FEWER NEWSPAPER COMPANIES, PAPERS, MEANS CHANGE

Consolidation hurts, but industry executives should get used to it

They sent out an e-mail at the Los Angeles Times last Monday. "Effective immediately," said the missive, "all references to the Times Mirror Co. or to Times Mirror Square are to be removed from the paper."

And so, on Tuesday – in the Los Angeles Times anyway – Times Mirror ceased to exist. The boards of directors of Tribune Co. and Times Mirror Co. had agreed that the former would acquire the latter.

The dissolution of what was once a great newspaper company is, in some ways, more hurtful than the closure of but one newspaper. Either way, something is lost.

But in a world of rapidly increasing consolidation throughout business, it shouldn't be surprising that newspapers are as vulnerable as any other industry.

In fact, as the retail business has consolidated – and has been transformed by the marts, K and Wal – newspapers have lost much of their retail base.

And, despite the recent upturn in national advertising, newspapers remain resolutely local. As the local community changes – as society changes – so does the newspaper business. Whereas there was once an advertising base and a readership base that could support two – or more – newspapers in a community, today our readers tell us they don't have time and our advertisers tell us they don't have the money.

I believe, therefore, it is natural for consolidation to occur in the newspaper industry. As there are fewer and fewer customers, there will be fewer and fewer newspapers and newspaper companies.

Industry analyst John Morton observed in his column in the American Journalism Review recently that Katherine Graham, the grande dame of the Washington Post, once said that it takes just as much energy to manage a big paper as a small one. This probably comes as a shock to Gannett Co. Inc., a company that appears to be back on the acquisition track.

Gannett last week purchased 21 of Thomson Corp.'s 55 daily papers, eight of them in Ohio (where it already owns the Cincinnati Enquirer and three other titles). Curiously, Gannett shunned a ninth Thomson Ohio property – The Repository of Canton. Could it be that the 63,711-circulation Repository (which also has a weekly operation) was too big for Gannett?

What these consolidations are showing is that every newspaper company has its own beliefs about where its strengths lie. Gannett, Community Newpaper Holdings (another big Thomson buyer), Dow Jones/Ottaway and the New York Times Regional Group believe only small properties are manageable. Tribune – with its acquisition of Times Mirror – appears to be confident about its abilities to cross-pollinate television, newspapers and the Internet (a strategy shared by Belo Corp. and Media General).

Privately held newspaper businesses like Advance/Newhouse, Cox and Hearst don't seem quite tied to either the size or the multimedia strategies – they have papers both big and small, those with multimedia ties and those without (though the multimedia strategies at all three companies are strong and deep).

Thomson's sale of its newspapers to concentrate on its electronic publishing businesses underscores what media managers are going to have to make a mantra for the next decade: "Focus, focus, focus."

If you are good at community newspapers, then do that; if you are good at major metros, then do major metros. If you are good at suburbans, do suburbans. And, if you don't have the guts, if you don't have the fire, then get out of newspapers.

Like Thomson's retention of the Globe and Mail in Toronto and Gannett's ownership of USA Today (not to mention the Detroit News and the Cincinnati Enquirer), there will be anomalies, but those just prove the rule.

The newspaper landscape is changing and whether it's an e-mail edict to remove references to the previous owner from the paper or merely an alliance with a local TV station, the pace of change is increasing.

– David M. Cole

Inside ...

• Times Mirror no longer, Thomson mostly sold and Central goes on block 2
• Joint operating agreements: successes as well as failures
• Sites help customers get their classified message on-line and in print
• Death notices alive, well on web sites that seek to preserve memories
• Pager foe finds device superior to cell phone
• Persons

From NEWSINC., June 19, 2000, Copyright © 2000, The Cole Group. All Rights Reserved.