“The fact that newspapers didn’t experiment enough,” says Miami Herald Executive Editor Anders Gyllenhaal, “is haunting us today.” [Photo: Eileen Escarda] |
On the fourth floor of the Miami Herald building overlooking Biscayne Bay, editors sit around a horseshoe-shaped “continuous news desk,” monitoring a wall of large screens that display news from miamiherald.com and its online competitors around south Florida. The journalists are pressing to meet deadlines much more immediate than those for tomorrow’s newspaper. They have to get articles in shape for four daily web updates, at 8:30 a.m. and 11, 2:30 p.m. and 4.
 Quick link to CHARTS on Florida newspaper circulation, online readership and stock prices. |
The Herald’s focus on its website has turbocharged the paper’s impact, sometimes dramatically. Just ask Richard Stephen Walsh. Then the director of the airport in Palm Springs, Calif., Walsh was a finalist for the top job at Fort Lauderdale-Hollywood International Airport until the Herald got copies of e-mails in which he’d made vulgar comments about Broward County officials. The Herald’s editors didn’t hold the story for the next day’s newspaper. They posted it online — as it turned out, during Walsh’s interview in Fort Lauderdale. The county manager confronted Walsh. He excused himself and slunk back to California.
Along with giving the newspaper a new immediacy, miamiherald.com is attracting more readers to the Herald than ever before, about 3?million unique visitors a month from across Florida and the globe. “For 100 years, we’ve been a newspaper company, and now we are newspapers, web, web TV, e-mail,” says Executive Editor Anders Gyllenhaal. “When you put it all together, we are suddenly reaching four or five times the audience we used to.”
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While declines in print-only readership are chronicled regularly, the expansion of newspapers’ overall audience via the web has been much less noted. The Pew Research Center for People & the Press recently trumpeted its survey showing that the internet had surpassed newspapers as a source of news for respondents, with 40% citing the web as their top source for national and international news, and 35% citing newspapers. The report failed to point out that the dominant sites for such news are either newspaper websites or sites like Yahoo News and Google News that get most of their content from newspapers.
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“The people who want our product want it in a format that we cannot economically sustain anymore.” — Tampa Tribune Executive Editor Janet Coats |
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How then, to reconcile the audience growth with headlines about dwindling profits, bankruptcies, fire sales, mergers and layoffs at Florida newspapers? The Herald’s newsroom, for example, has shrunk from nearly 400 journalists two years ago to 275.
A big part of the answer is the economic decline that’s hit every industry in Florida, eviscerating ad spending by newspapers’ largest sources of revenue — employment-related ads along with those from the real estate, retail and automotive sectors. At the St. Petersburg Times, which owns Florida Trend, revenue peaked in 2006, then dropped by double-digit percentages in both 2007 and 2008 as a result of advertising declines, especially in classified categories. Circulation revenue at the Times has actually increased but could never make up for the ad losses since it historically amounts to less than a fifth of a newspaper’s income.
Another part of the answer is that while the internet is generating audience growth, the structure of web advertising makes it much less lucrative than print. A full-page ad that appears in all copies of the Sunday edition of a large newspaper can cost upward of $20,000. Web ads can be structured in different ways — the number of times readers click through to an advertiser’s site, for example. But competition on the web means advertisers pay much less to reach a web reader than a print reader, and even large web ads generate only a fraction of the revenue produced by that full-page ad in the paper.
As newspapers struggle with the dynamics of web advertising, the recession couldn’t have come at a worse time, says Rick Edmonds, a media business analyst at the Poynter Institute for Media Studies in St. Petersburg. Papers still have to maintain their old, expensive print infrastructure such as printing plants and distribution systems while spending on new technology related to the web and other new media like iPhones. “Wrestling with debt and other difficulties,” Edmonds says, papers are operating in crisis mode.
Cases in point: McClatchy Co., which owns the Miami Herald and Bradenton Herald, must pay down the $4.5 billion it borrowed to buy the Knight-Ridder newspaper chain in 2006. One possible source of cash: Selling the Herald, which Miami developer and potential buyer Jorge Perez confirms the company has considered.
Tribune Co., the Chicago-based TV and newspaper conglomerate that owns both the South Florida Sun-Sentinel and Orlando Sentinel, has filed for bankruptcy protection, beset by the $13-billion debt incurred when real estate magnate Sam Zell took the company private in a 2007 leveraged buyout. Morris Publishing, which owns the Florida Times-Union in Jacksonville, has hired bankruptcy specialists as advisers, according to Editor & Publisher magazine.
