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09



Spring



CASE
STUDY:
GANNETT
CO.,
INC.



Suzanne
Yada


Business
160

Tues.‐Thurs.
7:30
a.m.


 


















SUMMARY:


Gannett
Co.,
Inc.,
is
the
largest
newspaper
company
in
the
United
States,
publishing
85
daily

newspapers
and
owning
23
television
stations.
The
troubling
economic
landscape,
coupled

with
the
decline
of
the
print
medium,
makes
2009
an
especially
tough
year
for
Gannett.

How
can
the
company
survive?


 


CASE
STUDY:
GANNETT
CO.,
INC.


BY
SUZANNE
YADA


The
year
2009
has
already
been
disastrous
for
the
newspaper
industry.
In


addition
to
battling
a
difficult
economic
climate,
consumer
habits
have
shifted
over


the
last
decade
from
reading
an
expensive
and
bulky
print
publication
to
consuming


a
free
and
immediate
online
one.
This
may
have
increased
readership
for
newspaper


companies,
but
they
have
struggled
ever
since
to
find
a
way
to
sufficiently
monetize


the
content
online.



They
were
still
trying
to
figure
it
out
when
the
economy
collapsed
in
late
2008,


and
many
wonder
if
newspapers
will
survive
this
current
downturn.
It
is
clear
the


large
newspaper
corporations
will
not
return
to
the
double‐digit
profits
of
last


decade
anytime
soon
(Overholser
&
Hall
Jamieson,
2006).
However,
the
company


that
first
set
the
bar
for
those
high‐profit
expectations,
Gannett
Co.,
Inc.,
is
expected


to
pull
through
this
recession
(Melvin,
2009)
for
a
number
of
different
reasons.



The
goal
of
this
paper
is
to
explore
those
reasons,
as
I
analyze
Gannett’s


strengths,
weaknesses,
opportunities
and
threats.
Then
I
will
present
three
different


management
decision
possibilities
for
Gannett’s
future,
and
I
will
explain
why
I
feel


one
of
those
options
is
the
best.



Before
that,
however,
I
will
give
you
the
background
on
the
company,
its


purpose,
history
and
current
position
in
the
market.




 Yada
/
2


WHAT
IS
GANNETT?


Gannett
(pronounced
gun‐NET)
is
a
news
corporation
that
owns
a
diverse
range


of
media
outlets
and
related
operations,
including
print,
broadcast,
digital
content


and
others.
Gannett
is
the
largest
newspaper
publisher
in
the
United
States,
owning


85
daily
newspapers
and
about
850
non‐daily
publications
in
31
states
and
Guam.


Its
flagship
newspaper
is
the
USA
Today.
Gannett
also
owns
17
daily
papers
and
200


other
publications
in
the
United
Kingdom
(Gannett.com,
2009).


In
addition
to
print
publications,
Gannett
owns
23
television
stations
that
reach


more
than
20
million
households
in
the
U.S.,
covering
18
percent
of
the
U.S.


population
(Romaine,
2009).
Its
Digital
segment,
formed
in
2008,
operates
online


ventures
such
as
CareerBuilder,
an
employment
Web
site;
ShopLocal.com,
an
online


shopping
and
advertising
channel;
PointRoll,
a
rich‐media
marketing
company;
and


Ripple6,
a
provider
of
social
media
technology
and
analytics.
The
company
also


deals
with
commercial
printing,
news
syndication,
and
marketing
and
data


operations
(2008
Annual
Report,
2009).


HISTORY
AND
REPUTATION


Frank
Gannett,
the
company’s
founder,
first
bought
a
half‐interest
in
a
tiny


conservative
newspaper
in
upstate
New
York
in
1906.
Twenty
years
later,
Gannett


owned
21
newspapers
and
7
radio
stations
(Overholser
&
Hall
Jamieson,
2006).
He


acquired
these
media
outlets
with
the
promise
of
autonomy
for
the
original
owner


and
purposefully
fought
to
keep
the
word
“chain”
from
being
uttered
anywhere
in


his
newsrooms
(Williamson,
2006).



