Q&A with Dean Singleton, MediaNews Group CEO and Denver Post owner
As the chairman of MediaNews Group, which owns more than 100 publications and media properties across the country, including the Denver Post, Dean Singleton is a divisive figure in many quarters. But like him or loathe him, he's a true believer in the daily newspaper, and his attempts to safeguard the form could have a profound impact on the medium as a whole. And he's got no shortage of ideas about how to do that, as he makes clear in the following Q&A.
The following conversation took place on May 15, the day after the Mizel Museum honored Singleton with its Community Cultural Enrichment award. He begins by talking about the continuing influence of newspapers -- power symbolized by the fact that Colorado's governor, Bill Ritter, co-hosted the Mizel dinner and President Barack Obama sent a letter of congratulations -- as well as the failure of media critics, in his view, to properly analyze current print challenges. Shortly thereafter, he's asked about a new plan to monetize much of the content at MediaNews papers, and he responds by saying he can't add much to a widely circulated memo on the proposal before proceeding to do just that. In addition, he tackles the horse-is-out-of-the-barn claim made by supporters of free online content, suggests that the Department of Justice relax anti-trust laws in order to allow newspaper companies to collaboratively develop solutions to current problems, talks about protecting Associated Press content in his role as chairman of the AP, and makes it clear that not every major metro daily will survive today's economic downturn.
Click "Continue" to read the interview:
Westword (Michael Roberts): The tribute to you last night proved that the powers that be continue to pay a lot of attention to daily newspapers. There are a lot of naysayers out there who suggest that newspapers are past their prime, but I don't think Barack Obama wouldn't have taken the time to send you a letter of congratulations if that was entirely true. Do you feel that way as well? That the death of newspapers when it comes to influence has been greatly exaggerated?
Dean Singleton: Oh, I absolutely feel that way. I'm still very confident that the newspaper industry will not only survive but will thrive over time. In a bit of a different model, but it still will. And I think the print newspaper will thrive over time. The problems of newspapers, in my view, are very mis-covered by media analysts today. They don't understand the difference between a severe economic downturn, the most severe we've seen in my lifetime, and structural change. There are both going on. There's structural change going on, and it has been for several years, and that will change our business model. But the majority of the revenue declines we're seeing in 2009 are plain, old economic downturn.
Car companies aren't selling cars, so they're not advertising very much. And car dealers aren't selling many cars, so they're not advertising very much. And realtors aren't selling houses, so they're not advertising very much. Home builders, for the most part, have quit building homes, and they're not advertising very much. Banks are in limbo, and they're not advertising very much. And the telecom business, and by that I mean wireless, et. al., has seen its sales plummet because of the recession, and they're not advertising very much. And on down the line. So many businesses have either eliminated or cut advertising because their sales are imperiled because of the downturn. And they didn't move those dollars somewhere else. They just quit or reduced the spending.
If you look at radio or television ad revenue for the March quarter, for the most part, they were down substantially more than print advertising. And they didn't lose any business to the web. So I think it's unfortunate that the media wants to cover itself as if the sky is falling. The sky is not falling. It's cloudy and we're having severe thunderstorms, but the sky isn't falling.
WW: You mentioned the structural changes taking place in daily newspapering these days, and you've gotten a lot of attention in the past week or so about your plans, which you announced in a general way, for monetizing content on the web. Could you give us a thumbnail sketch of some of your ideas in that area?
DS: I would just refer you to memo I sent to all of our employees, which is on the web. I really can't say much more than that says. We brought 22 of our Internet and newspaper executives from around the country to my ranch for three days with a well-known facilitator and said, "Look, if we were going to reinvent our business model, how would the Internet fit into that business model? And what did we and the rest of the industry do wrong five to eight years ago? What did we miss?"
Essentially what we did was, we went with a model that said, if you build a great audience, they [advertisers] will come. And if you build a great audience, you can sell a lot of Internet advertising around that audience. And as far as that goes, we were correct. We did build great audiences. In fact, in most of our newspaper markets, including Denver, the newspaper traffic is the highest local traffic in the market. And we sold a lot of advertising around that. What we didn't see five to eight years ago was how competitive the Internet would be and how low the cost per thousand of Internet advertising would drop.
Internet advertising CPMs [cost per thousand; the "M" is the Roman numeral for "thousand"] dropped nationally 47 percent in 2008 and they're down almost that much in 2009, because there's so much inventory available and there's much less demand because of the economic downturn. So while we have big audiences and a lot of volume, the ad revenue the Internet is creating is a lot less than we thought it would be. It's substantial for MediaNews Group: The ad revenue for this year will approach $100 million. And actually, last year it was over $100 million, so it's fallen a little bit this year. It fell a little bit last year and it's falling a little bit this year, and it has to do with pricing. So if you believe that pricing competition on the web will always be there, and it likely will, then you need to find other ways to generate revenue, including some pay models.