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“Despite the carnage in the banking industry and despite the carnage
in the automotive industry, no one is predicting a world without checking accounts or automobiles. So how come when some newspapers run
into trouble, everyone is predicting the end of print?” — St. Petersburg Times Editor, CEO and Chairman Paul Tash |
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The bottom line
The pressures have put cost-cutting at the top of every paper’s agenda. Newspapers have frozen positions, offered early retirements and laid off hundreds. The news staff at the Palm Beach Post is half its former size; a third of the Tampa Tribune’s former staff is gone; the newsroom staff at the St. Petersburg Times is 25% smaller than it was just three years ago.
Two days a week, Media General’s Hernando Today publishes only online; media analysts say other dailies may follow a similar path. News operations for the Ocala Star-Banner, which began publishing in 1866, are now run from the Gainesville Sun, a sister New York Times Regional Newspaper Group property 40 miles away.
Newspapers that once competed fiercely for stories now share work. South Florida’s three dailies, the Herald, Sun-Sentinel and Palm Beach Post, began sharing routine coverage last year to free up staffers for other stories. In November, the Herald and St. Petersburg Times merged their Capitol staffs.
Newspaper Revenue Breakdown |
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| Most of a newspaper’s revenue comes from advertising, with less than a fifth from circulation: |
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| Retail ads |
40% |
| Classified ads |
26% |
| Circulation |
15% |
| National ads |
13% |
| Online ads | 6% |
| Source: Newspaper Association of America | |
Such developments have led many to worry that having fewer reporters shining light on government, from local school-zoning changes to state spending decisions, means Floridians will be less informed and democracy will suffer. Others counter that newsroom changes will simply force papers to become more efficient, avoiding pack-coverage of events and spending more time digging for original stories. St. Petersburg Times Executive Editor Neil Brown takes a practical view of the merger of his Tallahassee Capitol staff with the Herald’s. The idea was to create a “journalistic powerhouse,” he says, “rather than stand by as the Capitol press corps shrinks and merely lament that there is less being written about the offices of power in Florida.”
An additional challenge posed by staff cutbacks is whether some newspapers could end up downsizing their print product into irrelevancy by the time the economy rebounds. Readers went ballistic last year when the Tampa Tribune cut its paper to one news section; executives responded by restoring a section. The paper’s executives don’t like the change any more than readers do, says Executive Editor Janet Coats. But, she says: “The people who want our product want it in a format that we cannot economically sustain anymore. My belief is that increasingly the newspaper will be viewed as the add-on product to the web, instead of the other way around.”
Post-recession, the question for newspaper executives is whether traditional print revenue sources will return to former levels. Websites such as Craigslist and Monster have cut into newspapers’ classified ad share. Media industry analyst Ken Doctor says publishers “are most hopeful about retail and about auto-related revenues, with deeper concerns that recruitment and real estate advertising (listings-heavy and thus internet-friendly) may suffer deeper, permanent losses.”
Some believe newspapers signed their own death warrant when they decided to give their product away free on the internet. At the Arkansas Democrat-Gazette in Little Rock, Walter E. Hussman Jr. is one of the few publishers who gives nothing away but headlines and the first paragraph or two of stories. Anyone who wants to read more of his newspaper’s content has to subscribe. The Democrat-Gazette’s print circulation has also declined, though not as dramatically as that of many other papers.
Still, as popular as it has become to predict newspapers’ demise, there’s little evidence that Florida’s papers are on their way into oblivion. “Despite the carnage in the banking industry and despite the carnage in the automotive industry, no one is predicting a world without checking accounts or automobiles,” says Paul Tash, editor, CEO and chairman of the St. Petersburg Times. “So how come when some newspapers run into trouble, everyone is predicting the end of print?”
Even as the downturn squeezes profits, newspapers are developing new ways to connect audience and advertisers. Some traditional advertising, for example, may be replaced by sponsorships in which an advertiser backs one particular section or editorial product. The Orlando Sentinel’s sales staff recently landed a yearlong sponsorship for its online “Breaking News Center.” Scripps newspapers on the Treasure Coast, which include the Stuart News and Jupiter Courier, are among those partnering with Yahoo News on “behavioral targeting,” which ties ads that readers see in their local newspaper to their other actions on the internet, like car shopping.
Perhaps most important, in every large city in the state, the daily newspaper has managed to establish itself as the dominant local information source on the internet. At the Tampa Tribune, the newspaper, its website and television station WFLA, all owned by Media General, work together in one newsroom to cover the Tampa Bay area.
 The DeLand-Deltona Beacon — run by co-publishers Barb Shepherd (right), Sammie Wiggins (standing) and Joann Kramer — is growing its online readership and revenue in communities where the Daytona Beach News-Journal and Orlando Sentinel have pulled back. [Photo: Kelly LaDuke] |
Going hyper-local
Private and community newspapers are struggling to a lesser extent than chain-owned papers as they invest in innovation and fill some of the gaps left by cutbacks. Analysts expect some papers to again end up in the hands of local owners willing to live off slimmer margins. Some community newspaper owners, including Matt Walsh, a longtime Florida business journalist who now owns a group of weekly newspapers in Sarasota, have waited to make an internet push in order to learn from larger papers’ mistakes. He and other community publishers are trying to capture “hyper-local” market share — giving readers the sort of neighborhood coverage they won’t find in either the area metro daily or the global internet news sites.
