Tomorrow’s Morning, a little-heralded weekly newspaper for kids based in Brentwood whose launch has cost its owner and investors over $5 million, has put itself on more solid footing in recent months after a major circulation increase.
After raising $5.1 million through an initial public offering in March, Publisher Adam Linter launched a two-month telemarketing and direct mail campaign that more than tripled the paper’s circulation, from 65,000 to about 240,000 copies.
Wall Street is apparently pleased with the results; stock in Tomorrow’s Morning Inc., which dropped below $2 a share in May and July, was trading at nearly $5 a share last week.
Tomorrow’s Morning is a four-page publication distributed in schools with a masthead and datelines like a real newspaper. It features national and international news from a kid’s perspective, features on nature and science, and even a kid’s stock column that lists closing prices on companies like Ben & Jerry’s and Walt Disney Co.
The paper was started in October 1992 by Linter, who raised close to $2 million through private investors. That was only the beginning of his money-raising efforts; over the past four years, he has had to continuously seek money from investors to prevent Tomorrow’s Morning from folding. The paper has reported a total operating loss of $5.7 million since it launched.
“We could have easily closed 10 times, just run out of money,” said Linter. “But then I would have lunch with somebody and get $50,000. And then I would be having dinner with somebody else and I’d get another $100,000. I was spending 75 percent of my time raising money, 15 percent writing the paper and 10 percent trying to convince myself not to kill myself.”
The newspaper, for kids aged 8 to 14, is distributed two ways: Home delivery costs $24.95 a year, and school delivery runs about $100 per classroom or $2.90 per copy. The paper also has an Adopt-A-School program allowing corporations or a non-profit organizations to sponsor a classroom.
Tomorrow’s Morning faces stiff competition from two larger publications Weekly Reader and National Scholastic, which have been around for more than half a century and are staples in schools nationwide.
And the children’s newspaper industry is not believed to be a profitable one. Peter P. Appert, an analyst at BT Alex Brown in San Francisco, expressed some amazement that Tomorrow’s Morning was able to raise $5 million through its IPO.
Scholastic Corp. is not making any money at all on its 6 million-circulation children’s newspaper National Scholastic, Appert said.
“There’s a lot of players in this market, very few that make meaningful money,” Appert said.
Richard LeBrasseur, chief executive and president at Weekly Reader, said Tomorrow’s Morning has had no noticeable impact on his papers’s circulation. It has a circulation of 8 million and is only available through school subscription.
Still, LeBrasseur said, “no competition is too small.”
Tomorrow’s Morning takes in most of its revenues from subscription fees, although it contains some advertising. For example, Universal Home Video recently paid $15,000 for a special insert promoting its “E.T.: The Extraterrestrial” home video and Web site, Linter said.
Meanwhile, reaction from teachers and school administrators to the paper is strong.
“I love it. I think it’s kid-friendly … and kids really love it,” said Sheila Watson, principal at Eagle Rock Elementary, one of the schools on the Adopt-A-School Program. “It’s a lot more professional and more slick-looking than the others.”
Money from the IPO is being used to pay down debt, fund the marketing program and complete the development of a CD-ROM game called “Scoop.”
“When I started the company, I always knew the newspaper was the linchpin, and that there would eventually be an online component, a CD-ROM, a television show and merchandising,” said Linter, a former screenwriter. “This is a kid’s media company.”