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February 10, 2013
David Warsh, Proprietor


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The Fancy Papers and the Local Papers (in which Boston gets its newspaper back, provisionally)

The Economist, in characteristically hyperbolic tones, asked on its cover in 2006, “Who Killed the Newspaper?” Last December, in an item tucked away in its Business section, the editors quietly changed their mind. News Adventures: after years of bad headlines the industry finally has some good news suggested that perhaps newspapers had a future after all, much as the radio business survived the sudden rise of television in the 1950s. This time they are probably right.

The rise of the Internet, the invention of search-based advertising, the expansion of bandwidth, plus the explosion of global trade, has meant that the world is awash in the self-examination known as news: newspapers, magazines, documentary films, book publishers, five hundred channels, nearly limitless spectrum, millions of blogs, tumblrs, sponsored content sites,  and more. Last week I added some relevant Bloomberg and Thomson Reuters names to the economics j-roll that accompanies the online edition of economicprincipals. Bloomberg has 36 columnists, Reuters has 20; all are talented, but few appear regularly in print.

Bloomberg, at least, and possibly Thomson, are said to be studying the purchase of the Financial Times if, as expected in some quarters, Pearson PLC, its restless owners, choose to put it up for sale. Both online or in its traditional newsprint format, the FT is the model of what a newspaper can hope to be. It is hard to believe anyone would buy that stellar newspaper in order to change it, but you never know. The Wall Street Journal wants shorter, brighter pieces in its quixotic battle with the New York Times. And the Times is promising an elaborate new strategy in April. The owners of the national newspapers are certainly scrambling to rethink their places in the world.

Meanwhile, the Chicago Tribune and the Los Angeles Times are for sale now that the nightmare leveraged buyout engineered by real estate mogul Sam Zell has emerged from bankruptcy. The Philadelphia Inquirer has a new lease on life, thanks to wage concessions by its unions. The publisher of The Washington Post is determined to…  well, nobody knows (Katharine Weymouth, who is Katharine Graham’s granddaughter, has put the paper’s downtown building up for sale). And Warren Buffet is looking for newspaper bargains in cities and towns where there is “a strong sense of community.”

What this is all about, it seems to me, is structure. It is a good moment therefore   to reflect on the place of the major metropolitan newspapers, in contrast to the nationals, in a world in which no longer exists the near-monopoly on advertising that, for a hundred and fifty years, made profitable and powerful institutions of newspapers of any sort. The distinction that newsdealers make, between fancy and the local papers is itself only a few decades old. It is largely a matter of price. The WSJ first sought to become a national paper in the 1950s; the Times sought to follow its lead in the ’60s, and succeeded in the ’80s on its second attempt; the FT entered the market seriously only in the ’00s. USA Today, the Gannett newspaper chain’s invention in the ’70s, has never aspired to the “fancy” appellation.

The news here in Massachusetts (aside from the blizzard, which really was a pip) is that Boston has its newspaper back.  Twenty years after it was purchased by The New York Times, The Boston Globe has returned to form, presenting the recognizable face of an old friend, dressed in a familiar suit, who has lost a great deal of weight.  In this I suspect there is a lesson for the rest of the industry.

The Times bought the Globe from the local Taylor family in 1993, for $1.13 billion. At the time, the acquisition seemed to make sense for the Times (never mind that the Internet opened to commercial use the same year).  The Globe, run for 120 years by the Taylor family, was among the nation’s most profitable newspapers, and its executives had agreed to stay on. And for eight years, money poured over the transom.

In 1999, Times chairman Arthur O. Sulzberger Jr. decided to replace Taylor family management at the Globe with his own, reneging on his father’s promise. He fired Benjamin Taylor and installed as publisher a junior member of the Times’ management team from New York, Richard Gilman.

