HOME
          
LATEST STORY
Ken Doctor: The New York Times’ financials show the transition to digital accelerating
ABOUT                    SUBSCRIBE
March 12, 2009, 9:02 a.m.

An imaginary conversation about the Seattle Post-Intelligencer

seattle

As the Seattle Post-Intelligencer’s fate continues to hang in the balance, Steven Swartz (CEO of P-I owner Hearst) and Lincoln Millstein (Hearst’s Senior VP-Digital) have lunch:

Millstein: Steve, we need to make up our minds about the P-I.  The 60-day clock we put them on stopped three days ago.

Swartz: Yes, I’m sorry — I’ve been tied up dealing with the Chron, shuffling management, getting that e-reader going, and whatnot.  But you’re right, let’s figure it out.  I’m running out of time in my “100 days of change,” also.  What’s your thinking?

Millstein: I’m thinking we go with an online-only P-I.  We’re going to end up facing that choice in other markets, including San Francisco, and Seattle gives us the opportunity to test the model and find out what works and what doesn’t.

Swartz: But can we make money?  We’ve been losing more than $1 million a month there — $14 million last year.  I’m not interested in an experiment to see if an online-only brand can stand up against a print/only combo — I’m interested in making money.  In the immortal words of Jack Welch: “fix it, sell it, or close it.”  There’s no buyer in sight, so we’re down to fixing or closing.

Millstein: I say we fix it.  We’ve got the numbers down to breakeven.  That’s doing pretty well, in this economy.  We can build profitability going forward. We’ve got a staffing plan: with just a few dozen content people we’ll have an operation that can cover Seattle well enough.  We need to hire a sales and marketing staff, some tech people, some admin types, but overall we’ve cut that $ 14  million loss down to total expenses of $5 million.   We can sell ads to cover that — the site is leading the market in unique visitors and pageviews.

Swartz: OK, but just to cover $5 million in cost, you need $100,000 a week in ads, and as I said, breaking even is not good enough — this is still a business.  The right number would be $250,000 a week, or more.  $13 million a year in revenue.

Millstein: Look, the Seattle Times has been selling all the ads in the JOA, so we’re going to have to ramp up to that number, but it can be done.  We get 4 million visitors, 45 million pageviews a month.  We outpull the Times.  We’ll be selling online and nothing but online; their folks still have to straddle print and Web.  If you want to get to $13 million in sales [pulls out napkin and pencil], that’s a page CPM of $24…

Swartz: That would beat any newspaper we’ve got, in the current ad climate.

Millstein: It would, and we’re not going to get there on day one.  Again, it’s going to have to be a ramp-up, but we can get to $10 CPM pretty quickly and build from there.  $10 gets us to a small profit in the first year. [Clarification: "Millstein" means total page CPM throughout.]  By year two, we’ll build in some other revenue sources: e-reader subscriptions, some niche products in print, like visitor guides, and some subscription revenue for premium online content that goes beyond what we’re publishing now.  We’ve built capacity to do that into our budget. And as business improves we’ll get to $24.

Swartz: You’re making me nervous, Lincoln.  There’s too many “ifs” — if you can operate with the staff that lean, if you can get $10 CPM, if you can get subscription revenue, if you can launch niche products, if the economy improves, and if you can built it up to $24 CPM down the road.  If you owned it, what would you do?

At this point, both of their cell phone ring.  The waiter brings the check.  They both have planes to catch.  “Call me tomorrow,” says Swartz. “Maybe we can figure it out by next week.”

POSTED     March 12, 2009, 9:02 a.m.
SHARE THIS STORY
   
Show comments  
Show tags
 
Join the 15,000 who get the freshest future-of-journalism news in our daily email.
Ken Doctor: The New York Times’ financials show the transition to digital accelerating
The numbers may look flat, but they contain a continuing set of ups and downs. Up next: executing on a year’s worth of launches.
Before the “teaching hospital model” of journalism education: 5 questions to ask
It’ll take a new generation of academic leadership — willing to incur the wrath of faculty, the greater university, alumni, industry, and analysts — to break through the old ways we train journalists.
Controlled chaos: As journalism and documentary film converge in digital, what lessons can they share?
Old and new media types from journalism, documentary, and technology backgrounds gathered at MIT to share practices and discuss mutual concerns.
What to read next
1020
tweets
The newsonomics of the millennial moment
The new wave of news startups is aiming at a younger audience. But do legacy media companies have a chance at earning their attention?
803A mixed bag on apps: What The New York Times learned with NYT Opinion and NYT Now
The two apps were part of the paper’s plan to increase digital subscribers through smaller, targeted offerings. Now, with staff cutbacks on the way, one app is being shuttered and the other is being adjusted.
413The new Vox daily email, explained
The company’s newsletter, Vox Sentences, enters an increasingly crowded inbox. Can concise writing and smart aggregation on the day’s news help expand their audience?
These stories are our most popular on Twitter over the past 30 days.
See all our most recent pieces ➚
Encyclo is our encyclopedia of the future of news, chronicling the key players in journalism’s evolution.
Here are a few of the entries you’ll find in Encyclo.   Get the full Encyclo ➚
National Journal
National Review
MSNBC
The Fiscal Times
Hearst
The Tyee
Investigative Reporting Workshop
The Blaze
Newsday
News Corp
DocumentCloud
Salon