I was recently stunned by a conversation with a group of newspaper execs mulling over which U.S. city would be the first to rely on an online-only newspaper. The switch might be faster in one of the handful of surviving, two-paper towns.
Last Sunday, Eric Pryne of Blethen’s Seattle Times wrote an article describing how Hearst’s Seattle Post-Intelligencer (The Times’ Joint Operating Agreement partner), could be the first to switch to an online-only format. Under terms of the 24-year old JOA, Hearst relies on The Times for its presses, warehouses, trucks and carriers.
But now The Times says it is losing money, and wants out. An arbitrator decides what’s fair by May 31.
If the case goes against Hearst, an online-only edition is being mentioned as a possible solution, although Hearst isn’t talking. Pryne notes in his article that an online-only route would mean a sharply reduced product, with maybe 100 of 200 news employees remaining, supplemented by ad staff of perhaps 20 to 40, plus six to 10 technical support people.
To be sure, the economics are fuzzy. While several money losing magazines have recently decided to keep their brands alive and put out an online-only product (Life, InfoWorld, etc.) the conventional wisdom is it takes more than 10 online newspaper readers to make up for a single print reader – and online newspaper readers are in short supply, and visit less frequently. The bundled synergy between print and online editions would also be lost.
It’s all too risky, one former Hearst publisher told Pryne. “Going to just an online paper would be suicide at this point,” he said. “That model’s not ready yet.” Nor would the transition to online be seamless. The Times Co.’s New Media division provides the computer servers and sells the advertising for the P-I’s Web site. The P-I newsroom provides its content.
According to the article, The Seattle Times online network – seattletimes.com
In any case, Pryne notes that Hearst may have a better alternative. “If it loses the arbitration, the JOA contract allows the company to close the P-I, pocket the money it spends on the paper now and collect 32 percent of The Times’ profits until today’s toddlers are great-grandparents.” It might be a better deal than keeping the paper alive, and losing money.
Thanks to The NAA New Media Federation’s Digital Edge for pointing this one out.
The most likely scenario in which the Hearst paper would shift to online only status is if this move would be consistent with the provisions in its contract with The Times which enablie it to collect 32% of The Times profits after shutting down the paper.
After all, an online local news site isn’t actually a newspaper, since it isn’t printed on paper.
Aside from allowing Hearst to possibly have its cake and eating it too, this would allow them to fire fewer employees, and gain valuable experience with an online-only local news operation.
OK, “online only” won’t happen. On 4/17, the two sides made their deal, and the P-I will be kept alive for at least nine more years. Under the agreement, Seattle Times Co. will pay Hearst $49 million, and Hearst pays $25 million to keep the JOA going until at least 2016. The deal gets rid of the need for The Times to account for “losses” and allows for more normal operations. It seems like a good deal.