Download - Case Study - Gannett
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SuzanneYadaBusiness160Tues.Thurs.7:30a.m.
SUMMARY:
GannettCo.,Inc.,isthelargestnewspapercompanyintheUnitedStates,publishing85daily
newspapersandowning23televisionstations.Thetroublingeconomiclandscape,coupled
withthedeclineoftheprintmedium,makes2009anespeciallytoughyearforGannett.
Howcanthecompanysurvive?
Spring09
CASESTUDY:GANNETTCO.,INC.
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CASESTUDY:GANNETTCO.,INC.
BYSUZANNEYADA
Theyear2009hasalreadybeendisastrousforthenewspaperindustry.In
additiontobattlingadifficulteconomicclimate,consumerhabitshaveshiftedover
thelastdecadefromreadinganexpensiveandbulkyprintpublicationtoconsuming
afreeandimmediateonlineone.Thismayhaveincreasedreadershipfornewspaper
companies,buttheyhavestruggledeversincetofindawaytosufficientlymonetize
thecontentonline.
Theywerestilltryingtofigureitoutwhentheeconomycollapsedinlate2008,
andmanywonderifnewspaperswillsurvivethiscurrentdownturn.Itisclearthe
largenewspapercorporationswillnotreturntothedoubledigitprofitsoflast
decadeanytimesoon(Overholser&HallJamieson,2006).However,thecompany
thatfirstsetthebarforthosehighprofitexpectations,GannettCo.,Inc.,isexpected
topullthroughthisrecession(Melvin,2009)foranumberofdifferentreasons.
Thegoalofthispaperistoexplorethosereasons,asIanalyzeGannetts
strengths,weaknesses,opportunitiesandthreats.ThenIwillpresentthreedifferent
managementdecisionpossibilitiesforGannettsfuture,andIwillexplainwhyIfeel
oneofthoseoptionsisthebest.
Beforethat,however,Iwillgiveyouthebackgroundonthecompany,its
purpose,historyandcurrentpositioninthemarket.
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WHATISGANNETT?
Gannett(pronouncedgunNET)isanewscorporationthatownsadiverserange
ofmediaoutletsandrelatedoperations,includingprint,broadcast,digitalcontent
andothers.GannettisthelargestnewspaperpublisherintheUnitedStates,owning
85dailynewspapersandabout850nondailypublicationsin31statesandGuam.
ItsflagshipnewspaperistheUSAToday.Gannettalsoowns17dailypapersand200
otherpublicationsintheUnitedKingdom(Gannett.com,2009).
Inadditiontoprintpublications,Gannettowns23televisionstationsthatreach
morethan20millionhouseholdsintheU.S.,covering18percentoftheU.S.
population(Romaine,2009).ItsDigitalsegment,formedin2008,operatesonline
venturessuchasCareerBuilder,anemploymentWebsite;ShopLocal.com,anonline
shoppingandadvertisingchannel;PointRoll,arichmediamarketingcompany;and
Ripple6,aproviderofsocialmediatechnologyandanalytics.Thecompanyalso
dealswithcommercialprinting,newssyndication,andmarketinganddata
operations(2008AnnualReport,2009).
HISTORYANDREPUTATION
FrankGannett,thecompanysfounder,firstboughtahalfinterestinatiny
conservativenewspaperinupstateNewYorkin1906.Twentyyearslater,Gannett
owned21newspapersand7radiostations(Overholser&HallJamieson,2006).He
acquiredthesemediaoutletswiththepromiseofautonomyfortheoriginalowner
andpurposefullyfoughttokeepthewordchainfrombeingutteredanywherein
hisnewsrooms(Williamson,2006).
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Asnewspapersshiftedtheirreportingvoicefromtheyellowjournalismeraof
sensationalismtoamorenuancedsenseofobjectivity,theperceivedseparationof
journalismwiththebusinessofjournalismwasmoreimportanttomaintainthan
ever.
Thattraditionshiftedbythe1960swhenlargenewspapercompaniesbeganto
gopublic,includingGannettin1967.Aroundthistime,AllenH.Neuharthbeganhis
ascentintopowerascompanypresident,CEOandchairman.Beforethen,
newspapercompanieshavetraditionallyportrayedthemselvesasimpoverished
organizationswhoseonlygoalwastoprotecttheFirstAmendment,butNeuharth
knewinvestorswerentinterestedinputtingtheirmoneyinabusinessthatprided
itselfonpoverty(Bagdikian,2004).