 Yada
/
3


As
newspapers
shifted
their
reporting
voice
from
the
“yellow
journalism”
era
of


sensationalism
to
a
more
nuanced
sense
of
objectivity,
the
perceived
separation
of


journalism
with
the
business
of
journalism
was
more
important
to
maintain
than


ever.



That
tradition
shifted
by
the
1960s
when
large
newspaper
companies
began
to


go
public,
including
Gannett
in
1967.
Around
this
time,
Allen
H.
Neuharth
began
his


ascent
into
power
as
company
president,
CEO
and
chairman.
Before
then,


newspaper
companies
have
traditionally
portrayed
themselves
as
impoverished


organizations
whose
only
goal
was
to
protect
the
First
Amendment,
but
Neuharth


knew
investors
weren’t
interested
in
putting
their
money
in
a
business
that
prided


itself
on
poverty
(Bagdikian,
2004).



By
the
time
he
became
CEO
in
1973
and
chairman
in
1979
(Gannett.com,
2009)


he
changed
the
image
of
the
company
to
reflect
its
financial
goals,
began
to
use
the


word
‘chain’
to
describe
the
Gannett
brand
and
was
unashamed
to
emphasize
the


bottom
line.
In
short,
Neuharth
began
treating
the
company
more
like
a
business


than
a
public
service,
and
other
media
outlets
took
notice
(Squires,
1994).


From
the
late
1970s
into
the
’80s,
the
Gannett
Corporation
began
to
rapidly


acquire
other
newspapers
and
media
companies,
specifically
community
papers


where
there
was
little
or
no
competition.



Critics
decried
the
acquisitions
as
breaking
anti‐trust
laws,
cheapening


journalistic
quality
in
the
name
of
the
bottom
line
and
reducing
the
number
of


voices
heard
in
the
media.
Gannett
responded
with
an
ad
campaign
in
its
own


newspapers,
emphasizing
its
commitment
to
the
First
Amendment,
its
pool
of
news


 Yada
/
4


and
information
from
across
the
nation,
and
its
stronger
ability
to
fight
in
big
court


cases
involving
freedom
of
speech
(Bagdikian,
2004).
Even
with
these
points


emphasized,
no
one
denied
Gannett’s
business
strategy
to
take
local
media
control.


Neuharth
boasted
in
his
own
book,
Confessions
of
an
S.O.B.,
that
Wall
Street
analyst


John
Kornreich
once
said,
“Gannett’s
basic
media
business
is
awesome.
It
is
virtually


an
unregulated
monopoly”
(Neuharth,
1989).


The
rapid
growth
in
acquisitions
was
also
mirrored
in
its
revenues.
Gannett
was


one
of
the
first
newspaper
companies
to
see
double‐digit
profits,
prompting
a
wave


of
plans
to
follow
suit
within
other
news
corporations.
Gannett
set
the
standard
in


profitability,
going
18
years
from
1967
to
1985
with
each
quarterly
profit
greater


than
the
one
before
(Bagdikian,
2004).



The
most
significant
date
in
Gannett’s
recent
history
was
Sept.
15,
1982,
the
day


the
company
launched
USA
Today
after
two
years
of
researching
what
would
be
the


ideal
national
newspaper
for
both
readers
and
advertisers
(Gannett.com,
2009).



The
design
and
style
of
the
newspaper
placed
a
new
focus
on
color,
infographics
and


shorter,
more
positive
news
articles,
mimicking
the
experience
of
television
in
many


ways
(Prichard,
2007).


Critics
lambasted
USA
Today,
nicknaming
it
“McPaper”
in
reference
to
what
they


felt
was
the
cheapening
of
news
that
played
to
the
reader’s
ever‐shrinking
attention


span.
But
by
the
end
of
1983,
the
newspaper
proved
to
be
immensely
popular.
It


sold
more
than
1.3
million
copies
a
day
and
would
eventually
become
the
largest‐

selling
daily
newspaper
in
the
nation
(Prichard,
2007).




