The Dallas Morning News is scrambling for life boats. It’s not just the News. The newspaper industry worldwide is in a free fall, a decline so precipitous that nothing may be able to save it. A recent industry report predicted newspapers will lose at least $20 billion in revenues from advertising and circulation in the next five years. The Internet and cable news have eroded the timeliness of its reporting, the once-magisterial authority of its opinions, and, more important, its classified advertising. (Dillard’s ads and grocery-store inserts never paid the freight; columns and columns of classified ads did.)
Even so, the News remains a powerful force and a profitable enterprise. Margins may have declined from a high of 36 percent in the 1990s to the low 20s today, but that still places it among the most profitable businesses around. (Just ask Dillard’s and the grocery stores, which are lucky to produce 2 to 4 percent.) Yet the decline has been so fast, and changes in the media so bewildering, that some observers believe the News is today managing a business that is doomed to fail.
Some newspaper companies have been able to adapt to the rapidly changing media environment. The neighboring Star-Telegram is often cited as one example of a newspaper with a sure grip on its own tiller, navigating the stormy weather with conviction and finesse. Belo’s management style, by all indications, is less sure. One longtime newspaper executive characterized it as “arrogance interrupted by bouts of sheer panic.”
The News actually has done some things right. Competition forced its crash introduction of Quick, the youthful freebie, and the development of F!D Luxe, the slick fashion insert, both of which seem to have staying power. Its Internet portal attracts 1 million page views a day and, by one estimate, captures 40 percent of the advertising dollars spent on the web in this market.
But management’s splatter strategy (throw wads of mud at the wall and see what sticks) has largely made a mess. The daily tabloids, laughably called “magazines” by the promotional department, have driven down readership and angered a newspaper’s most loyal consumers, crossword addicts. The Neighbors sections are well-executed but business failures. The consolidation of suburban news into the Metro section turns off readers who don’t live in the featured suburb of the day. GuideLive repels older readers. And the SportsDay section, once the crown jewel, has been cut by two to four pages daily.
Meanwhile, every weekday the News sells 480,484 copies, giving it the largest local reach of any media, with a product that seems tepid, uninspired, and often dated in its reporting before it even lands in the front yard. Its lead national and international wire reports are often rehashes of day-old Internet and television reporting. (One example: cable news and the Internet reported on the Dallas-area men detained for possible terrorist connections in Michigan three days before the News.) Its local stories—especially in the Metro and the Business sections—too often catch up on news that was reported elsewhere, in weeklies or on blogs, a week earlier.
The News seems to think it is still Dallas’ paper of record. The operating premise is that until it is printed in the News, it didn’t happen. That may have been true once. But it is not true anymore. In fact—and here the delusions of its editors cause observers to shake their heads—it hasn’t been true for years.
The decline in a newspaper’s quality is difficult to measure. That it reaches barely 34 percent of homes in Preston Hollow shows that even the city’s leadership no longer feels the need to read it. Recent market research done by other media companies in town shows that the newspaper has largely lost its goodwill with the citizens of Dallas. It’s a measure of how far the reputation of the News has declined that many people may ask whether it’s even important that it survives.
I believe it is important. I even believe that it is important that the paper survives under the control of the Dealey heirs (although every media executive I spoke with disagreed with me about that). The News built and led this city along with our banking institutions—Republic, First National, and Mercantile. It is the sole survivor, so far, and the gaping hole left by the disappearance of the others is all one needs to conceive of the even wider hole that would be felt without the News. A strong, directed, city-rooted daily newspaper could not only be a unifying force, but also a force for good in a Dallas still in the making.
So how do you right a ship that is perilously close to capsizing? The delusions, the arrogance, and the panic are, of course, the first things that have to go. In fact, if you listen to other newspaper executives, the entire management has to go. (A few selected quotes: “Start with the management.” “The people at the top are the problem.” “Nobody there has the intellectual curiosity and energy to run a major newspaper.” “They don’t have the people skills or the instincts.” “They don’t have a clue how to run a media company.”)
It takes enormous confidence to make a radical fix to a property that is still producing profits. The temptation—so sweet, so juicy—is to let that cash flow keep flowing while praying that something will come along that will magically allow it to keep on flowing. To face the cruel facts head-on is just too hard. Yet countless companies in other industries have done it; business lore is full of examples.
Radical action, though, is precisely what is needed, and the time to take it is when a company still has the financial strength to weather the transition. Wall Street will hate it (but Wall Street already hates newspaper companies, especially Belo), old-line reporters and editors may hate it (because, as we will see, they are overpaid and under-worked), but I think junior reporters and junior management will love it, because it gives the News a fighting chance. More important, I think readers and advertisers will love it, because it gives them a newspaper worth reading.