Now, you can't just put the newspaper content on the web and expect everybody to pay for it. But what you can do is create some niche models that can be paid for. And what you also can do is take most of your newspaper's content off the web, so that you make your newspaper more valuable. And more people will buy your newspaper not only in print, but in E-editions. And our E-editions are doing extremely well. And they are paid circulation. We get paid for them, we get paid well for them, and our cost of producing them is not that high.
If we begin to wean our locally produced content off our free sites, then I think we can drive people to pay for some of that content. It's not going to be a panacea. But we can't continue to give all of our content away for free on the web and expect people to buy it in print and in E-editions.
WW: You've dovetailed into something I wanted to ask you about. I had a conversation the other day with someone who's in the newspaper business, and he thought your plan was excellent in part because it would safeguard the current paid print circulation that you have. He thought the amount of revenue you generate on the web wouldn't be all that important in the short run, but it would prevent the paid circulation of your print product from deteriorating further. Is that a big part of the plan?
DS: That is the plan. The plan is to stop the deterioration in print, and to create a reason for people who want to use the web to buy our E-editions, or to buy some other online editions. For example, we anticipate that for a paid subscriber of the newspaper, that subscriber will get full access to everything we have. And for a non-subscriber, they'll get limited access to what we have.
The other thing that's become clear to us, and I don't know that the rest of the industry agrees, but we believe that the print product, when it becomes the only place... And when I say print, I mean print and E-editions. But when the paid product is the only place you can get the local content, we think we can preserve and maybe even grow our circulation when you combine print with E-editions. And that if we keep giving away all of our content for free, we can't make that happen.
When we look at why people quit buying the newspaper, it's overwhelmingly because "I can get it for free online." So what we need to do is to continue having a very vibrant free site that's full of user-generated copy and information about where to eat and shows that are available and other things. But we need it not to include all of our locally produced news. And that's kind of where we're trying to go. It's a combination of building a little bit more revenue through sale of content but preserving the revenue we have on our core products. I believe that when the economic recovery comes, that print advertising will lead us out of this thing. Because the bulk of the national and retail advertising in auto advertising and real estate advertising that we've lost was related to the economic downturn.
We've lost some categories. We'll never get print employment back to where it once was. We'll never get print private-party advertising back. Those categories work best on the Internet, and we'll get some revenue from those, but it'll be Internet revenue at much lower prices.
WW: I'm sure one of the phrases you hear on almost an everyday basis when these topics come up, and I'm guessing it's not one of your favorites, is, "The horse is out of the barn," when it comes to free content on the web. In your opinion, is it a short-sighted approach to say, well, "We made the wrong decision about this years ago, but now we have to stick with it"?
DS: Let me tell you, having been involved in ranches since I was born: It's not always easy, but you can chase that horse back in the barn.
WW: Anything thing I've heard frequently when this subject comes up is that all major newspaper companies ought to decide at the same time to lock up, if not all, at least part of their content. Now, I don't pretend to be an expert on anti-trust law...
DS: I suspect that the Department of Justice would have a problem with that.
WW: So do you feel someone needed to take the first step in this direction, and perhaps other companies will then follow?
DS: Our industry tends to be a bit like sheep. We're all trying different models today, and when it becomes evident that a model is working, others will follow. Whether it be our model, and people follow us, or someone else comes up with a better model and we follow them. And hey, we certainly don't know if our future strategy is going to be successful. You're better off to try a lot of new things, and some will work and some will not. We do need to try some new models, but someone else might have a model that's better than ours. And we have no problem following someone else. But it wouldn't be appropriate to go together as an industry and decide collectively to do something.
Quite frankly, I wish the Department of Justice would relax anti-trust laws so that we could. Give us a two-year exemption so we could talk about models to go together on. But that hasn't happened.
WW: Have there been any Senators or politicians who've made that suggestion? I know some officials have brought up the possibility of a nonprofit model in Congress...
DS: I think there already are some nonprofit models out there in our business (laughs). Fortunately, I don't have very many of them. But I don't think that's going to work. The cost of running a news operation in any market is so big that I don't think the nonprofit model works.
WW: Would you encourage legislators to look at the suggestion you just made about relaxing anti-trust rules?
DS: Members of the Newspaper Association of America have floated with Congress the idea of the relaxing of anti-trust rules for a period of time so that the industry can work together for some solutions. And that would probably get us there faster, and I certainly would support that. You could never have a situation where there was no review. But if the hurdles for review was relaxed, I think the industry could find models better.
There is no lack of demand for news. There's more demand for news than there's ever been. There is a slackening of demand for news printed on paper. Although there's still a big demand, it's not as big as it once was. So new models have to emerge.
WW: When we were talking earlier about your print model, you mentioned the goal of retaining subscribers to the physical newspaper. Here in Denver, you're also in a situation of trying to retain subscribers to the Rocky Mountain News. Is that part of the strategy as well? That by monetizing the local content on the web, it will help inspire those Rocky Mountain News to stick with the Denver Post.
