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January 27, 2014

Hartford Courant seeks revenue as spinoff saps finances

Photo | Pablo Robles Nancy Meyer, publisher of the Hartford Courant, is seeking her master's degree in interactive studies from Quinnipiac University to learn more about digital operations and social media.
Photo | Pablo Robles Before coming to the Courant, Nancy Meyer worked for newspapers in San Francisco, Albany, Saratoga Springs, N.Y., and Elmira, N.Y.

The Hartford Courant had plenty of challenging years recently, but 2014 will be a doozy.

Around mid-year, the 250-year-old publication's parent, Chicago-based Tribune Co., will spin off the Courant and seven other daily newspapers into a separate, stand-alone publishing division that has lost subscribers and revenue steadily for the past five years.

As part of the sendoff, Tribune newspapers will be saddled with new debt and expenses, including rental payments on properties they previously owned. Revenues, too, will take a hit as Tribune keeps to itself key online assets like CareerBuilder.com.

Into this new reality strides Nancy Meyer, the Courant's freshly minted publisher, who took over for Rich Graziano on Nov. 18 after he left to run a Tribune television station in New York.

Meyer, 50, said the Courant brand is tantamount; and even if fewer people are picking up the print edition, the community still seeks out the publication for its investigative, high-quality, and expensive journalism on different platforms.

“We know the future is not what we are today,” Meyer said. “It is important for us to know what the reader is looking for and where they are looking for it.”

Meyer said her strategic plan is to gradually shift more resources to serve the Courant's digital audience of the future, while still maintaining a strong print product for today's audience. To make up for lost print advertising revenue, Meyer said she will explore new revenue streams, including a paywall for Courant.com, hosting major events, and offering contracted digital services like web design and development.

Spinoff challenges

Meyer toes the company line in saying the Tribune spinoff will not impact the implementation of this digital transition, or the Courant's journalism quality, even as analysts and policymakers are waiving red flags.

“They are encumbered in a way that no spunoff newspaper has ever been burdened before,” said Alan Mutter, a San Francisco-based media consultant. “It would be better for the newspapers if they got a better deal than what they are getting now.”

Other media companies have spun off newspaper divisions before, but under circumstances that gave them a better chance to succeed, Mutter said. When Rupert Murdoch's News Corp. split off the Wall Street Journal and other newspapers in June, the new division had no debts and $2.6 billion in cash.

The Courant, along with the seven other newspapers in the new Tribune Publishing Co., will be saddled with more debt, drained of revenue, and forced to pay new expenses.

Before the spinoff, Tribune plans to borrow an unspecified amount to make a multi-million-dollar dividend payment to shareholders, with the debt to be paid by the new Tribune Publishing company, a U.S. Securities & Exchange Commission filing said.

Tribune will retain ownership of the Courant's headquarters at 285 Broad St. in Hartford and force the newspaper to pay rent for the space it occupies in the building shared by Fox CT. The total rent for all eight newspapers will be roughly $35 million annually, the SEC filing said.

Tribune also will keep the online revenue from CareerBuilder and Classified Ventures, which includes Cars.com. Those assets generated $85 million in revenue for the eight newspapers in the first nine months of 2013, according to the SEC document.

Congressman Henry Waxman (D-CA), whose district includes the Los Angeles Times, has been publicly and privately urging Tribune to back off these measures to give the newspapers a chance at long-term survival. Waxman's level of success at changing the minds of the Tribune executives will dictate the future of the Courant and its sister newspapers, Mutter said.

“When other newspapers were spun off, yeah, you are on your own, but at least your knapsack is full of trail mix,” Mutter said. “At the Tribune, these guys are putting rocks in their knapsack and borrowing money from them.”

Still Profitable

Despite the ups and downs in the publishing industry and the Connecticut economy, the Hartford Courant has maintained profitability over the years and the spinoff won't change that, Meyer said.

The newspaper has made significant layoffs in and outside the editorial department to account for declining revenues.

The most recent job cuts came in December and included four members of the newsroom. Courant newsroom staffing levels peaked in 1994 at 400 employees and dropped to 135 employees by 2009. The newspaper hasn't publicly disclosed staffing levels in the five years since, even though there have been several rounds of layoffs.

“It is all about priorities, and where you set your priorities,” Meyer said.

The biggest challenge Meyer faces against these mounting financial burdens is maintaining the Courant's reputation for strong journalism, said Richard Hanley, Quinnipiac University associate professor of journalism.

“Hartford Courant has been around for more than two centuries, and it is embedded into the culture of Connecticut, but it is not immune to the issues facing the media industry,” Hanley said.

Fewer advertising dollars are allocated to print and are going to online and mobile, Hanley said. Large regional newspapers like the Courant no longer have the media monopoly to charge advertisers high rates, which used to subsidize costly investigative journalism on which the Courant built its reputation.

Unlike younger media companies that have more flexibility in their traditions, the Courant has its 250-year reputation to uphold while it goes through this upheaval, a difficult balancing act to strike while Tribune spins off the newspaper division, Hanley said.

“If you are used to operating under one revenue model and you have to shift to a new revenue model, that is always difficult,” Hanley said. “I don't know if the Courant can go full bore with all this uncertainty hanging over its corporate ownership.”

Meyer has helped a newspaper through dire financial situations before. Prior to joining the Courant in 2006 as vice president of advertising, she worked as the director of online and classified advertising at the struggling San Francisco Chronicle.

Unlike the Courant, the Chronicle was losing money and had been for several years. The California paper rushed to improve finances by trimming staff and shifting it's focus toward the digital audience. Now, the Chronicle is no longer facing closure.

That effort in San Francisco to be nimble and creative in a challenging fiscal climate, while moving toward digital helped shape Meyer's strategic plan for the Courant. Hartford's financial situation is better, so the newspaper has more time for the digital transition, Meyer said. The Chronicle experience revealed how such a change was achievable.

“There was this sense of creativity, and a sense of urgency,” Meyer said.

In the Courant's digital transition, content remains extremely important, Meyer said. The priorities will be on local and indispensable content, ranging from investigative reporting to where to go on a Saturday night.

The tradeoff for paying for expensive, investigative journalism is centralizing more services to other Tribune publications, Meyer said. For example, the Sun Sentinel in southern Florida handles most of Tribune's creative services while Hartford handles closed captioning for Tribune television stations.

The Courant is looking at other revenue streams as well to make up for declining print advertising and circulation numbers, Meyer said. The Courant is the only Tribune newspaper without an online paywall, something Meyer said she will consider adopting.

New buckets of revenue could include hosting up to 10 major events annually and offering digital services to help companies with social media, online searching, and web design and development, Meyer said.

Throughout its history, the Courant faced many challenges. During the Revolutionary War, the newspaper's paper mill burned down, forcing the Courant to print on wrapping paper while publisher Hannah Watson — one of the nation's first woman newspaper publishers — asked the state legislature to authorize a lottery to construct a new mill.

Today's challenges, like the old ones, require quick and smart action, Meyer said. Newspapers were slow to respond to competition in the past, but with a new strategic plan, Meyer is confident about the future.

“Will we be here 250 years from now? I'm not going to be here, but I'm going to say, 'Yes,'” Meyer said.

Read more

Tribune names Fox CT GM

Courant parent approves spinoff of print segment

Tribune Publishing Co.

The Tribune Co. will spin off these eight newspapers into their own company sometime around June:

The Baltimore Sun

Chicago Tribune

Daily Press (of Virginia)

Hartford Courant

Los Angeles Times

The Morning Call (of Pennsylvania)

Orlando Sentinel

Sun Sentinel (of Florida)

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