Posted on 07/13/2007 2:25:44 PM PDT by abb
Publisher David Hiller just dropped a "mid-year business update" on L.A. Times staffers that has fresh bad news: "Revenue was down 10% in the second quarter, and cash flow down a whopping 27%, making it one of the worst quarters ever experienced." Emphasis added
Hiller acknowledges that readers are turned off by ads in inconvenient places, but one of his responses to declining revenue is going to be ads on the Times front page. Not the small discreet ads that the New York Times runs, but the inch-and-a-half strips the Wall Street Journal sells. He promises standards to ensure they don't visually shred Page One too much, but frankly, the ads on the section fronts have been disconcertingly jarring. Here's his case for the ads:
Front page ads will raise several million dollars in revenue, and make a meaningful contribution to improving current trends We will make sure the revenue is additive, and not just switched from other pages They will help pay for the content we create for readers, and for our investment in new growth opportunities They are common at reputable papers across the U.S. and Europe, including in the Wall Street Journal’s much admired re-design Space taken (1 ½” strip) and related design issues can be managed We will have standards to ensure the ads look good, not schlocky If we communicate well, reader reaction should be OK Wishful thinking -- that's the cutting-edge strategy for bringing back lost readers. Whole memo after the jump.
From: Hiller, David Sent: Friday, July 13, 2007 12:57 PM Subject: Mid-year business update
Folks,
As we move into the second half of our year, I wanted to update you on developments and the game plan for the rest of the year. There are some real positives:
The first half of the Zell/ESOP deal was completed, and we appear on track for completing the rest later this year, including getting all needed regulatory approvals. We are fully immersed in the “Times Change” process of reinventing our business to succeed in today’s marketplace. More to come on that, including acting on the recommendations of the just completed Reinvent Committee work, in the coming days and weeks.
The bad news is that we continue to face a most challenging revenue environment. Revenue was down 10% in the second quarter, and cash flow down a whopping 27%, making it one of the worst quarters ever experienced. Here again there were some bright spots, with good growth in movies, preprints, online and Hoy, but not enough to offset the ROP decreases in the core print business. Results were similar across Tribune, but overall Tribune was worse than most of the industry (not where we are used to being or want to be).
Fundamentally, the advertising business has changed dramatically. Newspapers, once nearly the only game in town for a lot of advertisers, now face competition like never before – a big part is the Internet, but also cable, cell phones, digital billboards, ads in computer games, you name it.
In paper (ROP) advertising has been especially hit hard, down nearly 20% over the last few years. This is a big issue since ROP advertising has been what historically has surrounded – and paid for – the editorial content in the paper. Moreover, research shows ROP ads are actually one of the big reasons readers buy and look at the paper (unlike most media). We (and our readers) don’t want the paper to turn into a wrap for ad inserts.
Plainly, business as usual in a drastically changed world isn’t cutting it. That’s what our “Times Change” efforts are all about. And for us to sustain ourselves financially, this change has to drive new revenue. We need improvement in the second half of ’07, and then carry it forward after we become a private company owned by ourselves and Zell.
Many things are already in or moving toward the market – the launch of Image (which is slated to go weekly in September), the re-design of Travel; Monday’s launch of Metromix.com; the planned October launch of our new Thursday Calendar tab and broadsheet sections and subsequent new Calendarlive website; and more new interactive product development (with the technology support to make it happen).
We’re looking at how our ad sales go to market and realigning our sales force accordingly, and adding new sales talent in key positions.
We are also looking at expanding the types and positioning of advertising we offer our clients. Here the opportunities include things that may really challenge established traditions, including putting ads on the paper’s front page. There has been a lot of focus on such ads, and I know there a real mix of views and emotions on this subject, so let me tell you what I think of them:
Front page ads will raise several million dollars in revenue, and make a meaningful contribution to improving current trends We will make sure the revenue is additive, and not just switched from other pages They will help pay for the content we create for readers, and for our investment in new growth opportunities They are common at reputable papers across the U.S. and Europe, including in the Wall Street Journal’s much admired re-design Space taken (1 ½” strip) and related design issues can be managed We will have standards to ensure the ads look good, not schlocky If we communicate well, reader reaction should be OK
Remember, one way or another we all impact our revenue business. Everybody who creates content for our readers and users, or manufactures or delivers, or sells to advertisers, handles customer service, or touches our customers in any of the millions of ways we do each day – all of us can and do have an impact.
As always, I am eager to hear your comments and suggestions. Transforming this great company for the future really rests on all our shoulders. It’s a cross-company effort and, more than ever, we need to pull together.
David
ping
Newspaper, magazine, and most Internet ads: avoidable. Radio and TV ads: much less avoidable. Let the papers put them wherever they want, I’ll just skip over them, and the cats don’t mind them in the litter box!
Could not happen to a nicer bunch!!
I discontinued my subscription a week later. Apparently so did a lot of others because within a month, the paper was calling me back begging me to renew. I also saw that their readership was down almost 10 percent from year-ago.
And this is a fairly conservative newspaper in Nebraska. Imagine the conceit of the "established" media flagships.
Has anyone told the LAT to try printing the truth?
The moon bats had a fit that their same-old same-old ad nauseum letters weren't getting printed as much.
The paper flinched.
Yah, right.
my comment to David is to liquidate the paper. Waiting for death is costly. Liquidate now and save a bunch of bucks from certain loss.
Lol! It might come to that! The LA Times is one of the worst in the country. It is good they are hurting.
Nah, lets let them bleed down a bit more...
BS, if that were true advertisers wouldn't be leaving. A small segment of (mostly older) readers want the supermarket inserts, and that's it as far as readership demand for ads goes.
Has anyone else told the LA Times the other bad news — that they’re losing readers because they don’t report the news, but rather, their stories are politically biased?
The media warlords are all going to suffer financial reversals unless they move toward the center and get away from pandering to the political left, which doesn’t have readers anyway.
Haven’t any of them figured out yet that the conservatives in this country are the ones who read?
http://www.latimes.com/business/la-fi-times14jul14,1,1572803.story?coll=la-headlines-business
From the Los Angeles Times
Times publisher says front page may get ads
By Thomas S. Mulligan
Times Staff Writer
July 14, 2007
Amid a steep decline in revenue, the Los Angeles Times is planning to break with long-standing tradition by selling ads on its front page, Publisher David Hiller said Friday.
When it happens, the newspaper will be the largest metropolitan paper in the country to place ads there.
Hiller said the decision was his. The Times’ corporate parent, Chicago-based Tribune Co., plans to sell Page One ads at its 10 other newspapers as well, said Doug Thomas, a senior vice president for advertising in Tribune’s publishing division. He said Tribune’s South Florida Sun-Sentinel in Fort Lauderdale began selling front-page ads this year and got “an incredible response” from advertisers.
Hiller said the initiative “is a meaningful response to the demand for more innovative solutions from advertisers who have a lot of choices about where to spend their money.”
“We aren’t the only game in town anymore,” he said in an interview Friday.
Earlier in the day, Hiller outlined the changes in a two-page memo to Times employees. He said premium-priced ads would raise “several million dollars in revenue” at a time when the newspaper’s financial performance has been extraordinarily weak. In the second quarter, The Times’ overall revenue slid 10% and cash flow plunged 27%, “making it one of the worst quarters ever experienced,” he said. Year to date, ad revenue is down 8%.
snip
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