The Newspaper Outlook

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The Newspaper Outlook

The Newspaper Outlook

Big Trends and Big Ideas Worldwide

Earl J. Wilkinson

Executive Director

INMA

www.inma.org


Shareholders

Readers

Advertisers

Employees

Creation of Value

Geographic communities

Demographic communities

Virtual communities


25%

20%

15%

10%

5%

0%

-5%

-10%

-15%

-20%

-25%

Newspaper Market Caps

Publicly Traded Newspaper Companies

-21%

+25%

U.S. Newspapers Non-U.S. Newspapers

Sources/Notes: U.S. newspapers, Yahoo, 2005-2006; non-U.S. newspapers, Bloomberg (April 2007), 2006


Inside United States

High profit margins

Continued earnings

growth

Moving toward multimedia

Value Levers

Storylines of Publicly Traded Newspaper Companies


Inside United States

High profit margins

Continued earnings

growth

Moving toward multimedia

Value Levers

Storylines of Publicly Traded Newspaper Companies

Outside United States

Embraced digital revolution

Expanded beyond its

geographic market

Medium, stable profit

margins


World’s Value Leaders

Schibsted

Market cap: US$2.8 billion

Norway’s top publisher

Norway’s top search portal

40% of profits from online

20 Minutes free commuter

daily launched in Europe

Minority partnerships with

global media players

Singapore Press Holdings

Market cap: US$6.9 billion

Saturated newspaper market

with 14 dailies in 4 languages

Moving from “Singapore Inc.”

strategy to “Regional

Footprint” strategy:

Protect core business

Create adjacencies close to core

as launch pad into Southeast Asia

(magazines, classifieds, outdoor,

internet)


20%

15%

10%

5%

0%

-5%

-10%

-15%

-20%

-25%

Wrong Storyline

Market Isn’t Buying What Newspapers Are Selling:

Stock Performance, 2005-2006

U.S. Newspapers S&P 500


Strategic Choice

Become larger businesses with smaller profit margins

OR

Become smaller businesses with higher profit margins

If companies have to accept lower margins in the

short-term to sufficiently invest in content

and audience aggregation, so be it.

-- Freedom Communications CEO Scott Flanders


How did we

get to this fork

in the road?


Global Newspaper Industry

11,207 daily newspapers circulating 500,000,000 copies each day

North America

Newspapers: 1,577

Latin America

Newspapers: 1,400

Europe

Newspapers: 2,398

Africa

Newspapers: 400

Middle East

Newspapers: 272 Asia

Newspapers: 5,071

South Pacific

Newspapers: 89


Technology:

Creates alternative

access points for

information, creating

a concierge class for

news-feeding

Abundance:

Creates a disconnect

between news and

success (relevance),

especially among

lower middle class

Value Disruptors


Technology and Abundance

U.S. households

have more television

sets than people

Threshold crossed in

the past 3 years

In this environment,

is there really

demand for another

newspaper section?


Newspapers Amid Abundance:

Case Of Libération

Upscale, legendary Paris

tabloid

Single-copy in nature

Editors wanted to add value

for readers

Added 24-page supplement to

72-page daily format

Top-flight journalism, highest

quality


Newspapers Amid Abundance:

Case Of Libération

Circulation dropped 30%

Research conducted on what

went wrong

Answer: Nothing,

traditionally speaking

Readers maintained high

opinion of Libération


Newspapers Amid Abundance:

Case Of Libération

Circulation dropped 30%

Research conducted on what

went wrong

Answer: Nothing, traditionally

speaking

Readers maintained high

opinion of Libération

Readers felt guilty about

not being able to read

cover to cover (no time)


Value Levers

Audience Brand Content


Value Levers

5% 5%

90%

Audience Brand Content


50%

Value Levers

25%

25%

Audience Brand Content


Complexity Accelerating

Source: Mediaedge:CIA


Backvertising, Assvertising,

Nailvertising


Lipvertising, Teethvertising,

Headvertising, Fruitvertising


The Big Picture:

Chasing Fragments

Consumers Fragmenting:

Technology and abundance

disrupting information

consumption

Advertisers Chasing

Fragments: Advertisers

shifting to multi-media

Newspapers Regrouping:

Newspaper business model

changing as a result

Fast Change Rewarded:

Companies changing faster

rewarded, those changing

slower punished


Goals For This Presentation

Link value creation to big trends at newspapers

Share global best practices

The transition from mono-media to integrated multi-media


Circulations Down 8%

Paid Dailies in Western Democracies During Past Decade


Usage, Engagement

Engaged have become more

engaged; disengaged have

become more disengaged

“No time to read”