Step No. 1:
Clear away the clutter.
The News seems afflicted with too many voices offering too many little fixes. The splatter strategy is a hoax; it fools management into thinking it is doing something when in fact it is doing nothing vital or crucial.
Many of those voices proclaim that the Internet will be the newspaper industry’s salvation. The Internet is only a tool, a system of delivery. It is not a replacement for the print edition and never will be. The News operates in a limited universe. The New York Times and Wall Street Journal, by contrast, operate in an unlimited universe. Select readers in Rome and Saigon and Milwaukee will pay to get the Times and the Journal online; they need the information. They don’t need—and won’t pay for—the News. The Internet is a means of extending the newspaper’s reach, but people have to want the newspaper’s content to start with.
The News is notoriously dependent on consultants, focus groups, and market research. I am skeptical about all three. Readers don’t know what they want until you give it to them, so why ask them? Great newspapers and magazines operate on the instincts of great editors. Great editors grab readers by the throat. They create stories that have to be read. They create products people can’t do without. If you need focus groups and consultants, what you really need are new editors.
Step No. 2:
Go local, local, local.
When we start a new magazine or consider an acquisition (we publish more than 20 magazines and nine community newspapers), we ask one simple question: “Will this publication deliver information that people can’t get anywhere else?” If the answer is yes, we do it.
The News right now cannot answer that question with a yes. It not only gives information its readers can find other places, but it often gets its information from the same places its readers get theirs, such as the AP wire.
To provide information its readers can’t get anywhere else, the News needs to become an intensely local product. I mean intensely. World and national news can be capsulated in two pages, if it’s needed at all. It can occasionally even make the front page. But readers have a thousand sources for outside news and don’t need the News for that unless it has something special to add.
What I need the News to do is tell me about my own city: the crooks, the scams, the deals, the heroes, the murder victims, the society vixens, the cops—the everyday dramas that play out like soap operas in the city’s courtrooms and bars and country clubs. I can’t get that anywhere else. If the News delivers it, I’ll buy it.
It’s as simple as that.
Step No. 3:
Keep swinging the ax.
The News recently offered buyout packages to some 85 of its newsroom staff in an effort to cut costs. It should have cut deeper.
Let’s be frank. Senior people on the news side are way overpaid. A top editor at the News—not to be confused with the editor—can make more than $200,000. A columnist pulls down $140,000 per year. Even copy editors make $60,000, while their counterparts elsewhere are making $45,000 for the same work. Perhaps this largesse is a hangover from the glory days of 1985 to 2000, when the News aspired to be the dominant newspaper in the Southwest. It staffed and paid accordingly. But that was then, and this is now. The culture from those days still pervades the newsroom. It has to end—abruptly.
Other changes are necessary to turn the newspaper’s focus where it should be: on its own city. Any remaining bureaus except Austin should be closed. Its Washington bureau is notoriously one of the laziest on the Hill. Shut it down. Take the editorial page from daily to weekly, make all editorials and op-eds local, and downsize accordingly. (Authoritative, well-reasoned editorials on every subject under the sun are available 24-7 on the web.) Kill wire stories as filler, especially New York Times stories that run two days after the Times has printed them. Turn columnists into reporters. Make them do their legwork like any cub reporter. Rigorously prune news staff in every section and department.
Overall, I figure the News needs to eliminate 200 or more people, mainly on the news side. It may replace 50 or so of those jobs; it may not.
In other words, burn the field to the ground so it can grow back healthier. To focus entirely on local news requires an entirely different culture—fast-paced, aggressive, ambitious, and competitive. Young, inexpensive talent is the key, people who know how to work and people who know how to write. Hire only those who demonstrate persistence, energy, imagination, and the gift for asking the right questions.
These aren’t the good old days. These are the 1910s and 1920s of newspaperdom, and reporters who can’t file four solid local stories a week ought to consider how well their brother-in-law is doing in insurance sales.
Cities are paradoxical creatures, full of bright lights and dark byways. An old detective show about New York used to proclaim, “There are 8 million stories in the Naked City,” and it is true.
All cities are naked and open. It only takes the right people with the right skills to pry out its hidden stories and the click of a camera’s flash to turn the darkness into light. That’s what a newspaper’s job once was, and in the 21st century that’s once again where its glory lies. Nobody can do it better. Nobody else can even attempt it on the scale and with the drama that a daily newspaper can.
Readers will eat it up.
