A HEALTHY INDUSTRY LOOKS TO STILL MORE GAINS IN NEW YEAR

Clustering may play a role, as the Los Angeles story may prove in ’98

Will clustering continue to be the trend of 1998?

Clustering is the notion of bringing together multiple newspaper titles – usually within the same geographic region – in an attempt to leverage certain resources. Sometimes those resources include production and editorial in addition to business-side activities, sometimes they don't.

Newspaper companies that have tried it have had good experiences, and in 1997 many made the move. One, Thomson Newspapers, has spent years essentially refocusing its entire business toward what it calls "strategic marketing groups." The company (for which I have done some technology consulting) spent a good bit of energy in 1997 buying and selling properties to build better clusters.

It may be a little overboard to call William Dean Singleton "the king of clustering," but there's no question that he has learned to love leveraging.

In Northern California, Singleton's Alameda Newspaper Group has consolidated a wide variety of functions for six titles, which include the Oakland Tribune. At its Pleasanton facility, in a room that seems to be the size of a football field, ANG does the copy editing and page layout for all six publications; completed pages are digitally transmitted to one of four printing plants.

It was this well-known penchant for clustering that led many observers to conclude that Singleton was the obvious buyer for the Los Angeles Daily News when it went up for sale in October. He would rope that property together with his San Gabriel Valley papers (Pasadena Star-News, San Gabriel Valley Tribune and Whittier Daily News) and have a nice cluster.

It was something of a surprise, though, when Singleton purchased the Long Beach Press-Telegram from Knight-Ridder in November. The cluster now made less sense. Nonetheless, Singleton's acquisition of the Daily News was confirmed in December, and the newspaper entrepreneur now has five titles in the Los Angeles region.

Inside, Senior Editor Pete Wetmore talks with Singleton about his new Los Angeles-area cluster. The CEO of MediaNews Group says the company will consolidate only those functions that make sense, which don't include either editorial or production. Wetmore also talks with the strong, experienced executive Singleton has brought in to be the new publisher in Long Beach.

Also inside, Correspondent Jon Fine attended the PaineWebber Media Conference, held in December in New York. The star of the show, it seems, was the newspaper business. The relentless good news coming from newspapers was met with cheer at the PaineWebber conference; analysts and economists fell all over themselves pointing out how minuscule their 1997 predictions had been.

Probably the most interesting tidbit out of Fine's reporting is the notion that though everyone is budgeting for a 1998 newsprint price increase, it appears few industry observers believe one will stick. As a business devoted to creating intellectual property whose primary medium lives and dies by the whims of a commodity, newspaper profits are tied inexorably to the price of paper. To hear that the leaders of our business don't think there will be a price increase that can be maintained in 1998 is really good news.

A second bit of good news out of PaineWebber is Fine's observation that analysts seem to be willing to allow newspaper companies the room to lose some money in new media. Fine cites losses at Tribune Co. – certainly one of the most new media-oriented companies around – at $30 million for 1997 and $40 million for 1998. If numbers like that don't make the analysts take note, then it would appear that the industry has a green light from Wall Street to invest to protect the business' franchise.

Which leads me to think that clustering and on-line may spell the future for the newspaper business.

– David M. Cole

Inside ...

• Two L.A. purchases give MediaNews a strong new reach
• Annual PaineWebber conference is rosy, just about all over
• First publisher of Sacramento Bee sees a traditional role
• Washington Post Co. expands its technology-oriented niche
• At year's end: a new editor, new deals
• New(s) Media eyes the prospect of competing classifieds on-line
• Persons

From NEWSINC., Jan. 5, 1998, Copyright © 1998, The Cole Group. All Rights Reserved.