Fast consumption: looking

at, not reading

Simultaneous media use

Place shifting (print

newspaper at home, free

daily on train, internet at

work, Blackberries in transit)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

5%

Junkies

15% Loyalists 12%

25% 28%

Specialists

30%

Upper Mass

8%

26%

20% Lower Mass 21%

Disconnected

5% 5%

1995 2005

Source: Urban & Associates data on U.S. newspapers

Engagement


U.K.: Qualities, Populars

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

'70

'72

'74

'76

'78

'80

'82

'84

'86

'88

'90

'92

'94

'96

'98

'00

'02

'04

Down-Market

Mid-Market

Up-Market


50,000

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

U.S.: Mornings, Evenings

0

1940 1950 1960 1970 1980 1990 2000 2006

P.M.

A.M.


350,000,000

300,000,000

250,000,000

200,000,000

150,000,000

100,000,000

U.S. Population vs.

Daily Newspaper Growth

50,000,000

0

Population up 118%

Daily newspaper circulation up 33%

Readership Gaps

Working women

Single-parent households

First-generation immigrants

1940 1950 1960 1970 1980 1990 2000 2005


Circulation Winners, Losers

Circulations decrease, 1996-2006

Circulations increase, 1996-2006

Others: unaudited, incomplete


So Goes the Middle Class

Circulation and readership

trends are consistent

worldwide within ABC1

demographics

Print circulation

performance mirrors the

middle class

If middle class grows,

circulation grows

If middle class stagnates,

circulation stagnates


What Readers Value


What Readers Value

Expectation of “always on,” customisation

Looking for connector of ongoing conversation

Sense of community: from geography to interests

Consuming more media, smaller bites

Faster consumption: looking at, not reading

Value “best at,” not “sort of good at”


The Newspaper Macro View

Diabetic News Consumer:

Consumers reading more than

ever before, but in smaller “bites”

throughout the day as technology

allows

Search For Value: Print

newspaper content package has

been commoditised by internet,

mobile, readily available free

print products

Acceleration, Not Discovery:

Trends been going on since

1950, internet is simply

accelerating trends for all

traditional media


News Diet Changing

Evening News Buffet, 1945-1970

6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00


News Diet Changing

Morning News Buffet, 1970-2000

6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00


News Diet Changing

Diabetic News Consumer, 2000-Present

6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00


Advertiser View

Chasing consumers

anywhere they live

and breathe

Battle for attention

spans

Growing preference

toward measurable

media over mass

media as technology

allows

Will continue to

associate with media

that produce quality,

exhibit creativity


Moving from

product focus to

“marketspace” focus


Owning “Space”

Procter & Gamble Oral Care:

Selling different things to the same

customer (owning “toothspace”)

Amazon.com: Selling different

things to different customers (owning

“internet retailspace”)

IDG: Selling the same thing to

different customers (owning

“knowledgespace”)

Federal Express: Selling more of

the same thing to the same

customers (owning “shippingspace”)


Newspaper “Marketspace”

Young

Old

Poor Rich


1988 Newspaper Marketspace

Young

Old

Print Daily Newspaper

75% household penetration

23% advertising share

Poor Rich


2008 Newspaper Marketspace

Young

Old

Print Daily Newspaper

48% household penetration

15% advertising share

Poor Rich


2018 Newspaper Marketspace

Young

Old

Print Daily Newspaper

35% household penetration

12% advertising share

Poor Rich


2018 Newspaper Marketspace

Young

Old

The Newspaper Dream

Single print product

Keep the old and rich

Attract the “young and rich”

Flirt with the “wannabe young

and rich”

Monetize for advertisers

Print Daily Newspaper

35% household penetration

12% advertising share

Poor Rich


2018 Newspaper Marketspace

Young

Old

Free Daily

Entertainment

Magazine

“Lite” Daily

Print Daily Newspaper

35% household penetration

12% advertising share

Business

Weekly

Weekly

Luxury Magazines

Poor Rich


The push for

“marketspace”

means multi-media


Television

Radio

Mobile

E-mail

Web

Publications

Multi-Media Future


Total Audience

Print Web

Mobile


Total Audience:

Aftonbladet, Sweden


Unduplicated Audience

Print Web

Mobile


Mobile/SMS:

58,000 daily readers

Unduplicated Reach:

VG, Norway

Total

Unduplicated

Daily

Coverage:

1,847,000

(47%

of population)

Print Newspaper:

1,356,000 daily readers

Web Site:

926,000 daily readers


Duplicated Audience

Print Web

Mobile


Duplicated Reach:

Asahi Shimbun, Japan


Emerging models to

manage audiences


Light

Allow 30 free

FT.com articles per

month to be

consumed free

Pricing Value Tiers

Medium

Annual online

subscription

£100/year

Single-copy buyer

of print newspaper

Increased from

£0.30 to £1.30

Heavy

Subscriber to print

newspaper

Maintain average

daily rate of £1.00

– lower than

single-copy price


“What our business will be about going forward is the skillful

management of the slow decline of the printed product and the

accelerated growth of the internet.”