Step No. 4:
Make circulation real.
There was a reason for the circulation scandal of three years ago. The News—once again, operating on the delusion that everything is still the same—is still trying to maintain an inflated subscription and single-copy sales base for advertisers.
The most expensive customer is the marginal one. That’s the customer who only subscribes if offered a very cheap price and then doesn’t renew. He then needs to be replaced to maintain the circulation base. The acquisition cost of a new subscribers is high and getting more expensive every year. Of 480,484 copies delivered daily and 649,709 delivered on Sunday, probably 25 to 30 percent are marginal. They need to go. All subscription discounts, prizes, contests, and other promotional gimmicks should be eliminated. Circulation must be allowed to float to its natural level.
If the News did this today, it would see huge savings in circulation costs—and face a disaster on the advertising front. That’s because it bases its advertising sales on its huge and expensive-to-maintain circulation. Its sales pitch to advertisers is based on nothing more than its delivery system.
There’s no doubt that the delivery system works. Newspapers make a powerful advertising medium for the right client. They are especially effective for advertising that is itself news—openings, sales, specials, new fashions, new car models, higher bank interest rates, and the like.
But if advertising sales are based solely on the delivery system, the News is planting the seeds of its own destruction. In an Internet-dominated world, circulation is going to fall. It already has. The challenge is to manage the decline in circulation, not to watch passively as it happens or to spend every last penny trying to hold back the tide.
In a minute I’ll show why advertisers will respond positively to a circulation cut. Meanwhile, it’s important to note that even at its natural base, say, 300,000 daily and 500,000 on Sunday, the News would still be the dominant force in local advertising. And it would save a bucket of money—and end the flimflam.
Step No. 5:
Give advertisers what they really want.
By cutting its circulation, the News would also need to cut advertising rates (which were jacked sky high during its halcyon days as a monopoly). That’s enough to scare the pants off any Belo executive. They might reasonably ask why I would want to tamper with a good thing.
The question itself is another sign of delusion. Inflated circulation propping up high advertising rates is a house of cards set to collapse.
The only solution is to restore confidence in the product. For that, the News has to have a product in which its salespeople and its readers can have confidence. Using advertising parlance, the delivery system is the steak; what the News lacks today is any sizzle.
Twenty years ago, my then-partners and I bought a very unprofitable magazine in New York with a national circulation of 1.2 million. Its editorial was tired and unfocused. Advertisers who bought it only committed because of the high circulation numbers.
We fired the editors, brought in new blood, refocused the editorial to a narrower audience, redesigned the product, and made sure we provided information people couldn’t get anywhere else. Meanwhile, with confidence in our new product, we doubled the newsstand price and tripled the subscription rate, while cutting marginal circulation by 300,000. Within a short 18 months, the magazine was profitable.
Advertisers bought the magazine because they bought our story. It made sense to them. They bought our mission, our energy, and our connection to readers. With all that, they didn’t particularly care about the old circulation numbers. We were no longer just a delivery system. We were a fresh, exciting way to reach prospective customers and sell their products.
The News today is like that magazine before we bought it. It is relying on numbers—and not very good numbers at that—to make its case. There is a much more powerful case to be made, but you have to have a product to make it. That case is about authority, connection, and meaning in people’s lives and in the life of the city. And it centers on delivering information people can’t get anywhere else.
This is not the first crisis the Dallas Morning News has faced in its long and sometimes distinguished history. The paper survived the cutthroat newspaper wars of the 1890s and 1900s, when as many as seven dailies in Dallas battled for market share. It survived an advertiser and reader boycott in the 1920s when it took a stand against the Ku Klux Klan. In the 1980s, after a long period of decline, it was revived when a young Robert Decherd and an experienced Jim Moroney Jr. kicked out their Dealey cousins, installed professional management, pumped new vitality into the newsroom, and built it into the premier newspaper in the Southwest. In a historical sense, this is just one more crisis.
The best advice I can give to the News is to stop flailing around. Stop inventing patchwork solutions to problems your newspaper doesn’t have. The problem is not around the edges, not with this or that demographic subset, not with the suburbs, not with young people.
The problem is with the product. In the new media world, the problem is your failure to define why you exist.
If George B. Dealey—that enterprising young Englishman who hopped off a boat in Galveston and by force of will built the newspaper empire you inherited—were alive today, he wouldn’t hire consultants, he wouldn’t do focus groups, and he wouldn’t give a damn whose feathers got ruffled. He would be radical. He wouldn’t just try to survive. He wouldn’t sit still while his newspaper declined around him. He would take control of events before events controlled him.