 Yada
/
5


GANNETT
TODAY


Today,
the
company
is
led
by
Craig
Debow,
who
became
the
CEO
of
Gannett
in


2005.
Headquartered
in
McLean,
Virginia,
its
more
than
225
million
outstanding


shares
of
common
stock
are
held
by
approximately
8,500
shareholders
(2008


Annual
Report,
2009).
The
company
currently
has
approximately
41,500
full‐time


and
part‐time
employees
after
a
10
percent
workforce
reduction
in
October
2008


and
the
elimination
of
1,000
newsroom
positions
in
August
(MacMillan,
2008).


This
past
year
was
turbulent
for
Gannett.
Its
operating
revenues
for
2008
were


$6.8
billion,
a
9
percent
drop
from
the
year
before.
The
company
reported
a
net
loss


from
continuing
operations
of
$6.65
billion
in
2008,
compared
to
an
operating


income
of
$1.65
billion
the
year
before.
There
was
also
a
net
loss
of
$6.65
billion
for


2008
compared
with
net
income
of
$1.06
billion
for
2007
(2008
Annual
Report,


2009).


The
early
months
of
2009
also
saw
Gannett’s
stock
reduced
to
junk
status,
which


severely
impacted
the
company’s
ability
to
secure
financing
to
make
strategic


growth
moves
(Witkowski,
2009).
At
the
end
of
2008,
the
company
had


approximately
$3.8
billion
in
long‐term
debt,
and
$2.2
billion
of
that
was
borrowed


from
banks
—
the
rest
was
in
unsecured
public
notes
(2008
Annual
Report,
2009).



COMPARING
THE
COMPETITION


The
industry
as
a
whole
has
seen
drastic
damage,
and
newspapers
across
the


country
are
shuttering
its
doors.
The
New
York
Times
published
the
following


graphic
on
March
12,
2009,
and
it
is
already
out
of
date.
Many
of
the
papers
that


 Yada
/
6


were
noted
to
close
in
this
infographic
have
done
so
already,
underscoring
how


quickly
the
industry
is
deteriorating:


BAD
NEWS
FOR
NEWSPAPERS



Sources:
Audit
Bureau
of
Circulations;
the
companies.
Graphic:
New
York
Times




 Yada
/
7


The
lower
half
of
the
previous
graphic
shows
a
brief
comparison
with
the
top


five
largest
public
newspaper
companies.
The
following
graphs
give
more
context:


3
NEWS
STOCKS
COMPARED
TO
S&P
500,
1971‐2009


3
NEWS
STOCKS
COMPARED
TO
S&P
500,
2007‐2009



Stock
symbols:
GCI
—
Gannett
Co.,
Inc.;
NYT
—
New
York
Times
Company;
SPX
—
S&P
500
Index;


WPO
—
Washington
Post
Company.
Source:
MarketWatch.com


In
these
graphs,
two
other
news
companies’
stock
performance,
the
New
York


Times
Company
and
The
Washington
Post
Company,
are
measured
up
with


Gannett’s
and
the
Standard
&
Poor
500
Index
to
provide
side‐by‐side
comparisons.


The
New
York
Times
Company
saw
its
2008
operating
costs
drop
5
percent.
In


2007
they
reported
an
operating
income
of
$187.6
million;
in
2008
they
had
an


 Yada
/
8


operating
loss
of
$88
million.
Net
income
in
2007
was
$208.7
million;
net
loss
in


2008
was
$57.8
million
(2008
Annual
Report,
2009).
Though
a
drastic
dip,
the


multimillion‐dollar
figures
are
dwarfed
by
Gannett’s
reported
billions.



However,
The
Washington
Post
Company
also
reported
in
the
billions
and
is
one


of
the
companies
that
saw
a
modest
increase
in
operating
income,
thanks
in
part
to


Kaplan,
a
successful
subsidy
that
provides
educational
and
training
services


unrelated
to
newsgathering.
In
2007,
the
corporation
reported
$4.2
billion
in


operating
income;
in
2008
it
had
raised
7
percent
to
$4.5
billion.
However,
2007’s


net
income
came
in
at
$280.6
million,
and
2008’s
income
measured
at
$65.7
million,


a
77
percent
decrease
(2008
Annual
Report,
2009).
However,
editors
had
to
address


conflict‐of‐interest
accusations,
because
the
acquisition
coincided
with
the
passage


of
the
No
Child
Left
Behind
Act.
The
buyout
resulted
in
bad
PR.



