Full Projo paywall set for 2012 as advertising sales slump 11%November 3rd, 2011 at 3:00 pm by Ted Nesi under Nesi's Notes
The Providence Journal’s new website is an interim step for the newspaper as it prepares to roll out its full digital paywall next year, executives at parent company A.H. Belo said Wednesday after reporting a third-quarter loss.
“Providence actually did what I would call a subscriber-content initiative ‘light’ … and there are plans for them to do what we’re doing [now in Dallas] next year,” Jim Moroney, publisher of the Dallas Morning News, told investors on a conference call. He made similar comments in July.
“Providence we will definitely do next year, and they’ll benefit from all the learning the Dallas Morning News will have,” Moroney said. The Journal replaced its old website on Oct. 17 with a new one that publishes brief news items and an electronic replica of the print edition.
The Journal’s advertising revenue fell 11.2% to $38.2 million during the first nine months of 2011, with double-digit declines in display, preprint and digital ads compared with 2010, A.H. Belo disclosed in an SEC filing. Total revenue was down only 6% to $68.8 million thanks partly to a 50% jump in printing and distribution contracts.
“Providence isn’t an easy market these days,” A.H. Belo CEO Robert Decherd said. “Frankly, I think we did well – all things considered – in Providence.”
‘There has to be stabilization’
Decherd said he expects the multiyear drop in revenue at The Journal and its California sister paper The Press-Enterprise will end soon, if only because it’s hard to imagine how it can continue for much longer. The Providence paper’s revenue plunged 40% between 2005 and 2010.
“I think you can expect some modest stability in those markets, because they just cannot continue to decline at the rates they have,” Decherd said. “That’s what we’re counting on. There has to be a stabilization there.” He said “everybody in the industry was surprised” by how weak advertising sales were this spring and summer.
“If advertising trends continue to diminish, we believe we have ways to compensate for that,” Decherd said. “In the event that we continue in the downdraft, we can take appropriate steps while conserving the great brand equity we have in these great newspaper nameplates.”
But Kevin Cohen, an analyst with Imperial Capital, questioned why Decherd and his management team continue to hold onto The Journal and The Press-Enterprise. The Journal’s weekday circulation has fallen 45% over the last 11 years to 90,085 copies, the Audit Bureau of Circulations said this week.
“You look at the portfolio and there’s clearly a real franchise in the Dallas Morning News,” Cohen said. “You look at the other two newspapers, and I don’t think anyone would disagree that they’re not nearly as compelling of a value proposition. Is there any reason to continue to own those?”
Decherd pushed back at the idea, saying he thinks the company has “benefited by having some diversity” despite operating in two “tough markets.” The CEO acknowledged ownership changes in the industry are “something we pay attention to,” but said A.H. Belo is not actively looking to sell either paper. “I’d just say we’re alert,” he said.
‘Really good’ results in Dallas
The executives spoke extensively about new digital initiatives taking place at the Dallas Morning News, its hometown flagship, but offered few details about their future plans for The Journal or The Press-Enterprise.
Moroney described the Morning News’ changes as “our subscriber content initiative – in the industry parlance, our paywall strategy.” The goals are to provide digital services to existing print subscribers while getting online-only readers to pay for content, he said.
At the Dallas paper, subscribers pay $407 a year for 7-day delivery plus full access to DallasNews.com and other digital products, while digital-only subscribers pay $203 a year for access on all devices or $119 a year for a single device. Starting Oct. 1, new subscribers pay $443 for 7-day delivery plus digital access.
Moroney said 91,500 subscribers in Dallas have linked their print and online accounts so far, and a new digital replica edition of the paper that debuted this month has been downloaded 5,400 times. “We feel really good about where we are on our subscriber content initiative,” he said.
Decherd refused to disclose how many customers have purchased digital-only subscriptions to the Morning News, though he said the company will do so eventually.
“The moment that number comes out, everything else we talk about, all the positive things that we’ve mentioned – regardless of what number we use – it’s just going to be the center of attention,” he said.
A.H. Belo’s balance sheet remains healthy, with no debt and $46 million of cash and equivalents on hand. ”Returning cash to shareholders is a top priority,” Decherd said.