Pressure for company profits can be own worst enemy

For those who follow the world of newspaper and digital publishing, last week had some big news.

First, the grand “hyper-local” experiment by AOL in creating over 800 Patch local news websites (including Claremont-La Verne) finally failed after 4 years. AOL had been shopping around the business and finally sold it to the private equity firm Hale Global. Although Hale Global says it will continue to “nurture” the websites, the betting line is they will split up the assets and try and sell them in pieces for a profit.

Kind of warms your heart doesn’t it?

There were many in the newspaper industry, especially community newspaper publishers, who watched Patch quite closely. AOL dumped a ton of money into Patch, literally starting 800 websites overnight. They had a cookie-cutter formula on how each website would be look and function, with a goal of turning a profit within a couple of years. Or less.

In the early stages as money flowed, there was some excitement (and concern) that Patch was going to break new ground in publishing local news online. They paid good wages to the editors who managed the websites, and developed many bells and whistles to involve readers in their products.

But it became clear very early that key ingredients were missing for success. It started with the model where one person does everything to publish news. Those nicely paid editors of each site were responsible for writing, photography, posting stories, proofing and probably a lot of technical support. They also worked 60 to 70 hour weeks.

From my perspective, this model was literally impossible to maintain. Not only were people burning out after 6 months (creating a ton of turnover), they had no real area of expertise. I can only imagine the difficulty of attending a news event, having to write a story, shoot pictures and video, and then go back to the office to edit, and publish all of this and deadline. Then do it all over again in a couple of hours.

I’ll confess, we at the COURIER have learned to multitask and have done this in a pinch. But it’s critical to start a news gathering business built on people who bring a particular expertise and skill level to the table. And then use them in that area. That’s why in most cases Beth Hartnett writes, Steven Felschundneff shoots pictures, and Mary Rose sells advertising. This is the “old school” way of managing the news coverage, but it works. Of course, it’s also expensive.

So as Patch employees burned out, quality which was mediocre at first, became much worse in the end. Without a quality product, your business will not survive.

With advertising never really taking off, especially at the local level, Patch seemed doomed after just two years of existence. AOL continued to pour money into Patch, losing at least $25 million annually. To their credit, they kept going longer than most media companies would.

In this day and age, profits come first, and never can start soon enough.

Which brings me to the Orange County Register. The newspaper that literally had become the darling of the industry. Notice I wrote that in the past tense.

But there still is a good story line. Guy arrives (Aaron Kushner) on the publishing scene with lots of money and a Stanford background, and saves Freedom Communications (OC Register’s parent company) from bankruptcy in 2012. He is a true romantic about newspaper publishing and bucks every media trend by reinvesting in the Register print edition, hiring back many laid off employees.

Mr. Kushner says strong content will build community, sell subscriptions and thus bring advertisers back to the newspaper. Changes abound as Freedom buys the Riverside Press Enterprise and starts a daily newspaper in Long Beach. Then we hear talk of the new Los Angeles Register. Clearly, Mr. Kushner has some sort of kryptonite and has a direct line to Superman.

I personality thought this philosophy was a rock solid approach. Focusing on quality content is job one at the COURIER and it continues to work for us. The Orange County Register magically became thick with pages, full of ads. We watched, and hoped, that this grand experiment would work.

It’s far from over, but Houston, it’s 2014 and we have a problem.

Turns out Register leadership were expecting an immediate turnaround and readers would flock back to the newspaper, and continue using the website. They have not. In fact, subscriptions have been flat even after all this investment. Profits since 2012? No one from the outside really knows.

My opinion Mr. Kushner? You are doing a great job so keep up the good work. I think the plan will work, but you have a solid four years to go. A newspaper cannot cut and trim the product for almost a decade and then expect readers to jump back on board immediately. Even with all your good intentions. In fact, it’s a lot easier to lose readers than get them back.

Unfortunately, it may be too late to heed this advice. This could have been a two-year plan from an investment perspective. The Register recently announced layoffs, 32 in all, including the longtime editor Ken Brusic. The new editor Rob Curley has a reputation for digital innovation. But even with increasing digital revenue, it won’t all pay the bills to maintain Mr. Kushner’s vision. 

Staffers are also wondering how they are going to literally report news from all of Southern California with well, less staff.

There’s more to this story, but I’m having serious déjà vu. A company goes into emergency mode because of the pressure for a return on investment. As money dries up, the cost cutting starts, impacting the quality of the product. It becomes a vicious circle.

So here’s hoping the Orange County Register will have great success. I worked there once and care about many of the staffers.

Mr. Kushner, if you want to talk, Mondays are usually good for lunch. I’ll come visit since I know my way around your building.