THE
INDUSTRY’S
MAIN
CHALLENGES


Stock
prices
and
operating
incomes
are
not
enough
to
paint
the
full
financial


picture
of
these
companies.
The
following
factors
help
explain
what
challenges
lie


ahead
for
the
news
industry,
and
why
some
do
not
think
newspapers
will
survive:



Online
advertising
is
not
sufficient.
Readership
and
circulation
for
many


news
organizations
have
increased
because
of
the
web’s
reach,
but
companies
have


not
yet
found
a
way
to
earn
adequate
income
from
them.
The
original
goal
when


news
organizations
put
content
online
for
free
was
that
the
increased
viewership


would
be
attractive
to
advertisers.
Unfortunately,
online
advertising
lacks
the


scarcity
and
visibility
that
print
advertising
offers,
and
news
companies
have
a


 Yada
/
9


harder
time
charging
premium
prices
(Mutter,
2008).
Readers
are
faced
with
more


competition
for
their
attention
than
ever
before,
fragmenting
an
advertiser’s
options


and
making
their
message
less
powerful.
However,
advertisers
have
been
turning
to


a
significant
competitor,
Google
AdSense,
because
text
ads
are
easy
to
create,
have


global
reach,
can
be
directly
managed
through
online
tools
and
are
narrowly


targeted.
Many
newspapers
do
not
offer
any
of
these
benefits.



Print
still
earns
the
vast
majority
of
advertising
income
by
far;
of
the
$38
billion


in
advertising
the
news
industry
was
estimated
to
have
earned
in
2008,
only
$3


billion
came
from
online,
which
is
less
than
10
percent
(Pew,
2009).

Those
numbers


are
shifting,
however,
but
it
is
not
enough
to
buoy
companies
through
a
deep


worldwide
recession.
The
graph
below
illustrates:


PRINT
VS.
ONLINE
AD
EXPENDITURES,
2003‐2007



Source:
Business
Analysis
and
Research,
Newspaper
Association
of
America,
Pew
Project
for
the


Excellence
in
Journalism.


 Yada
/
10


Craigslist,
the
free
online
classifieds
website,
is
another
example
of
an
online


competitor
causing
damage
to
a
newspaper’s
bottom
line.
Classified
advertising
in


print
peaked
in
the
fourth
quarter
of
1997
at
an
average
of
41.6
percent
of
a


newspaper’s
ad
revenue,
but
it
had
been
reduced
to
28.84
percent
by
November


2008
(Riley,
2008).
Gannett’s
own
numbers
look
slightly
better;
in
2007,
classifieds


represented
40.6
percent
of
Gannett’s
total
advertising
revenue.
In
2008,
it


plummeted
25
percent
but
still
maintained
a
36.4
percent
slice
of
ad
revenues:



Source:
Gannett
2008
Annual
Report


In
addition,
Gannett
has
invested
in
other
online
classified
enterprises
such
as


CareerBuilder,
ShopLocal
and
Classified
Ventures.
Those
operations
are
in
the


Digital
segment
and
accounted
for
separately
from
the
table
above.



Once
content
is
offered
for
free,
it
is
difficult
to
get
the
user
to
pay
for
it


again.
There
is
hope
that
the
Amazon
Kindle,
an
electronic
reading
device,
will
do


for
newspapers
what
the
iTunes
Store
did
for
restoring
profits
to
downloadable


music,
but
that
remains
to
be
seen.


It
is
also
possible
to
charge
visitors
of
a
website
to
view
the
content,
but
that


idea’s
success
also
remains
to
be
seen.
The
New
York
Times
has
tried
a
service


 Yada
/
11


called
TimesSelect
that
required
payment
to
view
premium
content,
but
it
was


discontinued.
However,
executives
at
the
Times
are
talking
of
resurrecting
it
again


in
a
different
way.



