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November 20, 2008 / Toby Dayton

Two-Paper Markets Will Disappear Soon

Without question, any city with two competing dailies or even neighboring cities with dailies can start counting the days until those dailies either merge or force each other to collapse completely. In a great piece on Followthemedia.com, Philip Stone describes two such markets: Dallas-Fort Worth and L.A.-Orange County. There are undoubtedly others, such as Seattle with two dailies both approaching total insolvency, and Minneapolis-St. Paul.

Here in the Twin Cities, the Minneapolis Star Tribune stopped making debt payments in June and would certainly have declared or been forced into bankruptcy were it not for the fact that Credit Suisse, its primary creditor, has less interest in owning a daily paper than Avista Capital Partners. The St. Paul Pioneer Press is so thin with ads and content on a typical day that I cannot imagine anyone even bothering to pick it up to read.

In any event, I am posting the entire FTM article here because they do not allow access to their site without registering and joining.

How Long Will It Take Until We Have the Dallas-Ft. Worth News Star-Telegram?

It’s just a matter of time until neighborly competing metropolitan newspapers bite the bullet and merge so surely it makes business sense, for instance, for the Dallas Morning News (Belo) and the Ft. Worth Star-Telegram (McClatchy) to come together so instead of two newspapers truly suffering from the economic downturn there arises from the ashes one strong newspaper for the Dallas-Ft. Worth Metroplex?

for sale signAnd in Southern California, how long will it be until we see the Los Angeles Orange Country Times-Register?  On paper it would make a lot of sense for Sam Zell to buy the ailing Register although even Zell could have problems these days putting the financial deal together considering looming Tribune debt repayments and that he is still hasn’t sold the Chicago Cubs, necessary to raise much needed cash to meet debt payments.

The Dallas and Ft. Worth newspapers have already struck a deal on distributing one another’s newspapers in borderline areas where they compete, and they have now started discussions on editorial co-operation.  News editor Bob Mong told staff in an e-mail, “Editors at both papers feel there are some common-sense ways we can save money through cooperation that can free valuable resources in both newsrooms. I can assure you we have no intention of diluting our powerful brand. But I do know there are ways to move forward with the Star-Telegram, save money and continue to provide the outstanding unique content we are known for.”

Jim Witt, the Star-Telegram executive editor, told his staff, “Despite operating in two vibrant markets, the Star-Telegram and The News have not been immune from the effects of revenue declines. There is absolutely no intention of diluting the powerful individual brands of these two papers. We just want to find some common sense ways to work together to save money.”

The Star-Telegram’s publisher, Gary Wortel, new to Ft. Worth this year, says “Our challenges are with the other media, not each other. We need to look for ways to collaborate.”

And the way to really collaborate is to consolidate. But these are two newspapers with proud heritages and the rivalry between Dallas and Ft. Worth cannot be ignored (when this writer lived in Dallas in the early 80s it was often said that Dallas marked the end of the US East Coast and Ft. Worth – just 20 miles down the road – marked the beginning of the US West Coast – so different were the mindsets.)

The general manager of a large Texas metropolitan newspaper told ftm recently that everyone knows that as long as the Dallas and Ft. worth newspapers remain separate they will continue heavy financial bleeding. But bridging the cultural heritage between them – arch competitors in days gone by – is going to be a difficult nut to crack. Maybe management is trying it via the slowly-slowly system – first the distribution deal, now co-operating on editorial, what will follow and how long will it take?

There have been reports that Sam Zell is taking a look at buying the Orange County Register, despite an estimated $13 billion in debt already on Tribune’s books. If an outright buy is out of the question then at least the two might cooperate in some of their production and distribution operations.

Scott Flanders, chief executive of Freedom Communications which publishes the Register, said recently, “We are having a lot of conversations that in the past in a different environment would have been inconceivable.”  The Register and The Times are both bleeding badly and joint cost savings would be a win-win.

With the economic crisis seemingly having no end in sight newspapers are going to have to get far more involved in consolidation. You already see it with co-owned newspapers cooperating (McClatchy’s Fresno Bee now printed at its Sacramento Bee) and you see it with competing newspapers outsourcing printing to their neighbors (Washington Times with the Baltimore Sun, Palm Beach Post (Cox) with Tribune’s Sun Sentinel in F,. Lauderdale, but this is just scratching away at the surface – there needs to be plain consolidation of titles and there are boardrooms out there that already recognize this is inevitable.

Either that or newspapers are just plain going to get shut down, as per the warning by the  Journal Register Company that it will close up to 13 Connecticut newspapers – two dailies and 11 weeklies —  if it can’t find buyers.

Wall Street has marked down newspaper share prices as if to say it is just a matter of time before they go bankrupt; if that judgment is right then it means consolidation, even among bitter rivals of the past, now must go on the table.

After all, at the end of the day newspapers are no different to any other business – market forces will decide those who stay, and those who go, and, yes, that is the point in this economic cycle that newspapers are now approaching.