29 April 2009

DNA Loses Rocky Subscribers

The Denver Newspaper Agency, which handled business operations for the Denver Post and Rocky Mountain News under their joint operating agreement, automatically transferred Rocky subscribers to the Post when the Rocky folded. But, many have not stayed.

[O]verall paid weekday newspaper circulation for 395 national newspapers in the past six months was down by 7 percent compared with the same period a year ago, as increasing numbers of advertisers “grow disenchanted with newspapers and seek other ways to get their message across to potential customers.”

Yet following the closure of the Rocky Mountain News in February, The Denver Post seems to be holding on. It’s now the 11th largest newspaper in the nation in terms of weekday circulation, according to the Denver Business Journal, selling an average of 371,728 copies a day since grabbing Rocky customers under a joint-closure deal.

Still, that’s 17 percent less circulation than when both newspapers were available . . . as Westword’s Michael Roberts points out, “the circulation would have to pretty much stabilize where it is to keep hope alive–and no industry observer I know expects that to happen.”

Assuming that the circulation losses have come primarily from former Rocky subscribers, that means that almost one in three Rocky subscribers have not replaced that subscription with a Post subscription. Some of those losses come from people who used to get both papers, an inevitable loss with the closure of one. But, one doubts that anywhere near one in three Rocky subscribers had previously taken both papers.

One particularly interesting business model, somewhat similar to that of the Denver Daily News is that the plan of the Colorado Springs Gazettte to publish a free minipaper called Ink that can be read in ten minutes.

One of the op-ed writers at the Post recently speculated that the decline in newspaper reading was due to people not taking the time to eat a reasonably length breakfast at which they could read one, and that the earlier decline of the afternoon paper was likewise due to the decline in time after work and before dinner to read one. People with less leisure time have less time to read a full paper.

I don't agree with David Milstead, former Rocky Mountain News business columnist, who predicted the demise of the Post less than two years after the demise of the Rocky.

Until the financial crisis hit advertising, particularly for the automobile and real estate industries that make up a large share of print advertising in newspapers, Denver was uncomfortably but on a break even basis, supporting $28 million a year of newsroom costs for two newspapers, and was confident enough in the stability of that income stream to build a fancy new building for the Post, the Rocky and the DNA, and to invest in new printing facilities.

Those industries may come back with a whimper that does not fully restore the lost revenue. It will take time for a recovering metropolitian Denver economy to use up the overhang of extra building capacity that developed at the peak of the construction boom. And, many car dealers will be shuttered as GM and Chrysler are forced to trim their operations to survive (one or both may even cease operations), and othere automobile companies follow suit to avoid having excessive dealer level costs.

Still, the Denver papers will not be hit as hard as those in rural areas, where populations are declining, a disproportionate share of the less profitable car dealerships are located, and there is little room to downscale already tiny newsrooms without going out of business.

It is possible to run a newsroom that can cover, at least, metropolitan Denver for $10 million, albeit with deep cuts in quality and depth from the $14 million per paper that used to be spent, and the demand for newspapers isn't going away overnight. Newspaper subscriptions and ad revenues are falling, but I don't think that funds available for the newsroom go down by two-thirds in a post-recession economy anytime soon. Also, a single primary newspaper has more leverage as a near monopoly to increase subscription rates and advertising charges, and also has more clout to adjust laws and regulations to its benefit -- for example, to require that legal notices be placed in newspapers of wider circulation and regain that source of revenue, now lost to many niche papers that few people read, like the Colorado Statesman.

The result may be a smaller circulation, more highbrow newspaper, but I don't think that Denver will be without a newspaper of record any time soon.

1 comment:

Unknown said...

"I don't agree with David Milstead, former Rocky Mountain News business columnist, who predicted the demise of the Post less than two years after the demise of the Rocky."

But, Dinky Singleton will declare bankruptcy by July.

And, if he cannot give a haircut to the bond holders, then the Post is tits up.

I love getting a morning paper to read with my breakfast. But, the Post is pathetic.
We used to get both papers and we still get the Post for these reasons:
1. easy to read while eating & pooping
2. funnies
3. local news