Journal Register Likely to Reduce Print at Some Papers

Rick Edmonds on Poynter: “Journal Register likely to reduce print to three days a week at some papers,” Sept. 20, 2012.

 The new slimmed-down Journal Register company, being pieced together in a bankruptcy proceeding, is likely to reduce print frequency at several of its 20 dailies.

“I would consider and am considering a reduction in print frequency in some markets — (which ones) to be determined,” CEO John Paton wrote me in an e-mail interview earlier this week. “I think it makes sense to think about the frequency of print as print revenues decline and digital revenues increase.”

>snip<

Paton declined to discuss what miscalculations in a bankruptcy plan three years ago, under different management, left the company with too much debt to carry again so soon. He also said it would be wrong to assume the same issues are creating an equal financial problem at MediaNews Group, the much larger chain controlled by Alden and managed by Paton’s Digital First company for just over a year.

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Los Links: More on Journal Register’s Bankruptcy

For your reading pleasure, more stories in the wake of Journal Register Company’s bankruptcy announcement.

In Denver Post & MediaNews Group: Fallout from partner Journal Register Company bankruptcy? Westword’s Michael Roberts reports that, according to “an insider,” there was some dissension in the ranks once the bloom was off the Digital First rose:

By summertime, however, our source reported grumbling over what was perceived as top-heaviness at Digital First Media, with new senior executive hires during a time of layoffs at MediaNews Group papers around the country. The fear: MediaNews Group was being used as a cash cow to build up DFM. Our source also noted tension between MediaNews Group types and folks imported by Paton, many of them with Journal Register Company roots.

GigaOM’s Mathew Ingram writes in Newspaper restructuring — think steel, cars and airlines, the newspaper industry’s transformation will need to be measured in decades:

If there is a poster child for the “digital first” newspaper movement, it is probably Journal Register Co., which manages a chain of dailies and weeklies in the eastern U.S. John Paton took the helm as CEO after it emerged from bankruptcy in 2009, and implemented a wide range of digital-first moves — and yet parent company Digital First Media just announced that Journal Register Co. is filing for bankruptcy for a second time. The not-so-hidden message in all this is that despite all the pain of the last few years, the restructuring of newspapers isn’t even close to being over: as we’ve seen with the large structural changes in the steel industry, car makers and the airline market, transforming an industry with massive legacy costs is a long and bloody process. What emerges at the end remains to be seen.

In Journal Register, future-of-news star, is bankrupt again, Ryan Chittum writes for the Columbia Journalism Review that the numbers John Paton mentioned in his announcement are meaningless without some context:

The reason we don’t know more about the numbers is that JRC, as a closely held company, releases financial information only selectively—in sharp contrast to its “open journalism” philosophy.

>snip<

Paton, for instance, has repeatedly said digital revenues at JRC were up some large percentage since he took over. He does so again in his bankruptcy note. Yes, but from what to what? Those are big numbers all right, but 235 percent of not much is still not that much, and its worth noting that JRC’s digital revenues were far below industry average when Paton took over. It’s much easier to grow fast off a low base, and Paton has used the company’s privately held status to cherry pick positive numbers without having to paint a full picture—one that definitely didn’t include an imminent bankruptcy.

A former Journal Register employee wrote a letter about the bankruptcy announcement that is posted on Romenesko:

From RACHEL JACKSON, former Journal Register employee: The [Journal Register] Chapter 11/sale announcement does not surprise me in the least – and the employee you quoted as calling this “horseshit” is exactly right.

Lastly, in the wake of the bankruptcy announcement there has been some grumbling (perhaps it’s contagious) about the fact that Project Thunderdome is located in Manhattan rather than, say, Willoughby, Ohio, where real estate costs are presumably less. Jim Brady explains the reasoning in a piece by Adrienne LaFrance for Nieman Journalism Lab, Why does Project Thunderdome have to be in New York City?

“You want to be in a position to get the best possible people you can,” Brady said. “I’d love to get in an argument with anybody who says there isn’t a lot of journalistic talent in New York City.”

Carry on.

