COL Newspaper industry needs to make major changes

Reaching young readers should become priority

Associated Press

SAN FRANCISCO -- The newspaper industry needs to develop alternative publications, hire younger workers and offer subscribers better deals to avoid losing more ground in the multimedia race for revenue and readers, several top executives have said.

The snapshot of the industry's future emerged during a forum last week at the annual meeting of the California Newspaper Publishers Association. The forum featured executives from Gannett Co., Knight Ridder, MediaNews Group Inc. and Pulitzer Inc.

The companies own 188 dailies nationwide with a combined circulation of 13.3 million, accounting for about one in every four of the nation's newspaper subscribers.


With readership and revenues eroding in recent years, the executives said the industry needs to rethink its traditional business approaches to remain financially viable and relevant.

To attract more advertising, publishers of dailies should introduce more free weekly community publications, said Knight Ridder CEO Tony Ridder and Mark Contreras, a senior vice president for Pulitzer.

The strategy makes sense because younger readers don't seem particularly interested in reading daily papers and definitely don't want to pay for content, said Gary Watson, who runs Gannett's newspaper division.

Gannett has launched alternative weeklies in Lansing, Mich., and Boise, Idaho, aimed at readers ages 25 to 34 -- an important advertising demographic.

The experiment has taught Gannett to allow for different standards, such as the use of profanity, that wouldn't be allowed at its daily papers, Watson said.

Watson and the other executives agreed that newspapers need to become hipper by hiring more reporters and editors in their 20s and early 30s.

"You really need to hire younger people in newsrooms, writing in a style that appeals to younger people," Ridder said.

MediaNews President W. Dean Singleton concurred noting, "You've got 60-year-old guys covering concerts that are being attended by a bunch of 20-year-olds."


The executives generally agreed that daily papers need to lessen their dependence on subscribers for future revenue and focus more on ad sales.

Paid circulation's contribution to Knight Ridder's annual revenue will likely drop from about 20 percent today to 10 percent during the next decade, Ridder predicted.

"We have been too aggressive in pricing," Ridder said. "Every time we raise the price, I am convinced that we lose subscribers. We are going to be very careful about raising prices."

Several Knight Ridder papers, including the St. Paul Pioneer Press, already have lowered newsstand prices during the past year. Paid circulation is crucial to newspapers because the size of their readership drives their advertising rates.

One of the newspaper industry's former fears -- the rise of the Internet -- is emerging as an increasingly profitable part of their businesses, the executives said.

Singleton said MediaNews' online revenue has doubled in each of the last three years and will likely double again in the company's new fiscal year, which starts July 1.

The Internet accounted for about 2.5 percent of MediaNews' revenue in the latest fiscal year and generated 5 percent of the privately held company's earnings before interest, taxes, depreciation and amortization, or EBITDA, Singleton said.

If not for Gannett's rapidly growing Internet operations, "our situation would be much more dire," Watson said.


Although Knight Ridder's online division also has become profitable, the company still views the Internet as a threat, Ridder said, primarily because it has become a popular place for help-wanted advertising.

"That clearly is coming out of the hides of newspapers," Ridder said.

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