Three years later, when the Globe’s editor, Matthew Storin, took a buyout, Sulzberger replaced him with Martin Baron, a former Times night editor who had become editor of Knight-Ridder’s Miami Herald.  Baron had immediate success, especially a series of hard-hitting stories about abuse of children by priests in the Catholic Archdiocese of Boston. The stories culminated in a Pulitzer Prize for public service.  The story has resounded around the world ever since.

Under Baron, the Globe adopted a stern watchdog stance toward local affairs – the “joyless pursuit of excellence,” in a  joke pervasive among the staff. New departures – an “Ideas” section, loosely modeled on the defunct magazine lingua franca; a tab-sized insert, “G,” designed to replace the paper’s broadsheet “Living” section – met with only limited success. A steady stream of talented reporters and editors came and mostly went, in accordance with the Times’ plan to use the  Globe as a farm team of sorts. among them such stars such as Anthony Shadid (who died last year covering Syria for the Times), Ellen Barry, Binyamin Appelbaum, James Bandler, Carolyn Ryan, Patrick Healy, Scott Heller, Jenny Schuessler, Michael Paulson, Charles Pierce, Ty Burr, Gareth Cook, Charlie Savage, Wesley Morris and Sebastian Smee — the last four of whom received Pulitzer Prices after their arrival.  (Globe veteran Mark Feeney won one as well; he, Smee, Cook, and Burr remain at the paper).

The makeover was accompanied by a precipitous circulation decline, both absolute and, more ominously, relative to newspapers in other cities – from more than 500,000 in 1993 to 218,214 weekdays last year, more than 800,000 to 356,652 Sundays; and from fifteenth among US newspapers in 1993 to the twenty-fifth spot last year. As revenues declined, the paper cut back sharply on political coverage and staff-written local obituaries. A zoned section dealing with Boston, Brookline, Cambridge and Somerville was closed. The newspaper’s profitable home delivery service, Community Newsdealers Inc., was sold. Successive write-downs were taken.

Meanwhile, competition for its audience grew, most notably the growth of a strong local news operation at WBUR, a National Public Radio affiliate. “Morning Edition,” with Bob Oakes, a popular on-air personality, and “On Point”, a two-hour daily talk show hosted by former Globe assistant managing editor Tom Ashbrook, have attracted a large Boston following; with Ashbrook gaining 240 stations nationally as well.  At the newspaper, a strong vertical disintegration occurred, costing the Globe some share of its audience. Spin-outs have been diverse, including investigative reporters Gerard O’Neill and Dick Lehr’s Boston gangster best-sellers, Black Mass and the upcoming Whitey: The Life of America’s Most Notorious Mob Boss; sports columnist turned radio talk show host Michael Holley; Vicki Croke’s world of animals franchise; Kimberly Blanton’s financial blog Squared Away; and, of course, economicprincipals.com. The Boston Herald, having turned sharply to the right, has continued to struggle along.

Significantly, no challenge to the Globe’s dominion has emerged from the Web.

By 2006, with problems apparent from every angle, the Times retired publisher Gilman and brought in, from Florida, the head of its regional newspaper group, Steven Ainslie. There followed the financial crisis of 2007-08, and three turbulent years at the Globe. At one point the Times threatened to close the paper if $20 million in wage concessions weren’t forthcoming. Once the unions yielded, the Times sought to sell the Globe – only to pull it back when the offers it received were embarrassingly low.

The turnaround began in January 2010, when Christopher Mayer was named publisher (he also presides over the Worcester Telegram & Gazette, as well as boston.com and the papers’ online operations ).  Mayer joined the Globe under the old regime, after graduating from Yale in 1984 with a B.S. in computer science. He knows the paper intimately, having overseen, at one time or another, its production, advertising, circulation, marketing and distribution departments. Once in the top job, he reached out systematically to leaders of the community.

Last December, Mayer named veteran Globe reporter, columnist and editor Brian McGrory to succeed Baron as editor, preferring him to several candidates advanced by New York. (After eleven years in Boston, Baron left in December to become editor of The Washington Post.)  McGrory grew up in suburban Weymouth; editorial page editor Peter Canellos is a local, too.  There is no way to be scientific about it, but I have a strong hunch that, at least with former readers, the paper has hit bottom and is once again in a position to grow.