Is Alden Global Capital Souring on Newspapers?

From a piece by Martin Langeveld at Nieman Journalism Lab: Journal Register’s bankruptcy is strategic, all right — but for whom?

In an in-depth analysis of the possible implications of Journal Register Company’s bankruptcy filing, Langeveld writes that while Alden Global Capital’s initial strategy seemed to be one of consolidation, the hedge fund might have changed its mind — it has shed around half of its newspaper holdings in the past year.

Last year in July, I estimated Alden’s total media investments to be about $750 million. Today, after the various sales and counting JRC’s value as zero, those holdings are probably down to about $300 million, and it seems clear that Alden would just as soon get out completely — at least from newspapers.

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Journal Register Co. Files for Bankruptcy

UPDATES AT BOTTOM OF POST:

• John Paton’s letter to employees and FAQ
• Steve Buttry’s take
• Running commentary on Romenesko
• Journal Register Co.’s reboot on Nieman Journalism Lab
• Story by The Denver Post’s Andy Vuong
• Analysis of the news on Poynter.org

FROM JOHN PATON’S blog: “Another Tough Step”

Today Digital First Media announced Journal Register Company has filed for Chapter 11 bankruptcy and will seek to implement a prompt sale.

We expect the auction and sale process to take about 90 days, and I am pleased to tell you the Company has a signed stalking horse bid for Journal Register Company from 21^st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC.

So why file Chapter 11?

The Company exited the 2009 restructuring with approximately $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that are now unsustainable and threaten the Company’s efforts for a successful digital transformation.

From 2009 through 2011, digital revenue grew 235% and digital audience more than doubled at Journal Register Company. So far this year, digital revenue is up 32.5%. Expenses by year’s end will be down more than 9.7% compared to 2009.

At the same time, as total expenses were down overall, the Company has invested heavily in digital with digital expenses up 151% since 2009. Journal Register Company has and will continue to invest in the future.

But also from 2009 to 2011 Journal Register Company’s print advertising revenue declined 19% and print advertising represents more than half of the  of the Company’s revenues. Print advertising for the newspaper industry declined approximately 17% over the same time period, according to the Newspaper Association of America. As well, both print circulation and circulation revenue have also declined over the same time period.

Since 2009, printing facilities have been reduced from 14 to 6; 9 of the 50 owned facilities have been sold and 8 distribution centers have been outsourced.

During the same time period, debt was reduced by 28% with the Company currently servicing in excess of $160 million of debt.

All of the digital initiatives and expense efforts are consistent with the Company’s Digital First strategy and while the Journal Register Company cannot afford to halt its investments in its digital future it can now no longer afford the legacy obligations incurred in the past.

Many of those obligations, such as leases, were entered into in the past when revenues, at their peak, were nearly twice as big as they are today and are no longer sustainable.

Revenues in 2005 were about two times bigger than projected 2012 revenues. Defined Benefit Pension underfunding liabilities have grown 52% since 2009.

After a lot of thought, the Board of Directors concluded a Chapter 11 filing was the best course of action.

Journal Register Company’s filing will have no impact on the day-to-day operation of Journal Register Company, Digital First Media or MediaNews Group during the sale process. They will continue to operate their business and roll out new initiatives.

If you have questions just ask – you know how to reach me.

John

John Paton
Chief Executive Officer
Digital First Media

John Paton’s e-mail address is jpaton@digitalfirstmedia.com and he can be found on Twitter at @jxpaton.

FROM AROUND THE WEB

• John Paton’s letter to employees and FAQ
• Steve Buttry’s take on the matter
• Running commentary on Romenesko
• Joshua Benton writes about Journal Register Company’s reboot on Nieman Journalism Lab

JRC is just first in line at the pension-killing bankruptcy table. Your newspaper chain might be next. http://t.co/AwSw8exW

— Joshua Benton (@jbenton) September 5, 2012

• Denver Post reporter Andy Vuong’s story about the bankruptcy
• Rick Edmonds analyzes the situation at Poynter.org

Los Links: Break The Chains, But Don’t Wait Too Long

Want to save local newspapers? Then break the chains that hold them back
In this piece for OJR: The Online Journalism Review, Robert Niles writes that economies of scale don’t work in the newspaper business anymore and it’s time to break up the chains.