Certain
publications
such
as
the
Wall
Street
Journal
have
built
a
“paywall”
on


their
websites,
and
it
has
been
successful
because
its
target
audience
is
business


readers
who
are
able
to
use
company
funds
for
subscriptions.
It
is
unclear
whether


this
will
work
for
general
interest,
geography‐based
community
news
websites,


which
is
Gannett’s
core
operation.



Many
people
would
also
consider
putting
content
under
lock
and
key
to
be


ethically
questionable,
since
much
of
journalism’s
purpose
is
to
bring
important


issues
to
the
public’s
attention.
However,
newspapers
have
been
charging
for
its


content
to
great
success
several
years
before
the
Internet,
and
the
paywall


possibility
is
an
attempt
to
restore
that
business
model.



Restructuring
debt
is
near
impossible
in
a
struggling
economy.
Many
of


the
largest
news
corporations
in
the
United
States
got
that
way
from
mergers
and


acquisitions,
which
were
bought
and
sold
using
debt.
They
did
not
foresee
the


decimation
of
the
revenue
model
and
expected
to
be
able
to
repay
the
massive


amounts
of
debt
they
owe.
However,
the
economy
collapsed
and
so
did
revenue.



Companies
everywhere
were
forced
to
make
painful
cutbacks,
and
newspaper


companies
were
not
able
to
navigate
around
both
the
failed
economy
and
the


competition
the
Internet
provided.



Financial
analysts
have
downgraded
many
of
these
companies’
stock
ratings,


which
means
banks
and
other
lenders
can
halt
loans
and
charge
higher
interest


 Yada
/
12


rates.
This
severely
hampers
the
options
these
companies
have,
because
instead
of


making
investments
now
that
could
end
up
making
large
profits
in
the
future,
the


company
has
no
choice
but
to
do
drastic
cutbacks
to
stay
afloat
(Cranberg,


Bezanson,
Soloski,
2001).



Several
newspapers
across
the
nation
owned
by
publicly
traded
companies
have


been
shuttered
—
not
because
the
paper
wasn’t
profitable,
but
because
the
parent


company’s
debt
was
so
deep
it
couldn’t
keep
above
operating
costs.


SWOT
ANALYSIS


So
what
does
this
all
mean
for
Gannett?
Here
is
where
I
will
discuss
what
I


believe
are
Gannett’s
strengths,
weaknesses,
opportunities
and
threats
as
it
relates


to
the
operations
of
the
business.


STRENGTHS



The
leadership
in
place
at
Gannett
is
looking
to
diversify
income
beyond
the


traditional
advertising
model,
which
is
a
great
step
forward.
Its
acquisition
of


ventures
such
as
CareerBuilder,
Ripple6
and
other
non‐news
entities
such
as


commercial
printing
operations
may
help
fund
the
rest
of
the
company’s
functions


through
the
economic
crisis,
and
its
current
holdings
in
broadcast
and
niche


publications
already
underscore
the
benefit
of
diversifying
revenue
streams.



Gannett
is
also
aggressively
consolidating
several
aspects
of
its
core


operations,
from
centralized
copy
editing
desks
to
nationwide
call
centers
to


collective
webmasters
that
take
care
of
the
whole
network.
In
my
opinion,
Gannett


 Yada
/
13


has
taken
some
of
the
consolidating
too
far,
however.
Some
quality
will
be


compromised
with
too
much
consolidation,
with
centralized
copy
editing,
for


example.
But
in
other
instances
it
increases
efficiency,
which
translates
to
the


bottom
line
and
aids
the
business
in
staying
afloat.




The
company
is
known
for
its
strong
emphasis
in
diversity
and
has
been


named
one
of
the
20
best
places
for
African
Americans
to
work
(Gannett.com,
2009).


This
builds
a
good
report
with
the
community
and
helps
counteract
the
accusation


that
Gannett
papers
reduce
the
mix
of
voices
heard
in
the
media.