-- John C. Mellott, Publisher, Atlanta Journal-Constitution

Target Market Segmentation

Print = Older Readers Online = Younger Readers


Philadelphia Model (Quality)

Audience migrates from print

to online

Raise print circulation prices

and sell “quality audience” to

“quality advertisers”

US$3 cover prices OK daily

Future of Print

Norway Model (Quantity)

Audience migrates from print

to online

Lower print circulation prices

to maintain mass audience

until inflection point …

Convert paid dailies to free

dailies to maintain quantity

audience


Extraordinary

Creativity


Marketing With

Emotion, Empathy


“Mozaic”

Het Nieuwsblad: Print Brand Campaign Using Reader Photos


“Mozaic”

Het Nieuwsblad: Print Brand Campaign Using Reader Photos


“Words Matter”

Slogan Celebrates Written Word, Importance of Reading Newspaper


Meine Kleine

Kleine Zeitung, Austria: Showcasing the Power of a Multi-Media Brand


Advertising

Experiments


Irregular Ads


Irregular Ads


Irregular Ads


Digital Slivers


Hyper-Local Content

Vorarlberger Nachrichten: Blogs Covering 96 Communities


Hyper-Local Content

Gannett Local Information Centers: Help Desk For Community


Weight Club

Aftonbladet Generates Millions From 200,000 Paid Club Subscribers


Podcasts, Bluecasts

London’s City AM: Taking Technology Further


Social Networking

Bakersfield Californian: MySpace Meets Yellow Pages


Dagbladet on Playstation


Expressen TV

Online Video: YouTube Style With Quality News, Sports, Entertainment


RSS

Videocasting

Podcasting

Blogs

Social networking

SMS/MMS

Mobile web

Digital Slivers

Individually, Nothing. Together, 3%-7% of Revenue


Defying Description


Drive-Through Classifieds

El Universal Creates Escape From Urban Chaos, Generates Revenues


Private Treaties

Times of India: Trades Advertising Space for Equity Stakes

Times of India growing

faster than advertising

market

To attract revenue from upand-coming

companies,

trade Times of India

advertising for equity stake

in companies

Since 2005, invested

US$300 million cash

equivalent with 80

companies


Breast Cancer Awareness

Sydney Morning Herald: Printed In Print to Draw Awareness


Toward Magazines?

The Power of Canada’s Globe and Mail Front Pages


Valentine’s Day Editions

Poland’s Gazeta Pomorska: Male and Female Versions of Newspaper


Conclusions


Hidden Assets

Highest success rates from

legacy companies that have

discovered “hidden assets”

previously not central to

past strategy

De Beers: From mines and

diamond stockpiles to

unique customer relationship

Marvel Entertainment: From

comic books to character

licensing for movies


Since founding in 1939, Marvel’s value proposition was comic books


Shifted from comic books to licensing Marvel characters for film distribution


Hidden Assets for Newspapers

Audience: Brand-loyal readers

who have never considered

themselves a community

Journalists: Valued journalists

trained only for broadcast

communications

Money: Immense cash flows

and capital budgets

Distribution: Infrastructure

second only to the postal

service

Advertising Sales Force:

“Feet on the street” that even

scares Google

Service: Making “smart” the

“help desk” concept


INMA: Harvester of Ideas

North America

Newspapers: 1,577

Latin America

Newspapers: 1,400

Constantly In Search of Global Best Practices

Europe

Newspapers: 2,398

Africa

Newspapers: 400

Middle East

Newspapers: 272 Asia

Newspapers: 5,071

South Pacific

Newspapers: 89


INMA: Harvester of Ideas

Constantly In Search of Global Best Practices

Know your value proposition and sell it; don’t equivocate

Other industries going through the same value search

About positioning your brand amid technology, abundance

Change is a constant moving forward

Look around the world for best practices to apply at home

Draw inspiration from knowing successes are everywhere


The Newspaper Outlook

Big Trends and Big Ideas Worldwide

Earl J. Wilkinson

Executive Director

INMA

www.inma.org

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