Locally-focused news publications must become truly local, with local information, produced by local reporters with local ties, sold to local advertisers by a local sales staff who work for a local owner.

News Corp Split, Buffett’s Bet Top Year of Big Media Ownership Changes
The Pew Research Center’s Project for Excellence in Journalism has a nice wrap-up of media transactions over the last couple of years.

According to the investment banking firm of Dirks, Van Essen & Murray, which monitors newspaper transactions, a total of 71 daily newspapers were sold as part of 11 different transactions during 2011, the busiest year for sales since 2007.

There’s a mention of Alden Global Capital’s acquisition of the Journal Register Company, and “Alden Global has also invested in several other newspaper organizations,” including MediaNews Group (two of the seven MediaNews Group directors are from Alden Global Capital).

And be sure to check out the list of Who Owns the News Media that covers newspapers, TV and radio.

The Fissures Are Growing for Papers
The New York Times’ David Carr writes about “cracks in publishing operations,” one of the bigger ones being underfunded pensions that threaten companies’ financial health. “There are smart people trying to innovate, and tons of great journalism is published daily, but the financial distress is more visible by the week.”

Those of us who work inside the racket like to think of our business as unique, but with underfunded pension plans, unserviceable debt and legacy manufacturing processes and union agreements, the newspaper industry looks a lot like, well, steel, autos and textiles.

Report: How to Build Trust In the Digital Age
Mediabistro’s 10,000 Words column has a piece by Mona Zhang about a report that examines the quality of journalism in the digital age, which “investigates the notions of objectivity and impartiality in the digital world, and whether or not we can trust the new forms of journalism that are emerging as a result of new technologies.”

He (Richard Sambrook) writes that as the traditional business models erode, there has been an increase in “journalism of assertion” and “journalism of affirmation”—models that rely on immediacy and volume, and affirming the beliefs of its audience.

Newspapers Chronicle Lives of Returning Veterans
Nu Yang wrote a piece for Editor & Publisher about the American Homecomings project by The Denver Post and Digital First Media.

The site is really a public service project,” (Lee Ann) Colacioppo said. “We’re doing it for the veterans who are returning and to serve that community … the feedback we’ve received so far is from readers thanking us for sharing these stories and veterans who appreciate the attention to the subject.

And a link to the American Homecomings project since there doesn’t seem to be one in the story.

Lastly, here’s a fun little infographic about the consolidation of media in America.

Old Dogs, New Tricks And Crappy Newspaper Executives

DIGITAL FIRST MEDIA CEO John Paton addressed the Canadian Journalism Foundation in Toronto on Feb. 16.

From Digital First, Feb. 18, 2012:

>snip<

And now, like many of you, I am struggling hard to teach this old dog new tricks.

Struggling to accept that much of what we know is no longer valid.

And trying to come to grips with the fact that crappy newspaper executives are a bigger threat to journalism’s future than any changes wrought by the Internet.

>snip<

The Journal Register Company – the Company I took over two years ago – and, more recently, MediaNews Group –which we now both run under Digital First Media – could be the poster kids for what ails the US newspaper industry.

We count our products in the hundreds.

Our employees in the thousands – ten thousand actually.

Our audience in the millions – 57 million actually.

And our revenues are counted in the “Bs” as in billions.

And, it is profitable. With better margins than an average Dow Jones listed company.

We have titles pre-dating the American Revolution and can stretch our lineage back to at least one predecessor title co-founded by Benjamin Franklin. Well, just about stretch if we stand on a high stool.

Another title was around to publish George Washington’s obit.

And our core mission is enshrined in the nation’s Constitution.

And none of the above will save it or other companies like it – unless we and our industry profoundly change how we do business.

>snip<

Because change we must.

And if we are going to change we are also going to have to admit that the Print model is broken. Don’t believe me – then read any of the newspaper company Chapter 11 filings in the United States or Clay Shirky.