There is, however, a hitch. The Globe is too aggressively priced.  A single copy on the newsstand costs $1.25.  (The Washington Post, a local paper with a fancy dimensionrecently raised its price to $1.25 and the Los Angeles Times to $1.50.) Home delivery of the Globe costs $676 a year, compared to $837 for the Times. An even sharper variation on this theme can be glimpsed in postal rates, where a mail Globe subscription actually costs more than the Times, $886 to $858 a year.  So much for libraries around New England!  Home delivery of the Post, in contrast, costs $383 a year.

Luxury pricing may work for the Times, which, like the FT, gets $2.50 for a single copy, compared to $2.00 for The Wall Street Journal.  Whatever its foibles, the Times is the best newspaper in the world, mainly because of its ambitions. (The WSJ, under Rupert Murdoch, nurtures ambitions of its own.) As a status object, the Times may be more deeply desired for being more expensive, at least up to a point. That seems to be the hope of Mark Thompson, the Times president and chief executive, who spokes to analysts last week about “the demonstrated willingness of users here and around the world to pay for the high-quality journalism” and promised a fuller accounting of his plans when the company reports its first quarter results in April.

But luxury pricing is unlikely to work for the Globe, the Post, the Tribune or any of the other big city papers that are, once again and more clearly than ever, the local editions as opposed to the fancy papers. They must depend on deep penetration of their local markets if they are to succeed.  (The LA Times may enjoy an exemption, California being California.)  Hence the emphasis on the provisional nature of the Globe’s incipient turnaround. It probably requires deeper pockets than the Times has got to pull the Globe fully out of its dive.  Here’s hoping for a sale.

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5 Comments

  1. I read the local section of the Globe every day, and we badly need that. For national and international news, I read the Times, but I’ll keep subscribing to the Globe as long as it keeps reporting on the local scene. Nobody sane reads the Herald.

    Sunday, February 10, 2013 at 10:27 pm | Permalink

  2. EC wrote:

    My son wanted a Globe last week (for the Sports section), and I handed him a dollar. I was shocked to find that it wasn’t enough. You’re right–the Globe will never survive at that price.

    Monday, February 11, 2013 at 12:54 pm | Permalink

  3. Dale wrote:

    You write, “The Times bought the Globe from the local Taylor family in 1993, for $1.13 billion. [...] And for eight years, money poured over the transom.”

    I calculate that the end of the money was in 2001, when the dot-com boom ended and techies started looking for jobs online. Gone were the 100+ pages of job ads every Sunday… I’d love to know how much ad revenue that was. My very crude estimate is that it was over $500k per week.

    The core question is how do you produce a newspaper that anyone wants to read with a reporting budget that is $26M/year less than before.

    Monday, February 11, 2013 at 3:16 pm | Permalink

  4. Dale wrote:

    You write, “Bloomberg has 36 columnists, Reuters has 20; all are talented, but few appear regularly in print.”

    The interesting question is, How much are they paid?

    Monday, February 11, 2013 at 3:17 pm | Permalink

  5. Newspaper biz-side execs, alas, are still struggling with the concept of monopoly franchises. It ill-served them in advertising. Inquirer, upon the Bulletin folding, bumped ad rates by 25% and made classified ads feasible only for those selling BMWs and Mercedes. Even pre-web, this led bread and butter advertisers to go to direct mailers. As GM of The Journal of Commerce, I could not convince Knight Ridder that an ad rate ten times the CPM of the NY Times could exist for ever because, I was told, “they don’t have anywhere else to advertise.” Newspapers need to be a casual purchase — or free to a highly-defined demographic and costly to others. All would be better off if they shed the idea of that big ole central press — and whatever monopoly powers that conferred.

    Sunday, February 17, 2013 at 3:29 pm | Permalink

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