Fine's tough prescription for newspapers
By Doug Fisher
One of Wall Street's leading analysts of the publishing and advertising
industry has some strong medicine for newspapers.
Fast-forward five years and kill your margins, Lauren Rich Fine
says. Let the stock price fall to where you can sustain it. Reward
stockholders with better dividends or share repurchases using the
industry's healthy cash flow; then put up the "work in progress
sign" and get to work reinventing yourselves.
"I just don't see enough rapid innovation. I see a lot of
hand-wringing," Fine told the American Copy Editors Society
meeting in Cleveland in late April. Too many managers, she said,
are "fighting to get back to something they can't get back
to."
Fine, who lives in Cleveland, has been Merrill Lynch's chief industry
analyst for 18 years. Her own experience, she said, is instructive.
While she used to be praised for the depth of her analysis, she
said, now she is praised for how fast she is.
"You can't make everyone happy. Those days are gone. No one
will pay you for it," she told the copy editors. "You'd
better have a better balance of what they want than what they need
if you expect to sell papers."
Fine said she continues to be a big supporter of newspapers and
feels the industry is far from dead. "I would argue it provides
the greatest value to readers," she said.
But she is not as sanguine as those who argue that newspapers have
always rebounded from competition – first from radio and then
TV. It's a specious argument, she said, because radio and TV opened
new advertising markets. That money "was never yours to be
had," she said.
Now, local cable TV and the Internet directly eat into newspapers'
ad markets, Fine said. And not only has the Internet become the
fastest-growing medium in history, but withholding content from
it won't work because there is plenty of citizen-generated content
to fill the void, she said.
The news side
Fine said newspapers have to learn the 24-hour news cycle, should
rethink the push to attract youth and need to understand that readers
are looking for a point of view.
– "You can't think of yourself as a once-a-day medium.
I see a big cultural divide here."
– "This industry has gotten really defensive, afraid
of taking risks, afraid of bias at the same time people want you
to take a stand." Fine said people tell her they want multiple
points of view and "I can figure it out." But taking a
stand does not mean bias, she said. It means using the logical and
other tests necessary to evaluate truthfulness and authenticity
and taking those into account when writing a story.
– "The industry has gone astray by putting things on
the front page that they don't want from you." They don't want
the breaking news they've already seen on TV or read on the Internet,
she said. They want more context, analysis and the fascinating stories
they can't get anywhere else because others don't have the resources
to cover them.
– Stop trying to remake papers to be youth friendly. "News
flash, they never did" read the newspaper, she said. "You
don't want to change your paper to be a youth rag because they will
never read it."
The business side
Fine said newspapers face rough times in the national and retail
advertising markets as companies consolidate and begin asking why
rates are going up as circulation is going down. The sweet spot
for newspapers will be the small local advertiser, she said.
"Newspapers have gotten defensive. Newspaper advertising works
beautifully," Fine said.
– Accept that circulation will drop. "It would be misguided
to think it's going to save any of you by raising circulation prices."
– With constant classified ad rate increases in the 1990s,
the industry annoyed those very people who were savvy enough to
embrace things like Craigslist and Monster.com. Take classifieds
online, for free, if necessary, and take on the likes of Craigslist.
Learn that the money will be made from what you surround those ads
with (think ads for new suits, resume services, etc.).
– Stop announcing newsroom layoffs. "It's going to guarantee
your demise" as the public perceives reduced quality, Fine
said. The industry will have to work with fewer people but figure
out how to keep the quality.
– Don't charge on the Web unless you want to lose readers.
Figure out how to make the Googles and the Yahoos that use your
content pay.
Fine spent more than 90 minutes in a frank discussion of almost
every nook and cranny of the troubled business, including her opinion
of why most newspapers became public companies for all the wrong
reasons. A complete summary is on the Common Sense Journalism blog
at http://commonsensej.blogspot.com.
