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REPORTER’S NOTEBOOK — A high-stakes game to save a paper

JACK WEATHERLY

What do you do if the newspaper you own is losing money?

Cut costs? Sure. Limit scope of coverage.

And if that doesn’t work, sell everything and enjoy the money?

How about spending more? A lot more.

Well, um . . . . that is what Walter Hussman is doing with the Arkansas Democrat-Gazette.

He is investing $12 million in buying iPads for its subscribers so that it can go digital six days a week, along with a printed Sunday edition. If need be, an agent will come to your house and show you how to use the tablet.

This is not the first time Hussman has stared into the abyss and not lost courage.

Back in the day, he gambled, resorting to the unthinkable – converting his Little Rock-based Arkansas Democrat from an afternoon paper to a morning paper to go head to head with the dominant Arkansas Gazette – and even giving away classified ads, then a staple of revenue.

Toward the end of the war, both papers reportedly were losing about $10 million a year. Yes, so Hussman knows that to make money, to survive, you have to be willing to go all in, as they say in poker.

Gannett, which a few years earlier had bought the once-dominant Gazette blanched and closed.

In 1991 – irony of ironies, as it turns out, the year that the World Wide Web was rolled out – Hussman bought the assets, including the name of the competitor, which was the oldest paper west of the Mississippi, founded 200 years ago in 1819.

A decade after the purchase, the Internet was a force to be reckoned with. It was cutting deeper and deeper into the revenues of traditional, and costly to operate, newspapers.

The old saying used to be that any idiot with a printing press could make money.

With the advent of the Internet, newspaper owners generally were acting as if the Internet was a pet that just had to be cared for and fed.

By and large, they gave away the news online, assuming Rover would fetch the ads.

Bad dog, it just ran away and wouldn’t respond to whistles.

The legendary Washington Post was a strong candidate for the ultimate poster child for the idiocy, standing at  the brink of extinction before putting up a paywall. Jeff Bezos, owner of Amazon, the richest man in the world, saved the day by buying the paper.

Hussman said when he hired me in 2002 as business editor of the ADG that he just didn’t think publicly traded newspapers were a good business model.

I had a hunch he was right.

I was coming from a Gannett-owned paper, The Clarion-Ledger (hyphenated and capital T) – or as it sometimes calls itself these days, the Clarion Ledger (no hyphen, no cap T) or Mississippi’s Clarion Ledger, a member of the Gannett network (it’s like, you know, one of those media thingies). Once you lose your identity, you’ll answer to any name as long as they throw you a bone.

Hussman didn’t ignore the Web, he just didn’t give away the news, maintaining a paywall from Day One.

Meantime, aggregators Facebook and Google started gobbling up more and more news, without having to produce it themselves. In 2017, they grabbed 77 percent of the local digital advertising revenue and 58 percent of the national revenue, according to The Wall Street Journal, citing a recent University of North Carolina study.

Nearly 1,800 newspapers closed between 2004 and 2018, the study says.

The ADG lost money in 2018, Hussman said.

Now Hussman is trying a new tack. Well, not totally new. The Philadelphia Inquirer tried something akin to Hussman’s plan nearly a decade ago but failed to launch, according to Rick Edmonds, media business analyst for the Poynter Institute.

Though Edmonds said he is a bit skeptical, he acknowledged that Hussman has proved naysayers wrong in the past.

 Hussman said in a recent ADG article: “We lost money last year. We are going to lose more money this year because this one-on-one [iPad instruction] is expensive. But, if we can convert people, we are going to be profitable again in 2020. That’s our hope.”

» Contact Mississippi Business Journal staff writer Jack Weatherly at jack.weatherly@msbusiness.com or (601) 364-1016.

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About Jack Weatherly