EDITOR’S NOTE: This story has been corrected from the print edition to clarity that the Los Angeles Daily News currently has 55 full-time editorial employees.
How about this for a job posting: Newspaper executive wanted to convert group of struggling papers into profitable digital enterprises.
No simple task, given that even the biggest names in ink haven’t fully figured out how to make the shift. And it’s unlikely to be much easier for the nine daily papers that comprise the Los Angeles Newspaper Group, or LANG, led by the flagship Los Angeles Daily News.
Dwindling circulation and a deterioration of print ad sales forced the Woodland Hills company’s majority owner, Denver’s MediaNews Group, to go through Chapter 11 bankruptcy reorganization two years ago.
After that, MediaNews emerged with new ownership that has a strong digital focus. Jack Klunder, a former publisher of three LANG newspapers, was promoted last month to head the group. Previously, LANG had a president, but Klunder is the first to also be publisher of all nine dailies and some weekly publications. He’s optimistic the digital transition can be made, but more cost-cutting may ensue.
“We’re going to look to see where we can drive more efficiency and take the savings to reinvest in two areas: ad sales and content generation,” he said.
He added that staff consolidations may occur, but mostly outside of the newsroom.
As the papers experiment with different ways to tap digital revenue, there’s also a sense of urgency. The newspaper group lost 30,000 weekday print subscriptions in the year ended Sept. 30, while adding 25,000 digital ones, according to the Audit Bureau of Circulations. LANG’s dailies collectively had an average weekday circulation of 403,000 as of Sept. 30.
The Daily News has been in a free fall. Since 2005, its weekday print circulation has dropped 62 percent, from 169,000 to 64,000. As a result, the paper, which had employed a staff of almost 100 in its Woodland Hills newsroom two decades ago, is down to 55 full-time editorial employees.
The digital initiative at the paper includes various websites, mobile apps and a digital replica of the print product for devices such as the iPad. There’s been some progress: Weekday circulation of the digital edition has grown from nothing in 2005 to 22,000 weekday copies as of Sept. 30.
Rick Edmunds, a media business analyst at the non-profit Poynter Institute in St. Petersburg, Fla., said the newspapers have a chance to succeed given the fractured L.A. media market.
“They’re viable papers,” he said. “The Los Angeles area is characterized by low penetration of the L.A. Times.”
Digital ads
Behind the initiatives is Digital First Media in New York. It is backed by New York hedge fund Alden Global Capital, which purchased a significant stake in MediaNews after buying up debt in bankruptcy proceedings. Digital First runs MediaNews.
Alden brought in John Paton, a longtime newspaper executive and founder of Hispanic news company impreMedia, to run Digital First last year. Befitting the company’s name, Paton is an almost evangelical voice for newspaper digitization.
“‘You’re going to miss us when we’re gone’ is not much of a business model,” he wrote about print newspapers in a recent blog post.
LANG staff said they felt Paton’s digital-first approach as soon as he took over in September. Reporters were asked to start tweeting from City Council meetings, publish news stories immediately to the web and update them regularly throughout the day. Soon, after the lead of other Paton papers, the Long Beach Press-Telegram will allow members of the local community to walk into the newsroom to write stories for the website.
However, the local strategy is far from complete. LANG, like other papers, is struggling with exactly how it will monetize digital content. The company still relies predominantly on print ad sales and subscriptions. It is testing out pricing schemes for digital editions, which accounted for about one-fourth of LANG’s daily weekday circulation as of Sept. 30.
While most of the news websites are free to access and rely on banner ads, the Whittier Daily News and Redlands Daily Facts also have pay walls that charge site visitors for repeat access.
Klunder said he hasn’t yet evaluated the effectiveness of the walls – a vestige of previous MediaNews management – to decide whether they will stay.
Meanwhile, it’s still unclear how much advertisers will buy into LANG’s mobile news apps. The Daily News’ app has advertiser support, while the smaller San Gabriel Valley Tribune’s mobile app has none.
How much time?
Klunder maintains that LANG is profitable, though he wouldn’t break out digital and print revenues. He added that he will keep all nine dailies’ print editions in circulation for the foreseeable future.
But to help preserve margins, he is looking at what few consolidations remain to be made at the company. Printing is already outsourced in all regions except the Inland Empire, and Klunder said he’s taking a look at replacing the in-house San Bernardino printing press with an outside contractor.
“That’s something you always have to look at, especially as operating costs continue to go up,” he said.
The big question: How much time does Klunder have? Private-equity groups that invest in distressed properties don’t like to hold on to their investments indefinitely. Westwood private-equity firm Gores Group LLC bought and sold the San Diego Union-Tribune in about a year and a half.
Still, despite private equity’s penchant for quick flips, Edmunds said he expects Alden to invest in transitioning the newspapers to digital for at least a few years before any sale might take place.
“They’re not going to do it in six to 10 months,” he said. “It’s a three- to four-year proposition.”
