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Sept. 9, 2011, 10:30 a.m.

A call for consolidation: Dean Singleton on John Paton, collective action, and the next waves of newspaper cutbacks

“I don’t think there’s any newspaper company in America that won’t have fewer people a year from now than they have today, and fewer still in two to three years.”

When MediaNews Group and Journal Register Co. announced a quasi-merger on Wednesday — putting the two under a new common management structure named Digital First, with John Paton serving as CEO of both companies — it was the most dramatic combination of American newspapers companies in years. And it was also a victory for the vision of Dean Singleton, the longtime MediaNews CEO who has been a champion for consolidation in the newspaper industry for decades.

Singleton, now MediaNews’ executive chairman, spoke with me Thursday about the move and his belief that more mergers, clusters, and partnerships are essential for the industry’s survival. “Broadcast consolidated, cable consolidated, and newspapers, in order to have the same relevance that cable and broadcast and others have, need to go through consolidation,” he said.

Back in 1996, at a management meeting when I was working at MediaNews, Singleton said that he anticipated one day just three companies would own most of the papers in the country — and he intended MediaNews to be one of them. At the time, the company owned only 13 newspapers and was not among the top 10 in terms of total circulation. Fifteen years later, with paid weekday circulation of about 2.2 million (JRC adds in another 400,000), it ranks second, behind only Gannett’s roughly 5 million.

Having shed most of MediaNews’s debt via a strategic bankruptcy, and having stepped aside from day-to-day management, Singleton is focused on building the next rounds of consolidation. He feels that collectively, the newspaper industry “should have seen the changing media environment sooner and dealt with it sooner,” and that collective strategies are now essential.

For Singleton, Paton seemed like an ideal partner: Their friendship goes back decades, and Singleton actually helped sponsor Paton, who is Canadian, when he needed a green card to work in the United States.

As a reflection of the daunting headwinds facing the newspaper industry, he predicted: “I don’t think there’s any newspaper company in America that won’t have fewer people a year from now than they have today, and fewer still in two to three years.” But he’s not headed for an exit strategy: “I love this business, I’ve been in it since I was 15, and I love it and I care a lot about it.”

Here’s a transcript of our interview. You can also download an MP3 of our conversation. (Due to the interviewer’s klutziness, the first question and a snippet of the first answer were truncated.)

Martin Langeveld: The newspaper industry has now had 20 consecutive quarters of declining revenue on the print side, along with declining print circulation and a lack of younger readers on the print side. Looking at these trends, Arthur Sulzberger has said that he can envision a day when the New York Times is no longer printed. Do you agree with him, and if so, how far off do you think that day is?
Dean Singleton: I doubt I’ll live to see a day with no print newspaper. I certainly acknowledge that that may happen, but from what I see today, I don’t see that date coming anytime soon.

“Broadcast consolidated, cable consolidated, and newspapers, in order to have the same relevance that cable and broadcast and others have, need to go through consolidation.”

Martin Langeveld: John Paton, looking at this, is pushing this strategy called Digital First. But as newspapers go through this transformation of Digital First and maybe eventually Digital Only, they face a lot of competition, because the barriers to entry online are so low. AOL’s Patch has almost 900 local news sites started in the last year; there are also many local hyperlocals; there are the nonprofits like California Watch, MinnPost, Texas Tribune. How can newspaper companies stay ahead of those competitors?
Dean Singleton: Well, I think newspapers by and large have much better local news brands than any of the other startups. Their brands are very credible, they’re respected, so I think they have a better chance of building a solid interactive franchise. But there’s no question that interactive dollars, I should say digital dollars, are smaller than print, and so the news-gathering operations must be more efficient and have a lower cost structure than we’ve traditionally had.
Martin Langeveld: But isn’t the problem really that collectively, newspapers have a less than one percent share of online attention — in other words they get less than one percent of the pageviews, less than one percent of the time spent online. Isn’t that really the crux of the online revenue problem: How do you grow that share of online time spent so that as to increase the share of online ad revenue?
Dean Singleton: I don’t know the numbers you’ve just used, those are not numbers I heard or have available. The bottom line is that newspapers even in our print editions still have a very, very loyal audience, and as that audience gravitates to digital, I think we have a better chance at maintaining and growing that audience than some of the startups do. Plus, we’re going to have print advertising revenue for a long, long time.
Martin Langeveld: You and John Paton have had similar career tracks — you both started at entry level jobs in newsrooms and then you switched to the business side and rose to chief executive levels. Do you feel an affinity with Paton because of those shared news-side roots? And to what extent do you think having that news-side origin has motivated and influenced both of you?

“Certainly part of consolidation will involve merging companies, I’m sure. But you don’t have to merge companies to do what Digital First will be doing.”