Gannett
has
paid
particularly
close
attention
to
embracing
new
technologies.


Two
years
ago
it
rolled
out
a
social
media
website
template
for
all
the
newspapers
in


the
company
to
adapt
to
their
communities.
Readers
are
able
to
interact
with
each


other
and
the
stories
that
affect
their
towns
and
cities.
Gannett
has
also
jumped
on


board
with
the
Amazon
Kindle
in
offering
a
USA
Today
subscription
and
a
number
of


its
blogs.
Last
year’s
creation
of
a
Digital
business
segment
has
enhanced
Gannett’s


online
offerings
to
investors.



Niche
publications
have
a
mixed
bag
of
results,
but
I
think
Gannett’s
push
to


deliver
content
in
a
myriad
of
different
specific
topics
will
help
readers
in
the
long


run
and
increase
circulation.
It
will
also
offer
advertisers
a
multitude
of
ways
to


reach
their
own
target
market.



As
reluctant
as
I
am
to
admit
it,
Gannett’s
strategy
of
owning
community


papers
with
little
to
no
competition
has
helped
pay
off.
Gannett’s
ability
to
set
ad


rates
higher
due
to
lack
of
competition
has
contributed
to
the
double‐digit
profits
of


previous
decades,
which
may
in
turn
be
one
reason
Gannett
will
still
be
around
after


 Yada
/
14


this
economic
storm
settles.
However,
I
do
not
believe
this
practice
is
good
for


Gannett’s
core
product,
journalism,
nor
does
it
benefit
advertisers
or
the


communities
they
live
in.
Inflating
advertising
revenue
hurts
local
economies,
and
it


affects
the
way
the
community
interacts
with
the
reporters
who
produce
the
main


product.
The
company
has
already
been
the
recipient
of
bad
PR
about
this
subject
in


the
1970s
and
’80s,
and
the
potential
for
it
to
explode
again
is
still
real.




Another
thing
that
is
a
strength
for
the
business
but
a
weakness
for
the


content
is
the
emphasis
on
features,
sports
and
entertainment
in
news
coverage.
It


is
a
strength
because
they
are
simple
stories
journalists
can
do
to
keep
the


newspaper
and
websites
populated
with
content,
which
means
they
can
produce


more
stories
in
less
time.
It
is
a
weakness
because
it
underscores
a
common


complaint
that
Gannett
cheapens
news
coverage,
which
in
turn
is
negative
for
the


image
of
the
company.


WEAKNESSES



The
recession
could
not
have
hit
at
a
worse
time
for
newspapers,
when


readers
were
already
shifting
their
reading
habits
online.
Gannett
needs
the
ability


to
take
out
loans
in
order
to
invest
in
itself
and
its
operations,
and
that
can’t
happen


easily
now
because
of
the
credit
crunch.
In
addition,
Gannett’s
major
advertisers
are


in
the
housing,
retail
and
automobile
sectors,
which
are
facing
major
troubles
of


their
own.
Also,
a
downturn
in
business
travel
means
emptier
hotels,
where
USA


Today
counts
half
its
circulation
in
door‐to‐door
deliveries.


 Yada
/
15



Gannett
continually
has
to
battle
its
own
reputation
for
poor,
shallow


journalism.
It
has
recently
been
doing
a
solid
job
in
its
flagship
newspaper,
USA


Today,
which
has
reinvigorated
its
investigative
news
coverage.
However,
the


community
papers
are
not
closely
following
suit.
An
investment
in
the
quality
of
the


content
regains
respect
from
community
members,
and
more
importantly,
the


advertisers,
who
are
watching
newspaper
size,
quality
and
audiences
thinning
from


poor
content.


OPPORTUNITIES



The
reason
the
Washington
Post
Company
did
so
well
in
a
side‐by‐side
stock


price
comparison
with
Gannett
is
mostly
because
of
their
subsidiary
Kaplan.
Kaplan


provides
tutoring
and
mentoring
services,
which
is
in
line
with
the
paper’s
core


mission
to
educate
and
inform
the
public,
but
not
exactly
journalism.
Gannett
may


consider
a
similar
venture
to
diversify
its
income.



