Sunday, March 16, 2008

Hint: It begins with "G"

I was intrigued by two recent items on Gannettblog: this one about Gannett's revenues through the first two months of the year, and then this one about Gannett's Friday conference call with Wall Street. It's not a pretty picture. Classified advertising is down, real estate advertising is down, employment ads are down, and auto ads are down.
Pro forma classified revenues declined 13.6 percent in the second period. Real estate revenues were down 20.7 percent, employment revenues were 16.1 percent lower, and automotive revenues declined 13.3 percent. U.S. Community Publishing pro forma classified revenues were 18.0 percent lower in February reflecting declines of 26.6 percent in real estate revenues, 23.3 percent in employment revenues and 10.9 percent in automotive revenues.
Those are big numbers, and it's really even worse than it looks. Look past the percentages to the dollars. In the first two months of the year, total ad revenue is down $69 million compared to 2007, and total revenue is down $88 million. The declines are accelerating, as the fall from 2007 to 2008 is more than twice as large as that from 2006 to 2007. Across Gannett, daily newspaper circulation is down more than 290,000 from 2007 to 2008, and circulation on Sundays is down nearly 350,000.

Compare 2008 to 2005 and the hole gets deeper. For the two-month period, ad revenue is $112 million less today, and total revenue is $125 million less today. Total daily newspaper circulation is down about 750,000, and Sunday circulation is down by 1 million.

With all that in mind, see this item at TechCrunch, with the title: "What Media Company Gained the Most Market Share in 2007? (Hint: It Starts With a G)." That would be Google. Henry Blodgett looked at the numbers for 17 media companies and found Google's revenues from ad sales rose by $2.6 billion. That's more than twice as big a gain as the next most-improved, Rupert Murdoch's News Corp. Total ad revenue by those 17 companies rose by 9%, to $58 billion.

Change just one word in TechCrunch's title: What media company lost the most market share in 2007? (Hint: It also starts with a G.) Anyone? Anyone? Bueller? Anyone?

The answer is Gannett. While Google gained $2.6 billion in revenue, Gannett's ad revenues fell by $338 million. So, the pie is getting bigger, and Gannett is getting smaller.

Gannett might try to say that it's making strides online. According to Neilsen NetRatings, Gannett's web sites, which would include USA Today and the Enquirer's Cincinnati.com sites, got 25.8 million unique visitors in February, and increase of more than 3 million from a year ago.

But Google had 104 million unique visitors in February, according to Nielsen. Gannett isn't close. This January report from Comscore shows how wide the gap is. Look at Table 3: Gannett had roughly 23 million unique visitors in January, ranking No. 33 and in the company of groups like CBS, Expedia, Bank of America and Yellowpages.com. In January, Yahoo had 138 million unique visitors, Google 134 million. The New York Times had 48 million.

This is bad, very bad, and there's no way to spin it otherwise. Gannett is losing revenue faster than its gains on the web can compensate for, and -- as the economy skids into recession -- the decline is accelerating. The budget cutting at the Enquirer has been vicious over the last year. It will only get worse. The Enquirer has cut the fat, it has cut into muscle and now it will be asked to start chopping off limbs. When you have fewer people in the newsroom to produce an editorial product, there's less in the product worth reading, so reversing the skid in circulation and producing meaningful gains in web traffic will be nearly impossible.

Gannett apparently believes the key to saving the print product is hard news and watchdog journalism, but Gannett's history is all about the journalism of hope and News 2000 and "Real Life, Real News" (scroll down to October 2, 2oo3). That's all very soft. Twenty-five years of these programs means Gannett doesn't have the DNA or the leadership to do hard news well enough to save itself. Hollis Towns a hard news editor? Tom Callinan? Get serious. Under their leadership the amount of enterprise reporting in the Enquirer as fallen to almost zero, so it looks like the future of the Enquirer is more "hard news" stories about the weather and high school sports and appeals to readers to submit photos of their pets. This is not a recipe for improvement, let alone survival.

Gannett needs to forget the past, and ask what it needs to do to build readership of the newspaper and viewship on the web, and then implement those plans without regard to the next quarter's profit. On the current path, with Gannett thinking about each quarter's profit, it will soon run out of quarters. Maybe CEO Craig Dubow needs to give up his bonus for a year or two, or three, but if Gannett doesn't figure this out soon -- and by "soon," I mean now -- it's dead.

7 Comments:

Anonymous Anonymous said...

The outrageous whoring for IKEA -- and that is exactly what it was, and shameful -- is an example of what the Enquirer brain trust thinks is real news.

The real stuff? Callinan is afraid of it and Towns wouldn't know it if it bit him in the rump.

So if hard news is going to save Gannett the Enquirer newsroom is in for yet another ride on the roller coaster.

6:02 PM  
Blogger Jim Hopkins said...

I imagine everyone's speaking Swedish now in the paper's newsroom now: http://tinyurl.com/3bdy7c

3:23 AM  
Anonymous Anonymous said...

If Gannett is going to cut, positions not related to hard news coverage would be first?

6:02 AM  
Anonymous Judge Crater said...

The Gannett product in Cincinnati is boring, predictable and filled with press releases. The Mike Allen/Spitzer story was typcial fare. Allen hires PR agent, publicist contacts Enquirer editors, paper then does story about his role in sex scandal that cost him his job as Hamilton County Prosecutor. The real news story would have been his ex-wife and what she thought of Mike Allen's antics and bid for the limelight, and what it is like for a woman to go through the glare with a cad and whorehound. The ex is a judge and is easily found at the courthouse. It would have been real stuff. But they are speaking Swedish in those executive suites. In a year or so Stan Chesley or George Clooney or George Vincent will own what's left of that paper and the Gannett holdings in Cincinnati. The frauds, big talkers, brown nosers and butt boys who run the place now will all be looking for work.

6:07 AM  
Anonymous Anonymous said...

Is it surprising to anyone that Google is doing so well, since they don't have to bother with the expense of PAYING for a news gathering operation? Seriously, what role does that have? Reporters ain't cheap.

How well will Yahoo and Google be doing when newspapers die and they don't have anyone to provide them content?

9:58 AM  
Anonymous mr. whig said...

It would have been more fun to see what Rebecca Collins is up to than read Mike Allen's side again, frankly.

10:17 AM  
Blogger ThatDeborahGirl said...

Even in tiny Cincinnati, I can't believe that anyone looks to the Enquirer for classifieds. The last two jobs I've gotten and any part time work has come Craig's list or Elance.com

Sadly, I remember the days when the Enquirer had to do a two part job section. Now during the week, even on Wednesday which used to be like a boomerang of Sunday, the classifieds are nonexistent. And Sunday is what Wednesday used to be, barely there and echo of what Sundays used to be like.

They're doing more "you looked, see it works, place an ad" type "advertising as well". Even their Sunday circulars are down to just a few die hards.

N

2:51 PM  

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