McClatchy Takes (Some of) KR

McClatchy won its bid for Knight Ridder. But KR fits into McClatchy’s plans less as a traditional newspaper company, than as part of a long-term transition to direct marketing, with the news playing an increasingly smaller role. The Internet, however, looms ever larger.

McClatchy’s leadership is secure and unsentimental. It doesn’t place a premium on ‘size for size’ sake. Instead, it hopes to re-impress Wall Street with fast growth across multiple channels, including print, the Web, direct mail –and possibly directories.

As The New York Times noted in its coverage, “the average rate of household growth for the dozen papers that McClatchy plans to divest is 4.8 percent for the next five years; for the 20 papers the company would keep, the growth rate is 11.1 percent. Including the 11.9 percent growth rate of the current 12 McClatchy papers, the new company’s papers will have an average household growth rate of 11.4 percent.”

PowerOne Media Goes to The Chop Shop

PowerOne Media, formed by the merger of AdOne and PowerAdz in 1999, was poised to be the small papers’ Classified Ventures. But PowerOne Media was beset by tech problems, management problems and tough competition from the likes of Adicio (CareerCast), HarvestInfo, Morris Digital Works and TownNews. It also suffered from the internal conflicts and usual lack of commitment of its owners.

What to do? For the newspaper owners, Option A was to reinvest in PowerOne. Option B was to take it to the chop shop, extracting whatever value it could.

By last summer, it seemed fairly obvious that Option B was the owners’ route. Finally, on Feb.15, PowerOne announced it was selling off its Zwire portal, national advertising, Adquest and Yellow Pages units to TownNews, the small paper vendor that is 83 percent owned by Lee Enterprises.

Tribune’s Recycler: Back to the Drawing Board

Recycler.com, The Tribune Co’s erstwhile Craigslist killer, is going back to the drawing board, having suffered mediocre sales and usage since expanding to 14 markets in May 2005.

“If you build a model that assumes revenue from upsells and sponsor link revenue, you’ll be disappointed,” said Tom Finke, director of corporate development at Tribune Interactive, in comments blogged by Rob Runett at the NAA Connections conference in Orlando February 20-22.

To be sure, Tribune basically kept the formula that made The Recycler a success: free ads for consumers, and cheap $8 ads for corporate entities, with lots of upsells. Online, however, hasn’t worked. The combination of Craigslist’s free offerings, unfamilarity with the product outside of LA, and the absence of a complementary (and revenue generating) print product has hurt Tribune’s expansionary efforts. This despite extensive promotion in the print paper, deep integration with Tribune Interactive’s verticals, including Cars.com, apartments.com and ShopLocal; and a neat feature allowing users to compare ads posted on other websites.