If you haven’t read Shirky’s essay Newspapers and Thinking the Unthinkable and you are in the newspaper business then brother let me tell you – you are not paying enough attention.

His message is simple:

“If the old model is broken, what will work in its place? The answer is nothing. Nothing will work. There is no general model for newspapers to replace the one the Internet just broke.”

And his message is clear:

You don’t tinker or tweak a broken model. You start again anew. And I would add build upon our foundations.

To do this you have to let go of those things we once held true. Like:

– We are the gatekeepers of information.

– That we are the agenda setters and that we decide what news is and what is not.

– And that we keep the Outside world outside and only let in the chosen few – people like us.

So, if we can admit the Print model is broken what else must we recognize isn’t working anymore.

I think it is this:

As career journalists we have entered a new era where what we know and what we traditionally do has finally found its value in the marketplace and that value is about zero.

Our traditional journalism models and our journalistic efforts are inefficient and up against the Crowd – armed with mobile devices and internet connections – incomplete.

Our response to date as an industry has been as equally inefficient and in many cases emotional.

“You’re gonna miss us when we’re gone” is not much of a business model.

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Ed Moss Appointed President And CEO Of The Denver Post

From The Denver Post, Feb. 10, 2012:

Digital First Media named Ed Moss, the former publisher of the San Diego Union-Tribune, as The Denver Post’s new president and chief executive on Friday.

Moss also was named an executive vice president of Digital First Media, responsible for MediaNews Group’s operations in Colorado, Texas and New Mexico. MediaNews owns The Denver Post.

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Prairie Mountain Publishing To Lay Off 17 In Outsourcing, Consolidation Move

From the Daily Camera, Feb. 7, 2012:

Prairie Mountain Publishing Co., the Boulder-based publisher of the Camera, Colorado Daily and Longmont Times-Call, plans to lay off 17 employees in Boulder as it consolidates and outsources some advertising design and production functions, Al Manzi, the Camera’s publisher, said Tuesday.

The majority of the layoffs will occur in Prairie Mountain’s advertising design department, Manzi said.

Fifteen positions will be eliminated as part of a broader initiative by Prairie Mountain’s parent company — Digital First Media, a joint partnership operated by MediaNews Group and the Journal Register Co. — to outsource print and digital advertising design operations to Illinois-based Affinity Express.

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Westword also weighed in …

Denver Post President And CEO Jerry Grilly To Retire

From The Denver Post, Jan. 12, 2012:

Jerry Grilly, president and chief executive officer of The Denver Post will retire on Feb. 10, newspaper owner MediaNews Group Inc. said today.

>snip<

“I came out of retirement almost three years ago to help MNG, and especially The Denver Post, create the transformational model into the digital world in our efforts to not only survive but thrive in the new and modern digital information age,” Grilly said in a statement. “Our team is nationally respected in those efforts and the Digital First Media leadership team brings an even greater effort and vision to accelerate our model. It has been an honor and privilege to work with and serve an incredibly dynamic and talented team.”

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Find Post writer Aldo Svaldi’s longer story here.

Newspapers’ Digital Apostle

From the New York Times, Nov. 13, 2011:

Last week, John Paton met with executives of the MediaNews Group, the second-largest newspaper chain by circulation in the country, home to papers like The Denver Post, The Detroit News, The Salt Lake Tribune and a broad swath of dailies throughout California, including The San Jose Mercury News.

Mr. Paton was given control of MediaNews by its owners in September based on his success operating the smaller Journal Register Company after it emerged from bankruptcy in 2009. Among other feats, he increased digital revenue by over 200 percent in his first full year as chief executive.

According to Mr. Paton, his new employees at MediaNews were hoping to discern the silver bullet that would enable them not only to survive, but prosper. Instead, he worked his way through a detailed presentation about outsourcing most operations other than sales and editorial, focusing on the cost side that might include further layoffs, stressing digital sales over print sales with incentives, and using relationships with the community to provide some of the content in their newspapers.

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Also check out the Q&A with John Paton.