Cablevision has made good on its threat to put the online version of Newsday behind a firewall, accessible only by print subscribers or online only users willing to pay $5 per week. Classifieds will remain free.
Newsday, purchased last May from Tribune Corp. for $650 million, is the nation’s 19th largest newspaper with a daily circulation of 368,194. That’s down from 488,000 a few years ago
The move to put it all behind a firewall is primarily designed to reinforce the value of a print subscription, while bringing in some new dollars – not many — from those who exclusively use the online site. It goes against the conventional wisdom that has prevailed in the Internet era that online readers extend the user base and the newspaper brand, making both more appealing to advertisers.
Newspapers, of course, have an interesting dilemma. Surveys have shown that many users simply don’t want the hassle of managing the account of a daily paper that needs to be recycled or thrown out, especially if they don’t have time to read it on a daily basis. The online fee – also being explored by The New York Times – would compensate the newspaper for its content. The NY Times, however, is apparently looking at a $5 monthly fee, not $20. And it is a primary source for news.
Limiting users is also appealing to publishers as it cuts bandwidth costs, and focuses advertising on local consumers. Providing content to European and Asian audiences is a constant topic of conversation among U.S. newspaper publishers, especially as they add more and more multimedia features with higher bandwidth costs.
At the same time, Cablevision risks losing even more subscribers and further reducing Newsday’s storied brand, which must compete against television news outlets (including Cablevision’s own News12), Internet news sources, and other metro titles (i.e. The New York Times, New York Post, The Daily News). Brand value is especially important in retaining major accounts, such as retailers and auto dealers.
Cablevision’s assessment, obviously, is that it can shore up the Newsday brand, especially using promotions on cable, and its pioneering use of dedicated, on demand channels for autos and real estate – an area that the cable company has been actively pushing.
My assessment is that the MSO is not necessarily de-emphasizing online ads, as some newspapers have. It just hopes to reach them in different ways, with a more focused audience. Executing on that vision (and minimizing the collateral damage) is the daunting task that lies ahead for Tad Smith, the information industry heavyweight from Reed Business Information who has just been appointed Cablevision’s new head of local media group.
Cablevision has already written off much of the $650 million that it spent to buy Newsday. Financially, the acquisition was a very poor decision. The question is whether it can get some of it back and rebuild the Newsday franchise for a new generation.