BythetimehebecameCEOin1973andchairmanin1979(Gannett.com,2009)
hechangedtheimageofthecompanytoreflectitsfinancialgoals,begantousethe
wordchaintodescribetheGannettbrandandwasunashamedtoemphasizethe
bottomline.Inshort,Neuharthbegantreatingthecompanymorelikeabusiness
thanapublicservice,andothermediaoutletstooknotice(Squires,1994).
Fromthelate1970sintothe80s,theGannettCorporationbegantorapidly
acquireothernewspapersandmediacompanies,specificallycommunitypapers
wheretherewaslittleornocompetition.
Criticsdecriedtheacquisitionsasbreakingantitrustlaws,cheapening
journalisticqualityinthenameofthebottomlineandreducingthenumberof
voicesheardinthemedia.Gannettrespondedwithanadcampaigninitsown
newspapers,emphasizingitscommitmenttotheFirstAmendment,itspoolofnews
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andinformationfromacrossthenation,anditsstrongerabilitytofightinbigcourt
casesinvolvingfreedomofspeech(Bagdikian,2004).Evenwiththesepoints
emphasized,noonedeniedGannettsbusinessstrategytotakelocalmediacontrol.
Neuharthboastedinhisownbook,ConfessionsofanS.O.B.,thatWallStreetanalyst
JohnKornreichoncesaid,Gannettsbasicmediabusinessisawesome.Itisvirtually
anunregulatedmonopoly(Neuharth,1989).
Therapidgrowthinacquisitionswasalsomirroredinitsrevenues.Gannettwas
oneofthefirstnewspapercompaniestoseedoubledigitprofits,promptingawave
ofplanstofollowsuitwithinothernewscorporations.Gannettsetthestandardin
profitability,going18yearsfrom1967to1985witheachquarterlyprofitgreater
thantheonebefore(Bagdikian,2004).
ThemostsignificantdateinGannettsrecenthistorywasSept.15,1982,theday
thecompanylaunchedUSATodayaftertwoyearsofresearchingwhatwouldbethe
idealnationalnewspaperforbothreadersandadvertisers(Gannett.com,2009).
Thedesignandstyleofthenewspaperplacedanewfocusoncolor,infographicsand
shorter,morepositivenewsarticles,mimickingtheexperienceoftelevisioninmany
ways(Prichard,2007).
CriticslambastedUSAToday,nicknamingitMcPaperinreferencetowhatthey
feltwasthecheapeningofnewsthatplayedtothereadersevershrinkingattention
span.Butbytheendof1983,thenewspaperprovedtobeimmenselypopular.It
soldmorethan1.3millioncopiesadayandwouldeventuallybecomethelargest
sellingdailynewspaperinthenation(Prichard,2007).
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GANNETTTODAY
Today,thecompanyisledbyCraigDebow,whobecametheCEOofGannettin
2005.HeadquarteredinMcLean,Virginia,itsmorethan225millionoutstanding
sharesofcommonstockareheldbyapproximately8,500shareholders(2008
AnnualReport,2009).Thecompanycurrentlyhasapproximately41,500fulltime
andparttimeemployeesaftera10percentworkforcereductioninOctober2008
andtheeliminationof1,000newsroompositionsinAugust(MacMillan,2008).
ThispastyearwasturbulentforGannett.Itsoperatingrevenuesfor2008were
$6.8billion,a9percentdropfromtheyearbefore.Thecompanyreportedanetloss
fromcontinuingoperationsof$6.65billionin2008,comparedtoanoperating
incomeof$1.65billiontheyearbefore.Therewasalsoanetlossof$6.65billionfor
2008comparedwithnetincomeof$1.06billionfor2007(2008AnnualReport,
2009).
Theearlymonthsof2009alsosawGannettsstockreducedtojunkstatus,which
severelyimpactedthecompanysabilitytosecurefinancingtomakestrategic
growthmoves(Witkowski,2009).Attheendof2008,thecompanyhad
approximately$3.8billioninlongtermdebt,and$2.2billionofthatwasborrowed
frombankstherestwasinunsecuredpublicnotes(2008AnnualReport,2009).
