Total ad revenue for the year so far is “up a little it, but not much,” compared to a year ago at the more than 70 titles owned by the Rochelle, Ill.-based News Media Corporation, according to owner and founder John Tompkins.
“Company profits are ahead of last year,” Tompkins said in an interview with The Inlander.
In this Q&A, he discusses a range of issues regarding the newspaper business.
Q. What markets are you facing your biggest challenges?
A. California, which has been hit hard by the real estate slump that started over a year ago. But our legal advertising is up significantly, and that is mainly due to foreclosure legal advertising. We anticipated this increase, but not as big a number as we’re seeing.
Q. What other impact has the slowing economy had on your business?
A. It’s revealed a weakness that we’ve had: mainly relying too heavily on real estate and auto advertising. It’s too big a part of our revenue stream. It’s good that it’s helped us look at replacing those revenue sources. We tend to focus on maintaining our profit levels and growing them. The reason we’re able to get that done in most of our markets is that we have reduced costs somewhat and also switched out customers in parts of the country where we’re down. We have a culture of constantly having sales staff focusing on getting new customers that perhaps weren’t needed before. There’s a lot that goes into this, it’s not just that they’re in small markets that are isolated.
Q. What have you replaced real estate and auto advertisers with?
A. A lot of small businesses. In many cases, we’ve been successfully going after them with new promotions, special sections, things like that. We run lists on all of the licensed business in our markets and go after them.
Q. How is News Media Corp. different from other companies?
A. Everybody says they’re different. We really are different. Our sales culture is very much the same at almost all our papers. We give the local people new ideas and they come up with their own, and they just know they have to go after the new business.
Our culture is such that there’s not any argument about should we do this or not. It’s totally different than the typical company where the local publisher has to be sold on all kinds of things.
We try to have good ideas every month, and we ask just about all our papers to implement them. One good idea across several titles produces a lot of good results and covers a lot of potholes, so to speak.
The publisher at all our papers is the ad director and handles accounts and leads the sale staff. They meet twice a day, once to set goals and a second time to see how well they did. There’s much more accountability against goals and on a much more-frequent basis here. We make it fun, though. We don’t take ourselves too seriously. We have contests and we let the people set their own goals.
Q. Do you believe the digital age will one day impact small papers in the way it has large metros?
A. Not at all. We have an e-edition, a complete paper that people can pay for. We have local Web sites with some of our content, but not very much. They contain other information like weather and games. We believe it’s very foolish to give your content away for free, especially in small markets.
If small papers fill the void somewhat, that further deprives a local hobbyist from making a living from a Web site.
The financing is not there to significantly create a local news-gathering operation.
Say a high school kid who is a sports nut gets some local prep stuff online and tries to build a little business out of that. You can get a Web site up cheaply—the barrier to entry is low, yes, but that’s just a foot in the door. But how could he direct traffic to it? He’d have to take ads out in our paper.
The amount of revenue that you get for Web site advertising at a CPM rate is going to be low. He might make $5,000 to $10,000 a year, but the money that might be able to pay for a local news staff and ad staff just isn’t there.
Besides, in a small town, people already know the businesses. We call it the “Mayberry effect.” People already know the news— the local newspaper confirms it and gets more details.
As far as I know, no one is making money online. Having said that, we’re keeping an eye on it.
Q. Any plans to sell any lower-performing newspapers?
A. No. We don’t sell papers. In fact, we’re in an acquisitions mode.
Contact: John Tompkins,