DS: Our strategy is a corporate, country-wide strategy that isn't aimed toward any single market. There's nothing different about the strategy in Denver than there is in the rest of the country. But we've retained the Rocky subscribers quite well. Impressively well.
WW: Are you at that 80 percent level you were shooting for?
DS: Oh, I think we're still at 95 on unduplicated home delivery. Let me explain that one to you. You can't compare March '09 to March '08, because in March '08, the DNA made the decision to eliminate most if not all of its third-party circulation, which was non-home delivery. It started getting out of the deep discounting and started to eliminate most if not all of the hotel copies. So you saw a decline from March to September because of eliminating marginal copies. And in an ABC [Audit Bureau of Circulations] survey, it takes you two statements to cycle.
So what we're looking at is, what was the Rocky's circulation the day they closed, and how much of that have we held. There were about 14,600 customers who took both newspapers, so you automatically lose the fourteen-six. And we kept about 70 percent of the single copy, and the reason we kept 70 percent was there was a lot of duplication among single-copy buyers who bought two. But of the unduplicated, home-delivered subscribers, we are maintaining today 95 percent of that.
WW: Papers across the country are having circulation declines in the 5-to-15 percent range. Are those economic factors hitting you in the same way here?
DS: Not really. We're holding our home delivery and single-copy sales pretty well. Now, again, we're still cycling the elimination of third party, which we did a year ago, and as you've seen, we're taking some newspapers out of the far reaches of the state for the daily print product.
WW: Was that a hard decision for you?
DS: Yeah, it was. It was very difficult for me. I've been saying "no" to that for years and years and years. Our management wanted to do that in 1996, when the Rocky did. And what we're doing isn't nearly as dramatic as the Rocky. The Rocky cut back to seven counties. We just eliminated the far reaches. But the economics were, we eliminated about 8,000 daily copies and saved about $2.5 million. And that $2.5 million was very important in today's economic environment. I stopped short of letting them cut Sundays. Sundays are still statewide, and we're offering statewide E-editions for the other six days. So we're still delivering a newspaper all over the state. But on a daily basis, it's E-editions only in those areas that we cut. And again, we only cut about 8,000. And that hasn't all happened yet.
WW: I also wanted to ask you about the availability of Associated Press content on the web. As the chairman of the AP, are there plans to lock up some content in a way that hasn't been done in the past?
DS: Let me tell you what the Associated Press did, and what I announced at the annual meeting in April. The Associated Press said we will not allow anybody to use AP copy that isn't licensed to use it. And once they're licensed to use it, we expect them contractually to protect it and not let it get out from under their control. We don't want any AP copy used by anybody who hasn't paid for it, and we will move forcefully to see that it's carried out. Now, many online providers pay us a licensing fee and use our content appropriately. Some, however, let it get scraped and go places where it hasn't been paid for. And others sell advertising around improper use of AP copy. Those are the things we're attempting to stop. We don't want anybody making money off of our copy who hasn't paid for doing it. And as we renew our portal contracts, we will shore up those arrangements to protect our copy.
WW: How does Google factor into this? There's been a lot of talk about Google being a facilitator of this particular problem...
DS: I'm not going to talk about any specific customer of the Associated Press. We will treat all users of AP copy alike.
WW: Getting back to the idea of putting some of your content behind a paid wall: Do you fear that the hits you get on your websites will go down as a result of that decision? Or do you think they'll stay pretty much the same, because people who are searching might be taken to a capsule of a story, whereas in the past they might have had access to the entire thing?
DS: Locally produced news copy that comes off the free site will be replaced with other content. A lot of it will be user-generated content. A lot of it will be new features. Our strategy depends on having a very exciting, free website. It just doesn't depend on giving away all of our local news.
WW: So, if I'm understanding you right, under the best-case scenario, you feel that your overall web numbers will remain where they are or perhaps actually increase?
DS: Our goal is to keep them where they are or grow a bit.
WW: What's your best guess as to how long it'll take for daily newspapers to emerge from this particular economic crisis?
DS: I don't know how long anything's going to take. I don't know how long the recession's going to last. We're in uncharted territory. We're basically putting together strategies that appear to make common sense to us. And we'll see if they prove out... But I feel that the economics of the newspaper business are still very strong, and after an economic recovery, it will still be strong, although maybe not as strong as it once was.
As you started the conversation saying, people do pay attention to newspapers. I don't know that last night said anything about newspapers, but people do still care what they print, care what their opinions are. The newspaper is still by far the most important communications vehicle in every local market, and if we can reinvent the economic model a bit, they still will be. That doesn't mean every newspaper's going to make it. Denver wasn't big enough for two. Seattle wasn't big enough for two. Boston may not be big enough for two, San Francisco may not be. All newspapers aren't going to make it. But I think most will.
WW: So when you hear some media pundits predict that all printed editions of major daily newspapers will be gone in five years or something like that...
DS: I don't buy it. I don't buy it. I could be wrong, but I don't buy it.