COMPARINGTHECOMPETITION
Theindustryasawholehasseendrasticdamage,andnewspapersacrossthe
countryareshutteringitsdoors.TheNewYorkTimespublishedthefollowing
graphiconMarch12,2009,anditisalreadyoutofdate.Manyofthepapersthat
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werenotedtocloseinthisinfographichavedonesoalready,underscoringhow
quicklytheindustryisdeteriorating:
BADNEWSFORNEWSPAPERS
Sources:AuditBureauofCirculations;thecompanies.Graphic:NewYorkTimes
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Thelowerhalfofthepreviousgraphicshowsabriefcomparisonwiththetop
fivelargestpublicnewspapercompanies.Thefollowinggraphsgivemorecontext:
3NEWSSTOCKSCOMPAREDTOS&P500,19712009
3NEWSSTOCKSCOMPAREDTOS&P500,20072009
Stocksymbols:GCIGannettCo.,Inc.;NYTNewYorkTimesCompany;SPXS&P500Index;WPOWashingtonPostCompany.Source:MarketWatch.com
Inthesegraphs,twoothernewscompaniesstockperformance,theNewYork
TimesCompanyandTheWashingtonPostCompany,aremeasuredupwith
GannettsandtheStandard&Poor500Indextoprovidesidebysidecomparisons.
TheNewYorkTimesCompanysawits2008operatingcostsdrop5percent.In
2007theyreportedanoperatingincomeof$187.6million;in2008theyhadan
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operatinglossof$88million.Netincomein2007was$208.7million;netlossin
2008was$57.8million(2008AnnualReport,2009).Thoughadrasticdip,the
multimilliondollarfiguresaredwarfedbyGannettsreportedbillions.
However,TheWashingtonPostCompanyalsoreportedinthebillionsandisone
ofthecompaniesthatsawamodestincreaseinoperatingincome,thanksinpartto
Kaplan,asuccessfulsubsidythatprovideseducationalandtrainingservices
unrelatedtonewsgathering.In2007,thecorporationreported$4.2billionin
operatingincome;in2008ithadraised7percentto$4.5billion.However,2007s
netincomecameinat$280.6million,and2008sincomemeasuredat$65.7million,
a77percentdecrease(2008AnnualReport,2009).However,editorshadtoaddress
conflictofinterestaccusations,becausetheacquisitioncoincidedwiththepassage
oftheNoChildLeftBehindAct.ThebuyoutresultedinbadPR.
THEINDUSTRYSMAINCHALLENGES
Stockpricesandoperatingincomesarenotenoughtopaintthefullfinancial
pictureofthesecompanies.Thefollowingfactorshelpexplainwhatchallengeslie
aheadforthenewsindustry,andwhysomedonotthinknewspaperswillsurvive:
Onlineadvertisingisnotsufficient.Readershipandcirculationformany
newsorganizationshaveincreasedbecauseofthewebsreach,butcompanieshave
notyetfoundawaytoearnadequateincomefromthem.Theoriginalgoalwhen
newsorganizationsputcontentonlineforfreewasthattheincreasedviewership
wouldbeattractivetoadvertisers.Unfortunately,onlineadvertisinglacksthe
scarcityandvisibilitythatprintadvertisingoffers,andnewscompanieshavea
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hardertimechargingpremiumprices(Mutter,2008).Readersarefacedwithmore
competitionfortheirattentionthaneverbefore,fragmentinganadvertisersoptions
andmakingtheirmessagelesspowerful.However,advertisershavebeenturningto
asignificantcompetitor,GoogleAdSense,becausetextadsareeasytocreate,have
globalreach,canbedirectlymanagedthroughonlinetoolsandarenarrowly
targeted.Manynewspapersdonotofferanyofthesebenefits.
Printstillearnsthevastmajorityofadvertisingincomebyfar;ofthe$38billion
inadvertisingthenewsindustrywasestimatedtohaveearnedin2008,only$3
billioncamefromonline,whichislessthan10percent(Pew,2009).Thosenumbers
areshifting,however,butitisnotenoughtobuoycompaniesthroughadeep
worldwiderecession.Thegraphbelowillustrates:
PRINTVS.ONLINEADEXPENDITURES,20032007
Source:BusinessAnalysisandResearch,NewspaperAssociationofAmerica,PewProjectforthe
ExcellenceinJournalism.
