McClatchy dumps the Star Tribune

The end of the year is the time that savvy investors dump their losers for the tax write-off. McClatchy did just that, selling off the Star Tribune in Minneapolis for $530 million. McClatchy paid $1.2 billion for it in 1998. That’s one heck of a tax writeoff.

It’s a sign of how troubled the times are for mid-sized newspapers like the Star Tribune. They’re in a really tough spot: they’re not small enough to intensely connect with their communities and be a required read, but they’re not large enough to command a national presence and audience like The New York Times.

My first job out of school was at the Star Tribune; it was definitely among the tops in its league when it comes to quality.

In recent years, regional newspapers like the Star Tribune have largely been aggregators of content. Think of all of the content in a newspaper that comes from third parties: most national and international news stories, many columnists, many travel/auto/feature stories, stock quotes, weather forecasts, TV listings, comics, crossword puzzles. It used to be that the newspaper was the best, cheapest way to get that aggregation of data.

The Internet has changed all that. Instead of getting a generic mass-produced product, I can get a highly personalized product.

I check My Yahoo! at least five times a day; it’s more relevant to me than any newspaper will ever be. I’m not the only one: My Yahoo! reaches 24.5 million readers a month. If you add in Yahoo! News, the unduplicated reach is 46.6 million. The combined circulation of the top 25 newspapers in the country is 19.7 million. And that figure uses the highest reported circulation for each newspaper, the mostly much higher Sunday circulation. (The Star Tribune’s Sunday circulation of 596,333, is 66% higher than its daily circulation.)

Here are some things I can see happening as newspapers continue to adapt to lower circulation numbers:

  • Changes in the way national and international news is presented. Most regional papers have already abdicated coverage of national and international news to wire services and syndicates like those from The New York Times and The Washington Post. But they’ve abdicated it in one of the least efficient way possible. Each day, wire editors read, re-read and edit stories from the wires and national syndicates. Mostly the stories are edited to fit into the space designated in the paper and to change the “style” to fit the paper’s. (“Style” involves nitpicky details that most readers won’t notice.) All of this work and re-work adds very little to the value that the readers sees. It’s not uncommon to see errors introduced at this stage. Some of these stories run several days later in the regional paper than they did in the original.
    Instead of having papers across the country redo all of this work every night, I can see a strong national brand like The Times or The Post generate a pre-packaged national/international section that regional and local papers can publish unedited. I’m surprised that Gannett hasn’t already done this with USA Today and its stable of regional and local papers.
  • More truly local coverage. In many cities the alternative weekly has a distinctly more local voice than the daily newspaper. Much of what ends up in the “local” pages, I couldn’t care less about. A stabbing 15 miles away is much less important than what business is going to go into that empty storefront two blocks away.
  • Reduced coverage of sports, especially away games. Newspapers spend a lot of resources covering sports, with reporters and photographers often traveling with teams. That’s a lot of expense without a proportional return, especially in sports like baseball where there are 81 away games and an individual game is next to meaningless. (Sports columnists are different – from an ROI perspective, they more than earn their keep.)
  • Fewer TV and movie critics. These are national products with national audiences and plenty of national reviewers. The justification for local reviews has long been that a local reviewer can better reflect the needs of the local community. But in communities as large and diverse as those that the regional papers serve, it’s extremely unlikely that one critic can reflect a given reader better than a national critic.
  • No more TV listings or stock quotes. Some papers have already eliminated these sections or significantly reduced the space dedicated to them.
  • More focus on online. Online has been one of the few bright spots for newspapers. Although they badly trail Yahoo!, AOL, as well as the TV-related news sites, newspapers are seeing a steady increase in revenue from their online operations. I wrote earlier about how to keep online newspapers relevant.
  • Metrics driven coverage. With the help of their online sites, newspapers can tell by topic, story or author what gets read and what doesn’t. Sites like the Star Tribune already post the most read and emailed stories. It’s only a matter of time before this gets factored into coverage and personnel decisions.

Most of the coverage of the Star Tribune sale has focused on the fact that the acquirer, Avista Capital Partners, is a hedge fund, not a traditional newspaper companies. If it goes as many expect, Avista will radically cut costs, strip the paper and try to sell it for a profit in a few years.

I agree that that is the most likely scenario. But there’s a part of me that hopes that owners from outside the newspaper industry will be more likely to step outside of tradition and throwaway the inefficencies of the business to develop products that better meet readers’ needs.


About Rakesh Agrawal

Rakesh Agrawal is Senior Director of product at Amazon (Audible). Previously, he launched local and mobile products for Microsoft and AOL. He tweets at @rakeshlobster.
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