As the Rocky Mountain News closed its doors last week, I couldn't help but feel emotional about something that so many had poured their hearts and souls into for so many years. While I operated on the periphery of the Denver newspaper war with the Denver Post, my frequent flyer miles still piled up as we competed head-to-head with the Post. Some of the best writers in the country were in Denver--on both sides. The depth of reporting, the commitment to dig for the truth and to hold the powerful accountable produced a couple of outstanding papers.
I was at the Rocky the day of the Columbine shootings. The reporting and the lengths the reporters went to cover the story in tasteful, sensitive, truthful ways was incredible. I watched as the horror of the event was communicated in unbelievable ways and varying perspectives. Columbine is just one example of how top-quality journalism was exercised every day at The Rocky. Beating the Post in quality; when is the last time a newspaper felt it needed to beat anyone in quality, except where two papers compete head-to-head? That's lesson one. Newspapers in this country were so much better when they had competition. What they don't realize is that they have plenty of competition--it's just not printed on a press anymore.
Top-quality journalism didn't stop the red ink, however. Offering a yearly subscription for $3.25 wasn't going to pay the bills. Many of us back in the corporate offices lamented amongst ourselves that there was going to be no winner in the war. It was apparent. If there was to be a victory, it would be Pyrrhic at best. So many tens of millions of dollars were being poured in from both sides that the only winners were the readers and the television stations; since newspaper advertising was so cheap, advertisers were able to spend larger portions of their budgets with TV stations.
The paper could've been closed in 1998 and Scripps would have been millions ahead.
There are so many lessons to be gleaned from the experience. The Denver newspaper war is clearly a lesson of extremes. Two papers, practically free, with some of the best writing and reporting in the country. No one should wonder why newspaper penetration was well over 100% in the Denver market. Many households took both papers at a time when newspaper circulation in the US was falling precipitously. The advertising was so cheap that the published marketplace was filled with ads.
I would never suggest that papers be free, nor the advertising. The Denver situation is, as I stated, a situation of extremes. But newspapers are going to have to recommit themselves to quality. At the same time, newspapers need to follow the laws of supply and demand--something they have never quite grasped, coming from a monopolistic position for so many years. Competition sharpens the senses. Newspapers desperately need to find pricing equilibrium where consumers are willing to pay for their product, or get a different product.
To do all that, newspapers will have to quell the chattering from shareholders who have come to expect large returns, because, in order to succeed, newspapers will have to operate on very thin margins for a long time to come. Newspapers for too many years have been operating to provide analysts with their projections that dare not be missed, lest the stock price fall into an abyss. Analysts telling newspapers what they will make, and newspapers sacrificing the long term to meet the short term demands of analysts is a large part of what has led the newspaper industry to this point. Let's face it, most projections come from spoiled kids in NYC with immediate gratification syndrome who are barely dry behind the ears.
My prescription for the past 5 years to newspapers was to get liquid and buy back stock. Perhaps the stock buy-back was premature, based on where newspaper stocks are now--dirt cheap. So many companies are carrying huge debt loads that bankruptcy will be inevitable for most. They still all need to get rid of debt; sell buildings, sell land. Sell receivables. Do whatever it takes.
Once liquid, buy back all the stock. Every last bit of it. Do it while there's still operating cash to do it with. Do it before a cash infusion is needed just to keep operating. Perhaps find one or two primary investors who understand the goal, aren't in immediate gratification mode and can wait for the returns.
The Rocky provided a great lesson that is being overlooked. A great paper at a decent price will sell. Conversely, an overpriced paper of lesser quality is just something for the dog to poop on, and nobody is going to pay $9.00 a month for that. The very least the rest of the industry can do is take a lesson from The Rocky. I will miss that paper and raise a toast to the many who toiled tirelessly to make it a great paper. Godspeed.
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