscriptions. Currently, virtually all digital subscriptions come with print subs -- whether they like it or not. Print-only subscriptions aren't available, much to the annoyance of some readers in places like Des Moines, Iowa.

Without promoting them "aggressively," the company now has more than 12,000 digital-only subscribers, Dickey said. Clearly, that's a small figure. But Dickey points out that these subscribers are highly coveted because they tend to be from a younger and more affluent demographic.

Related: Listen to an audio replay of the conference.


  1. To be sure, Corporate's forecast doesn't see overall annual revenue growing until 2015, and even then by just 2% to 4%.

    Any gains from paywalls are welcome and long overdue. But they simply slow the rate of revenue declines over the next three years.

    The bottom line: Gannett is a long way off from once more being a growing enterprise.

  2. The only way Gannett makes its numbers is by raising prices and preventing consumers to gain access to local news/content.

    This is a failing business model and a short term band-aid.

    This company lacks innovation, leadership and a set of balls!

    It will only be a matter of time when another 22 year college drop out disrupts Gannett business and the arrogant 55+ AARP leadership team gets thrown out!

    1. Get your facts straight. Only Martore is over 55 among senior Gannett managers. Her flunkies are all younger.

  3. In Vietnam, this was known as 'acceptable losses.'

  4. 10:27's comment is pointless hyperbole. It should be deleted.

  5. 10:47 I don't know. It sure is vivid.

  6. Again with the disappointing ageist crap (see 8:53)! Age has nothing to do with it! Unless one believes in some Orwellian dystopia, skills and talent don't commence nor end, pegged to a birth date. That frame of mind is ridiculous, naive and arrogant.

  7. The circulation drop has just started and will increase greatly when customers get their subscription bills. Less content + higher bills = less subscribers... it's simple math, and it's going to happen.

  8. Dickey found a way to suggest 12,000 subscribers is anything but pathetic. And as for circulation being down but not by as much as they thought, Dickey is simply saying he thought they'd suck more. What are the combined circ losses over the past 3-5 years? Look at the total amount of subscribers and on-line viewers to see what small percentage 12,000 is. Why does anybody fall for this?

  9. Charging more for less and crappier content. -- it's the Gannett way.
    God damnit, bob dickey is so clueless. Why doesn't he wake up and realize how foolish this all is?
    We should have figured out a way to charge for content years ago and we should be providing more and better content now, not ess and crapshit content
    It is all so disheartening

  10. Dickey thinks those 12000 highly coveted digital only subscribers have more value than the print or print plus digital subscribers. They may be younger but I seriously doubt they are more affluent. They also are a small minute part of Gannett's revenue.

  11. 12,000 is pathetic. but when you multiply that by $200 a year, it covers a nice chunk of executive bonuses.

  12. At $200 per year, (assuming these people keep viewing), the gross revenue would be $300K less than Dickey makes per year. And I'd love to know what the loss of circ and ad revenue over the past year. My guess is the $2.4 Mil from paywall is nothing compared to print and ad losses. And to offset those losses, Gannett is getting rid of quality writers, editors... Not covering local stories and being beat to national stories by TV. The coming year will be fun to watch.

  13. Actually, this is not fun to watch.
    It's depressing and painful. I've got 30 yrs w/ this company. Most were good. A few were so-so. The last 2 have been fucking miserable.
    Fun to watch?


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