The
Detroit
Free
Press,
a
Gannett
paper,
and
the
Detroit
News
have
both


reduced
their
home
delivery
print
product
to
four
times
a
week
with
a
more
robust


website
updated
constantly.
With
readers’
declining
habits
with
the
printed


newspaper
and
the
heavy
expense
of
printing
and
deliveries,
there
is
an
opportunity


in
the
major
metro
markets
to
do
the
same
thing
companywide
and
save
money.




There
is
an
opportunity
to
monetize
full
event
calendar
listings
that


newspapers
have
not
embraced
yet.
Taking
the
phonebook
model,
publications
can


list
every
event
for
free,
but
event
promoters
can
pay
more
for
highlights,
icons
or


extra
lines
of
text.


 Yada
/
16



Gannett
may
have
the
weight
to
try
something
radically
new.
If
it
partners


with
Amazon.com
and
offer
to
send
a
free
or
steeply
discounted
Kindle
to
paid


subscribers,
Gannett
could
save
a
large
amount
in
printing
costs.




If
quality
journalism
is
a
concern
for
Gannett,
the
company
can
always
form


alliances
with
nonprofit
foundations
and
programs
dedicated
to
preserving


investigative
journalism,
such
as
ProPublica.org,
the
Center
for
Investigative


Reporting
and
Spot.Us,
all
of
which
fund
in‐depth
reporting
projects.


THREATS



The
economy
is
going
to
be
a
threat
long
after
it
has
recovered,
because
the


repercussions
of
this
downturn
will
be
felt
deep
within
the
financial
structure
of


business
throughout
its
recovery
years.



The
readers’
move
to
viewing
content
for
free
online
is
hurting
the
massive


print
ad
revenue
of
newspapers.
As
a
newspaper’s
target
demographic
grows
older,


the
youth
are
not
replacing
them,
instead
choosing
to
frequent
websites
like


MySpace
or
Facebook
instead.
They
may
get
their
news
from
blogs
that
are
not


professionally
edited
and
verified.



Online
advertising
competitors
such
as
Google
AdSense
and
Craigslist
will


continue
to
be
threats,
as
will
new
technologies
that
no
one
has
envisioned
yet.



The
environmental
movement
and
recycling
culture
have
discouraged


readers
to
subscribe
to
the
newsprint
editions,
because
readers
will
feel
the
papers


are
“killing
trees.”


 Yada
/
17


THREE
MANAGERIAL
DECISIONS


In
knowing
this
information
about
Gannett
—
its
strengths
and
weaknesses,
its


history
and
strategies
—
I
have
selected
three
possible
options
for
the
Gannett


Corporation
to
take
in
navigating
the
future
of
the
news
business.


1)
Shift
the
bulk
of
focus
to
the
Digital
division.
Print
is
dying,
and
there


needs
to
be
a
heavy
investment
into
the
future
of
news
if
Gannett
wishes
to
be


around
another
103
years.
The
Digital
division
has
a
multitude
of
smart
companies


that
may
not
be
related
to
journalism
but
have
the
potential
to
be
solid
profit‐

makers
with
any
renewed
focus.
Gannett
can
also
apply
the
Detroit
experiment
to


more
papers
—
that
is,
reduce
the
number
of
days
the
paper
prints
and
beef
up
the


website
coverage
instead.
The
downside
is
that
print
is
the
real
income
earner
in
the


company
in
terms
of
revenue.
But
sometimes
the
next
step
in
a
business’
evolution


has
to
be
forcing
the
customer
(in
this
case,
the
advertiser)
to
adjust
and
become


used
to
a
different
format.
Print
will
not
be
around
forever,
and
focusing
heavily
on


Digital
is
a
risky
but
needed
shift.


2)
Find
new
ways
of
adding
value
to
print.
Since
print
is
far
and
away
the


biggest
moneymaker,
Gannett
can
create
new
ways
print
can
meet
readers’
needs.