Dean Singleton: Well, John has been a good friend of mine for 23 years. We met in the 80s when I had a partnership arrangement with the Toronto Sun Company, and John was a rising star in the Toronto Sun Company. We got to know each other in the 80s and have stayed in contact with each other ever since. In fact, I was a sponsor of John when he got his green card to come to the United States and was a sponsor when he applied for citizenship, and we’ve maintained a good relationship for 23 years. We are a lot alike. One my directors when he interviewed him said, “You know, he’s your clone. You sound alike, you talk alike, you both have the same view of the industry.” I took that as a compliment. We do see the world very much the same. John has pushed Journal Register in the digital world very rapidly in the last 18 months, but he started from a lower base and he’s done an excellent job of putting Journal Register in the forefront of the newspaper digital movement. We’ve been doing that for a long time and we’ve accelerated our digital move in the last year, but one of the reasons that John fits MediaNews well is that we all agree on where we need to go.
Martin Langeveld: You’ve pushed this vision for consolidation for a long time — I remember you talking about it in Alaska in 1996, and you probably talked about it even before that. You took a big step toward consolidation when you formed the California Newspaper Partnership. Should we be looking at this combination with JRC as kind of a national newspaper partnership, or is there a more regional strategy behind this — for example, it creates a big New England cluster, with a lot of added penetration here in New England.
Dean Singleton: You know, I have long been a proponent of consolidation, because I think consolidation has many advantages. Consolidation eliminates overhead, which improves cash flow coming in. Consolidation provides a much bigger platform for selling advertising. That was true in print advertising, but it’s even more true in digital advertising. We started out consolidating by buying newspapers in regions and doing what we call clusters. Our company is made up of clusters. Then in the later ’90s, when some of the newspapers around us were not available to be bought, or we didn’t have the capital to buy them, we started doing partnerships, where we partnered with other newspaper companies that were nearby so that we got the cost synergies plus the revenue synergy platforms. And what we’re doing with Digital First is the next step of that culture, where you basically start clustering newspaper companies. It can be done by buying newspaper companies, or it can be done by having diverse newspaper companies come together from a management and strategic standpoint. I can’t say where the world of newspaper consolidation will go, except I have long been a proponent that consolidation must be a part of newspapers’ future.

“I don’t think there’s any newspaper company in America that won’t have fewer people a year from now than they have today, and fewer still in two to three years.”

Martin Langeveld: In effect, the structure of this deal is that both companies are outsourcing their top management function to Digital First Media, although Digital First, it appears, is a subsidiary of JRC. Can you elaborate a little on the structure — will Digital First Media consist mainly of John Paton himself, or is the intent here to fully merge the corporate offices of both companies into Digital First?
Dean Singleton: Well, Digital First today is John. But the vision is to expand it and bring together certain experts in what we’re doing. Some may come from MediaNews, some may come from Journal Register, some may come from the outside. But it is designed to be a small group of executives that help plan strategy and oversee the management teams of the companies they manage. It’s not meant to build a bloated corporate overhead someplace; it’s meant to share management and expertise both for cost purposes but more importantly for strategic planning purposes of where we move the newspaper industry — move the parts of the newspaper industry that we have control of.
Martin Langeveld: So to the extent that there are some savings in the corporate overhead, that all goes straight to the bottom line. Is there any estimate on what percentage of total expenses that represents? What’s the magnitude of the potential savings?
Dean Singleton: You know, we’re private companies, so we wouldn’t talk about those kinds of things. Efficiencies on the cost side are certainly a factor here, but the overwhelming factor is to have the right strategies for these companies going forward and to work together with a much bigger platform to create more sources of revenue.
Martin Langeveld: But still, there’s this question of what motivates the particular structure— why not simply merge the two companies? Or is that an option down the road?
Dean Singleton: Well, obviously merging companies involves capital, involves shifting shareholder ownerships. Merging companies is much more complicated than merging management and strategic plans. Certainly part of consolidation will involve merging companies, I’m sure. But you don’t have to merge companies to do what Digital First will be doing.
Martin Langeveld: So was the current climate in terms of raising capital — was that an issue in not taking that route?
Dean Singleton: No. I mean, certainly the capital markets for our business are somewhat difficult today, but there really was no thoughts of merging. Is that possible someday? Anything’s possible but that’s not part of the plan.
Martin Langeveld: With regard to the Freedom deal — the Wall Street Journal reported a few weeks ago that “MediaNews and its advisers believe financing terms would be prohibitive given recent market turmoil and a challenging outlook for newspaper companies.” Will the JRC deal help put the Freedom deal back on the table?
Dean Singleton: I can’t comment on stories that have been written. I mean, we don’t comment on strategies or possible expansion.
Martin Langeveld: And what will your own role be here? You’re now the executive chairman of the board of MediaNews, and you’ve said that you want to focus on consolidation strategies. What will you be concentrating on, going forward?
Dean Singleton: Well, I chair the board, I’m on the board. I founded the company, so I’m very interested in building the company and growing the company, but I made a decision some time ago that at 60, it was time for me not to be CEO anymore. I’ve been CEO of the company since we founded it, almost 29 years ago, and I’ve got some physical limitations as is well known, and I decided more than a year ago that it was time for me not to be CEO. Which is why we announced and began a search for a CEO. No company should have a CEO that stays forever and too long, and I’m much more interested in helping develop strategies and plans long term than operating day to day. So this works very well for my planning and I think sets the stage for a new spurt of innovation in our businesses.