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Craigslist,thefreeonlineclassifiedswebsite,isanotherexampleofanonline
competitorcausingdamagetoanewspapersbottomline.Classifiedadvertisingin
printpeakedinthefourthquarterof1997atanaverageof41.6percentofa
newspapersadrevenue,butithadbeenreducedto28.84percentbyNovember
2008(Riley,2008).Gannettsownnumberslookslightlybetter;in2007,classifieds
represented40.6percentofGannettstotaladvertisingrevenue.In2008,it
plummeted25percentbutstillmaintaineda36.4percentsliceofadrevenues:
Source:Gannett2008AnnualReport
Inaddition,Gannetthasinvestedinotheronlineclassifiedenterprisessuchas
CareerBuilder,ShopLocalandClassifiedVentures.Thoseoperationsareinthe
Digitalsegmentandaccountedforseparatelyfromthetableabove.
Oncecontentisofferedforfree,itisdifficulttogettheusertopayforit
again.ThereishopethattheAmazonKindle,anelectronicreadingdevice,willdo
fornewspaperswhattheiTunesStoredidforrestoringprofitstodownloadable
music,butthatremainstobeseen.
Itisalsopossibletochargevisitorsofawebsitetoviewthecontent,butthat
ideassuccessalsoremainstobeseen.TheNewYorkTimeshastriedaservice
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calledTimesSelectthatrequiredpaymenttoviewpremiumcontent,butitwas
discontinued.However,executivesattheTimesaretalkingofresurrectingitagain
inadifferentway.
CertainpublicationssuchastheWallStreetJournalhavebuiltapaywallon
theirwebsites,andithasbeensuccessfulbecauseitstargetaudienceisbusiness
readerswhoareabletousecompanyfundsforsubscriptions.Itisunclearwhether
thiswillworkforgeneralinterest,geographybasedcommunitynewswebsites,
whichisGannettscoreoperation.
Manypeoplewouldalsoconsiderputtingcontentunderlockandkeytobe
ethicallyquestionable,sincemuchofjournalismspurposeistobringimportant
issuestothepublicsattention.However,newspapershavebeenchargingforits
contenttogreatsuccessseveralyearsbeforetheInternet,andthepaywall
possibilityisanattempttorestorethatbusinessmodel.
Restructuringdebtisnearimpossibleinastrugglingeconomy.Manyof
thelargestnewscorporationsintheUnitedStatesgotthatwayfrommergersand
acquisitions,whichwereboughtandsoldusingdebt.Theydidnotforeseethe
decimationoftherevenuemodelandexpectedtobeabletorepaythemassive
amountsofdebttheyowe.However,theeconomycollapsedandsodidrevenue.
Companieseverywherewereforcedtomakepainfulcutbacks,andnewspaper
companieswerenotabletonavigatearoundboththefailedeconomyandthe
competitiontheInternetprovided.
Financialanalystshavedowngradedmanyofthesecompaniesstockratings,
whichmeansbanksandotherlenderscanhaltloansandchargehigherinterest
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rates.Thisseverelyhamperstheoptionsthesecompanieshave,becauseinsteadof
makinginvestmentsnowthatcouldendupmakinglargeprofitsinthefuture,the
companyhasnochoicebuttododrasticcutbackstostayafloat(Cranberg,
Bezanson,Soloski,2001).
Severalnewspapersacrossthenationownedbypubliclytradedcompanieshave
beenshutterednotbecausethepaperwasntprofitable,butbecausetheparent
companysdebtwassodeepitcouldntkeepaboveoperatingcosts.
SWOTANALYSIS
SowhatdoesthisallmeanforGannett?HereiswhereIwilldiscusswhatI
believeareGannettsstrengths,weaknesses,opportunitiesandthreatsasitrelates
totheoperationsofthebusiness.
