Three keys to 21st century media profitability
US newspaper executive Mark Contreras says three words have led his newspaper company to success that has exceeded wildest expectations – fragmentation, interactivity and accountability. Contreras, senior vice president: newspapers of The E.W. Scripps Company, was speaking on Monday, 3 June 2007 at the World Association of Newspapers (WAN) congress in Cape Town.
Contreras says strategising around these three trends is seen as vital in his organisation for continued success in the media industry in the foreseeable future.
Newspaper publishing accounts for about one-third of Scripp's revenue. Just 10 years ago, more than 60% of revenue came from the newspaper business, noted Contreras. Today, the business has a strong presence in lifestyle cable television and the Internet, among other areas, and earnings continue to grow at an impressive rate.
Contreras told hundreds of editors and media representatives his company realised about a decade ago it “needed to get out quickly in front of eyeballs migrating elsewhere”. Fragmentation refers to the explosion of alternatives available to consumers and advertisers. Interactivity is essentially code-word for the Internet. The trend of accountability is that of the “heightened expectations advertisers have”, particularly around whether advertising works.
Anticipate trends
“We absolutely have to anticipate and stay out in front of trends,” he said. Scripps identified gaps in the cable television market, launching home television and a video content service on food and other lifestyle-oriented channels.
Much of the value in Scripps is currently being driven by these channels, while in its newspaper business “profits have been under increasing pressure as expenses like pension, healthcare and others have been growing faster than revenue,” he said.
Nevertheless, it hasn't written off the newspaper business as an area that can generate future earnings growth. The plan, said Contreras, is to “add to titles when it makes sense for our shareholders”. It has spent many millions of US dollars recently on newspapers.
“Secular trends we first noticed a few years ago are accelerating. We don't have the silver bullet for what's ailing the newspaper industry back home, but we don't accept the doom-and-gloom at face value,” he said.
The Internet is clearly seen as an area with massive growth potential. Scripps, like many other newspaper companies, has migrated newspaper content online. It has been building dynamic websites, which have produced handsome financial rewards.
“Collectively those websites generated US$34 million in revenue last year – about 8% of newspaper division profits and about 1% of consolidated revenue,” remarked Contreras.
Yahoo consortium
Scripps has joined other newspapers in a consortium with Yahoo to “up the ante”. This project is aimed at creating a comprehensive network for advertising and content. The early signs are encouraging, with online employment revenue up 24% in February as result of “leveraging the brand strength” of Yahoo Hotjobs, said Contreras.
Local content is also producing dividends for Scripps, on the Internet as well as video.
The Naples Daily News has been “training reporters to shoot video when they go out on assignment”.
The company is “boring deeper” on the Internet, by developing video-rich sites – which also generated millions of rands for the company last year, said Contreras. The websites for television channels, meanwhile, go way beyond programming.
Scripps has also “placed some bets on the Internet search market place”. It has bought two comparison shopping search engines, one in the US and one in the UK.
These “bets” produced hundreds of millions of rands for Scripps last year. Scripps has a fund and incubator to support fledgling businesses and support promising ideas that are “bubbling up through the ranks”.
“The future newspaper may not look like a newspaper at all,” was the closing thought Contreras left with delegates.