In Volusia County, the DeLand-Deltona Beacon publishes only twice weekly but is becoming a daily force on the internet. Online, the Beacon is growing both readership and revenue in communities where the Daytona Beach News-Journal and Orlando Sentinel have shuttered bureaus and reduced their local news coverage.
Non-profits modeled after such efforts as Propublica.com, a foundation-funded online paper devoted to investigative reporting, also may be on Florida’s horizon. A Tallahassee consortium has been working to fund a Sunshine State News Bureau modeled on Minnpost.com (motto: “High-quality journalism for news-intense people who care about Minnesota”).
New print products will be part of the mix as well. To win young adult readers, the St. Petersburg Times in 2004 launched a free weekly called tbt* (Tampa Bay Times) that had positive cash flow within a year, went daily in 2006 and became profitable last year, earlier than projections.
At the Herald, Gyllenhaal faults newspapers for being too slow to develop a business model that integrated web and print. “The fact that newspapers didn’t experiment enough,” he says, “is haunting us today.” But he says the recession is obscuring a future for newspapers that he believes is as bright as the screens of the monitors above the Herald’s continuous news desk.
“When you look at the foundational changes under way in Florida and our country, they speak to the need for the kind of deep and probing journalism that newspapers have always been about,” Gyllenhaal says. “You cannot understand it all without reading deeply. You cannot understand it all without reading newspapers.”
Next page, charts showing newspaper circulation, online readership, and stock prices.
Circulation Drops — While Clicks Climb
The decline in newspaper circulation has been accelerating since the late 1990s.
Some of the decreases came as newspapers cut costs by not distributing outside their immediate bases. Newspapers also lost some subscribers by eliminating big discounts, which artificially inflated their circulation numbers. By 2008, total national newspaper circulation had fallen to around 50 million, the lowest level
since 1946. But while print circulation has declined, Florida’s newspapers are seeing
double-digit growth in online readership. The second chart below shows web traffic at Florida’s top newspapers in a 30-day period last fall. “Unique visitors” is a count of the individuals who have come to the site during that time; additional visits from the same person aren’t counted.
| Circulation at Floridas largest newspapers | ||||
| Sunday Circulation | ||||
| Newspaper | Owner | Fall 2003 | Fall 2008 | % Decline |
| St. Petersburg Times | Times Publishing | 397,695 | 390,289 | -1.9% |
| Miami Herald | McClatchy | 419,667 | 279,484 | -33.4 |
| Orlando Sentinel | Tribune Co. | 362,170 | 307,976 | -15.0 |
| South Florida Sun-Sentinel | Tribune Co. | 339,120 | 269,256 | -20.6 |
| Tampa Tribune | Media General | 285,487 | 258,089 | -9.6 |
| Palm Beach Post | Cox | 190,831 | 164,364 | -13.9 |
| Florida Times-Union | Morris | 226,620 | 181,155 | -20.1 |
| Source: Audit Bureau of Circulations | ||||
| Online ReadershipOnline Readership | |
| Newspaper | Unique Visitors Over 30 Days |
| St. Petersburg Times | 3,692,037 |
| South Florida Sun-Sentinel | 3,634,643 |
| Miami Herald | 3,472,221 |
| Orlando Sentinel | 3,060,795 |
| Tampa Tribune | 2,871,783 |
| Palm Beach Post | 2,008,761 |
| Florida Times-Union | 1,045,691 |
| Source: Omniture | |
Taking Stock
While most of Florida’s large dailies, by themselves, generate positive cash
flows, their margins are much smaller than when the papers pumped out the 20%-plus profits that the parent companies traditionally demanded, and the individual results disappear into red ink as the chains sink under heavy debt loads. The shares of public newspaper corporations that do business in Florida have lost from 71% to 93% of their value over the past year.
| Stock Price (Feb.) | ||||
| Company | Florida Newspapers | 2004 | 2008 | 2009 |
| Gannett (GCI) |
Florida Today Fort Myers News-Press Pensacola News Journal Tallahassee Democrat |
$88 | $35 | $5 |
| McClatchy (MNI) |
Miami Herald Bradenton Herald |
$69 | $11 | 70¢ |
| Media General (MEG) | Tampa Tribune | $65 | $20 | $2 |
| New York Times (NYT) | Gainesville Sun Lakeland Ledger Ocala Star-Banner Sarasota Herald-Tribune |
$47 | $17 | $5 |