The
company
may
want
to
look
into
more
coupons,
giveaways,
valuable
inserts
such


as
CDs
and
DVDs,
large
photographs,
puzzle
sections,
high‐quality
design,
and


anything
else
that
reinforces
the
tactile
experience
of
print.
In
addition
to
that,
there


are
options
in
development
for
more
niche
products,
including
customized


magazines
the
readers
can
create
themselves
by
selecting
the
kind
of
content
they


 Yada
/
18


want.
There
is
a
prototype
system
at
printcasting.org
for
the
custom
reader
that
can


be
adapted
to
a
Gannett
strategy.
Another
experiment
the
company
may
want
to
try


is
“reverse
publishing”
online
content.
Each
Gannett
news
website
already
has
a


social
network
where
users
are
allowed
to
blog
and
comment.
Have
editors
select


the
best
of
those
comments
to
publish
in
their
newspapers
or
into
a
new
niche


magazine
that
can
target
different
advertisers
looking
for
a
younger
demographic.


This
gives
online
contributors
the
thrill
of
seeing
their
work
in
print,
it
gives


advertisers
exposure
they
wouldn’t
get
online,
and
it’s
inexpensive
to
implement.


3)
Focus
on
a
different
subsidy
altogether
to
bring
in
revenues.
The
tough


times
in
the
journalism
industries
are
not
a
coincidence
—
it
is
difficult
to
fund
real


news
and
information.
It
may
benefit
news
organizations,
then,
to
find
a
completely


separate
business
to
generate
the
cash
flow
until
the
economy
recovers.
The
success


of
The
Washington
Post
Company
is
a
lesson
that
Gannett
is
very
close
to
learning.


Their
acquisition
of
Kaplan,
a
tutoring
company,
turned
the
business
into
a
profit‐

generating
venture.
Gannett
has
entered
into
a
few
related
businesses
other
than


journalism,
but
they
may
need
to
step
outside
their
way
of
thinking
even
further.



MY
RECOMMENDATION


I
would
recommend
that
Gannett
take
option
3.
I
was
convinced
by
the
statistics


I
saw
and
the
news
articles
I
read
about
how
The
Washington
Post,
while
not


flourishing,
is
actually
performing
decently
despite
the
circumstances.



 Yada
/
19


I
think
it
is
too
soon
for
the
company
to
risk
completely
abandoning
print
when


it
is
still
making
such
a
large
chunk
of
revenues.
When
more
definitive
data
comes
in


from
the
Detroit
Free
Press
experiment,
then
perhaps
I
can
recommend
option
1.


Option
2
makes
sense
in
the
short
term
only,
because
print’s
days
are
numbered.


However,
it
would
not
hurt
to
implement
more
reinforcement
for
the
print
product


in
the
meantime,
because
that
is
Gannett’s
biggest
revenue
vehicle.


Option
3
has
the
most
proof
to
back
it
up
in
the
example
of
the
Washington
Post


Company.
Washington
Post,
however,
despite
the
conflict‐of‐interest
accusations,


had
the
benefit
of
reader‐perceived
journalistic
integrity
and
making
business


decisions
based
on
more
than
just
the
bottom
line.
Gannett
does
not
have
that.


I
am
not
advocating
abandoning
the
news
business;
in
fact
in
the
long
run
it
may


help
solve
the
puzzle
on
how
to
operate
a
company
that
serves
societal
as
well
as


financial
purposes.
There
will
always
be
readers
interested
in
quality
journalism,


but
there
may
not
always
be
a
sustainable
business
model
attached
to
it.
Journalism


may
have
to
be
a
company’s
loss
leader.


It
is
extremely
important
that
businesses
of
the
size
and
stature
of
Gannett


continue
to
find
other
related
revenue
streams
to
bring
into
the
company
and
in


return
fund
the
important
information
communities
need
to
be
educated.



Until
the
economy
becomes
more
stable
and
the
future
of
the
news
industry


becomes
more
clear,
news
organizations
everywhere
will
have
to
do
the
same.




 Yada
/
20


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