STRENGTHS
TheleadershipinplaceatGannettislookingtodiversifyincomebeyondthe
traditionaladvertisingmodel,whichisagreatstepforward.Itsacquisitionof
venturessuchasCareerBuilder,Ripple6andothernonnewsentitiessuchas
commercialprintingoperationsmayhelpfundtherestofthecompanysfunctions
throughtheeconomiccrisis,anditscurrentholdingsinbroadcastandniche
publicationsalreadyunderscorethebenefitofdiversifyingrevenuestreams.
Gannettisalsoaggressivelyconsolidatingseveralaspectsofitscore
operations,fromcentralizedcopyeditingdeskstonationwidecallcentersto
collectivewebmastersthattakecareofthewholenetwork.Inmyopinion,Gannett
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hastakensomeoftheconsolidatingtoofar,however.Somequalitywillbe
compromisedwithtoomuchconsolidation,withcentralizedcopyediting,for
example.Butinotherinstancesitincreasesefficiency,whichtranslatestothe
bottomlineandaidsthebusinessinstayingafloat.
Thecompanyisknownforitsstrongemphasisindiversityandhasbeen
namedoneofthe20bestplacesforAfricanAmericanstowork(Gannett.com,2009).
Thisbuildsagoodreportwiththecommunityandhelpscounteracttheaccusation
thatGannettpapersreducethemixofvoicesheardinthemedia.
Gannetthaspaidparticularlycloseattentiontoembracingnewtechnologies.Twoyearsagoitrolledoutasocialmediawebsitetemplateforallthenewspapersin
thecompanytoadapttotheircommunities.Readersareabletointeractwitheach
otherandthestoriesthataffecttheirtownsandcities.Gannetthasalsojumpedon
boardwiththeAmazonKindleinofferingaUSATodaysubscriptionandanumberof
itsblogs.LastyearscreationofaDigitalbusinesssegmenthasenhancedGannetts
onlineofferingstoinvestors.
Nichepublicationshaveamixedbagofresults,butIthinkGannettspushto
delivercontentinamyriadofdifferentspecifictopicswillhelpreadersinthelong
runandincreasecirculation.Itwillalsoofferadvertisersamultitudeofwaysto
reachtheirowntargetmarket.
AsreluctantasIamtoadmitit,Gannettsstrategyofowningcommunity
paperswithlittletonocompetitionhashelpedpayoff.Gannettsabilitytosetad
rateshigherduetolackofcompetitionhascontributedtothedoubledigitprofitsof
previousdecades,whichmayinturnbeonereasonGannettwillstillbearoundafter
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thiseconomicstormsettles.However,Idonotbelievethispracticeisgoodfor
Gannettscoreproduct,journalism,nordoesitbenefitadvertisersorthe
communitiestheylivein.Inflatingadvertisingrevenuehurtslocaleconomies,andit
affectsthewaythecommunityinteractswiththereporterswhoproducethemain
product.ThecompanyhasalreadybeentherecipientofbadPRaboutthissubjectin
the1970sand80s,andthepotentialforittoexplodeagainisstillreal.
Anotherthingthatisastrengthforthebusinessbutaweaknessforthe
contentistheemphasisonfeatures,sportsandentertainmentinnewscoverage.It
isastrengthbecausetheyaresimplestoriesjournalistscandotokeepthe
newspaperandwebsitespopulatedwithcontent,whichmeanstheycanproduce
morestoriesinlesstime.Itisaweaknessbecauseitunderscoresacommon
complaintthatGannettcheapensnewscoverage,whichinturnisnegativeforthe
imageofthecompany.
WEAKNESSES
Therecessioncouldnothavehitataworsetimefornewspapers,when
readerswerealreadyshiftingtheirreadinghabitsonline.Gannettneedstheability
totakeoutloansinordertoinvestinitselfanditsoperations,andthatcanthappen
easilynowbecauseofthecreditcrunch.Inaddition,Gannettsmajoradvertisersare
inthehousing,retailandautomobilesectors,whicharefacingmajortroublesof
theirown.Also,adownturninbusinesstravelmeansemptierhotels,whereUSA
Todaycountshalfitscirculationindoortodoordeliveries.
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Gannettcontinuallyhastobattleitsownreputationforpoor,shallow
journalism.Ithasrecentlybeendoingasolidjobinitsflagshipnewspaper,USA
Today,whichhasreinvigorateditsinvestigativenewscoverage.However,the
communitypapersarenotcloselyfollowingsuit.Aninvestmentinthequalityofthe
contentregainsrespectfromcommunitymembers,andmoreimportantly,the
advertisers,whoarewatchingnewspapersize,qualityandaudiencesthinningfrom
poorcontent.
OPPORTUNITIES
ThereasontheWashingtonPostCompanydidsowellinasidebysidestock
pricecomparisonwithGannettismostlybecauseoftheirsubsidiaryKaplan.Kaplan
providestutoringandmentoringservices,whichisinlinewiththepaperscore
missiontoeducateandinformthepublic,butnotexactlyjournalism.Gannettmay
considerasimilarventuretodiversifyitsincome.
TheDetroitFreePress,aGannettpaper,andtheDetroitNewshaveboth
reducedtheirhomedeliveryprintproducttofourtimesaweekwithamorerobust
websiteupdatedconstantly.Withreadersdeclininghabitswiththeprinted
newspaperandtheheavyexpenseofprintinganddeliveries,thereisanopportunity
inthemajormetromarketstodothesamethingcompanywideandsavemoney.
Thereisanopportunitytomonetizefulleventcalendarlistingsthat
newspapershavenotembracedyet.Takingthephonebookmodel,publicationscan
listeveryeventforfree,buteventpromoterscanpaymoreforhighlights,iconsor
extralinesoftext.
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Gannettmayhavetheweighttotrysomethingradicallynew.Ifitpartners
withAmazon.comandoffertosendafreeorsteeplydiscountedKindletopaid
subscribers,Gannettcouldsavealargeamountinprintingcosts.
IfqualityjournalismisaconcernforGannett,thecompanycanalwaysform
allianceswithnonprofitfoundationsandprogramsdedicatedtopreserving
investigativejournalism,suchasProPublica.org,theCenterforInvestigative
ReportingandSpot.Us,allofwhichfundindepthreportingprojects.
THREATS
Theeconomyisgoingtobeathreatlongafterithasrecovered,becausethe
repercussionsofthisdownturnwillbefeltdeepwithinthefinancialstructureof
businessthroughoutitsrecoveryyears.
Thereadersmovetoviewingcontentforfreeonlineishurtingthemassive
printadrevenueofnewspapers.Asanewspaperstargetdemographicgrowsolder,
theyoutharenotreplacingthem,insteadchoosingtofrequentwebsiteslike
MySpaceorFacebookinstead.Theymaygettheirnewsfromblogsthatarenot
professionallyeditedandverified.
OnlineadvertisingcompetitorssuchasGoogleAdSenseandCraigslistwill
continuetobethreats,aswillnewtechnologiesthatnoonehasenvisionedyet.
Theenvironmentalmovementandrecyclingculturehavediscouraged
readerstosubscribetothenewsprinteditions,becausereaderswillfeelthepapers
arekillingtrees.
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THREEMANAGERIALDECISIONS
InknowingthisinformationaboutGannettitsstrengthsandweaknesses,its
historyandstrategiesIhaveselectedthreepossibleoptionsfortheGannett
Corporationtotakeinnavigatingthefutureofthenewsbusiness.
1)ShiftthebulkoffocustotheDigitaldivision.Printisdying,andthere
needstobeaheavyinvestmentintothefutureofnewsifGannettwishestobe
aroundanother103years.TheDigitaldivisionhasamultitudeofsmartcompanies
thatmaynotberelatedtojournalismbuthavethepotentialtobesolidprofit
makerswithanyrenewedfocus.GannettcanalsoapplytheDetroitexperimentto
morepapersthatis,reducethenumberofdaysthepaperprintsandbeefupthe
websitecoverageinstead.Thedownsideisthatprintistherealincomeearnerinthe
companyintermsofrevenue.Butsometimesthenextstepinabusinessevolution
hastobeforcingthecustomer(inthiscase,theadvertiser)toadjustandbecome
usedtoadifferentformat.Printwillnotbearoundforever,andfocusingheavilyon
Digitalisariskybutneededshift.
2)Findnewwaysofaddingvaluetoprint.Sinceprintisfarandawaythe
biggestmoneymaker,Gannettcancreatenewwaysprintcanmeetreadersneeds.
Thecompanymaywanttolookintomorecoupons,giveaways,valuableinsertssuch
asCDsandDVDs,largephotographs,puzzlesections,highqualitydesign,and
anythingelsethatreinforcesthetactileexperienceofprint.Inadditiontothat,there
areoptionsindevelopmentformorenicheproducts,includingcustomized
magazinesthereaderscancreatethemselvesbyselectingthekindofcontentthey
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want.Thereisaprototypesystematprintcasting.orgforthecustomreaderthatcan
beadaptedtoaGannettstrategy.Anotherexperimentthecompanymaywanttotry
isreversepublishingonlinecontent.EachGannettnewswebsitealreadyhasa
socialnetworkwhereusersareallowedtoblogandcomment.Haveeditorsselect
thebestofthosecommentstopublishintheirnewspapersorintoanewniche
magazinethatcantargetdifferentadvertiserslookingforayoungerdemographic.
Thisgivesonlinecontributorsthethrillofseeingtheirworkinprint,itgives
advertisersexposuretheywouldntgetonline,anditsinexpensivetoimplement.
3)Focusonadifferentsubsidyaltogethertobringinrevenues.Thetough
timesinthejournalismindustriesarenotacoincidenceitisdifficulttofundreal
newsandinformation.Itmaybenefitnewsorganizations,then,tofindacompletely
separatebusinesstogeneratethecashflowuntiltheeconomyrecovers.Thesuccess
ofTheWashingtonPostCompanyisalessonthatGannettisveryclosetolearning.
TheiracquisitionofKaplan,atutoringcompany,turnedthebusinessintoaprofit
generatingventure.Gannetthasenteredintoafewrelatedbusinessesotherthan
journalism,buttheymayneedtostepoutsidetheirwayofthinkingevenfurther.
MYRECOMMENDATION
IwouldrecommendthatGannetttakeoption3.Iwasconvincedbythestatistics
IsawandthenewsarticlesIreadabouthowTheWashingtonPost,whilenot
flourishing,isactuallyperformingdecentlydespitethecircumstances.
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Ithinkitistoosoonforthecompanytoriskcompletelyabandoningprintwhen
itisstillmakingsuchalargechunkofrevenues.Whenmoredefinitivedatacomesin
fromtheDetroitFreePressexperiment,thenperhapsIcanrecommendoption1.
Option2makessenseintheshorttermonly,becauseprintsdaysarenumbered.
However,itwouldnothurttoimplementmorereinforcementfortheprintproduct
inthemeantime,becausethatisGannettsbiggestrevenuevehicle.
Option3hasthemostprooftobackitupintheexampleoftheWashingtonPost
Company.WashingtonPost,however,despitetheconflictofinterestaccusations,
hadthebenefitofreaderperceivedjournalisticintegrityandmakingbusiness
decisionsbasedonmorethanjustthebottomline.Gannettdoesnothavethat.
Iamnotadvocatingabandoningthenewsbusiness;infactinthelongrunitmay
helpsolvethepuzzleonhowtooperateacompanythatservessocietalaswellas
financialpurposes.Therewillalwaysbereadersinterestedinqualityjournalism,
buttheremaynotalwaysbeasustainablebusinessmodelattachedtoit.Journalism
mayhavetobeacompanyslossleader.
ItisextremelyimportantthatbusinessesofthesizeandstatureofGannett
continuetofindotherrelatedrevenuestreamstobringintothecompanyandin
returnfundtheimportantinformationcommunitiesneedtobeeducated.
Untiltheeconomybecomesmorestableandthefutureofthenewsindustry
becomesmoreclear,newsorganizationseverywherewillhavetodothesame.
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SOURCELIST
Bagdikian,BenH.(2004,May15).TheNewMediaMonopoly.BeaconPress.
Cranberg,G.,Bezanson,R.,Soloski,J.(2001).TakingStock:Journalismandthe
PubliclyTradedNewspaperCompany.IowaStateUniversityPress.
Fairfield,H.&Parlapiano,A.(2009,March12).BadNewsforNewspapers
infographic.TheNewYorkTimes.
GannettCo.Inc.(2009).2008AnnualReport.RetrievedApril2,2009,from
http://media.corporateir.net/media_files/irol/84/84662/08GCIAnnualReport.pdf.
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