“But we’re living in a world today where you don’t put a stake in the ground and say yes, we will do paywalls, or no, we won’t do paywalls. You test everything that has a possibility of succeeding and you make decisions based on tests and market research.”

Martin Langeveld: There’s already some speculation that other companies might want to get into the Digital First tent — have you had any nibbles?
Dean Singleton: I can’t comment on that. We’ve announced what we’re ready to announce, and we’re very excited about what we’re doing. I’ve said for many many years — you heard me say it years ago — that consolidation is an important part of the newspaper industry’s future. Broadcast consolidated, cable consolidated, and newspapers, in order to have the same relevance that cable and broadcast and others have, need to go through consolidation.
Martin Langeveld: So as part of that are you going to take another run at the cross-ownership rule?
Dean Singleton: No. I think there was a time when lifting the cross-ownership rules was very important, and I worked for years trying to make that happen, and we were able to make it happen at the FCC, and for the most part were able to make it happen legislatively, but then the courts intervened and slowed it all down, if not stopped it. The importance of cross-ownership is yesterday’s news. We don’t need a TV station to do video anymore. We don’t need a TV station to broadcast video anymore. You can do video in our digital offerings today, online, in mobile. I think the day will come when people don’t sit down in front of their TV and spend three hours watching TV or 30 minutes watching the news. They’re going to get it on their tablets, and computers. I think the need that newspapers thought they had to own TV stations is probably over.
Martin Langeveld: There are still quite a few locally owned, family-owned daily newspapers in the country. Do you think those papers can hold out, adopt their own digital strategies, and survive as print gradually disappears? Or do you see them as likely to be joining this combination at some point?
Dean Singleton: Every newspaper has its own situation. It’s easier to craft a strategy when you have a large group of newspapers than it is when you have one, but it’s not impossible to do it with one. There are certainly some good examples of individual newspapers that do a good job. The Bergen Record in New Jersey is one example. They’re local family-owned and doing a good job, and there are other examples as well. I don’t think being a standalone keeps you out of the game by any means. It’s just easier when you have a larger platform. The platform that MediaNews and Journal Register will have is truly the beginning of a national platform. When you look at the audience that the two newspaper companies have, through all platforms, it’s impressive.
Martin Langeveld: How do you see this affecting the jobs of people at individual MediaNews newspapers — like reporters and ad salespeople?
Dean Singleton: You know, MediaNews today has perhaps 40 percent fewer employees than it had five years ago. And the number of employees it takes to do what we need to do will continue to decrease, because the revenue stream has decreased and the revenue generated online on a per-eyeball basis is not the same as the revenue generated in print. So the move to be more and more efficient in what we do will continue. I don’t think there’s any newspaper company in America that won’t have fewer people a year from now than they have today, and fewer still in two to three years. We will continue to outsource more and more functions in order to bring the cost of doing business down. We’ll continue to operate with smaller infrastructures, less management, more feet on the street. The number of people all of us have working for us will over time continue to decrease. That’s the way the business model is going.

“The platform that MediaNews and Journal Register will have is truly the beginning of a national platform.”

Martin Langeveld: But what about in terms of the nature of the work, the corporate culture. At the shop floor level, Paton has created a corporate culture at JRC that’s very different from the way I perceive MediaNews’s culture. Do you expect that the JRC way of doing things will be adopted at MediaNews, and do you see any problems in making that kind of a culture shift?
Dean Singleton: Well, first of all, the two companies are very different. If you look at the size of the newspapers at Journal Register, compared to the size of MediaNews, MediaNews has larger newspapers and larger clusters, although we have some smaller newspapers too. One size does not fit all. John, having come out of Toronto Sun Company with various size newspapers, understands that one size doesn’t fit all. What’s been done at Journal Register is not necessarily what’ll be done at MediaNews, but, that being said, he and I are totally on the same page with becoming more and more efficient, having less overhead, and providing services for less money. But again, you can’t necessarily compare Troy, N.Y. with Denver, or even New Haven with San Jose. Newspapers are still individual businesses and you operate them individually based on the size, the markets they serve. It’s not a one-size-fits-all, but are we all on the same page to become more and more efficient? Absolutely.
Martin Langeveld: John Paton is not a fan of online subscription models (to avoid the paywall word) — so MediaNews and JRC are going in opposite directions there. Which strategy do you think is going to win out?
Dean Singleton: We don’t have any strong feelings either way, and I personally don’t have any strong feelings either way. We did a test in two newspapers with a paywall, and felt good about the results of those tests. So in August we expanded the test to do paywalls in all of our newspapers that had 20,000 circulation or less that were not part of a cluster. That started in August, and we’ll watch the results, and based on those results, we’ll either decide that we like that model, or we want to tweak that model, or we may not keep that model. John is the CEO of the company now, and it’ll be his decision which models we use. It seemed right to us to test the paywall model in smaller markets where we didn’t have a lot of ad revenue at risk. So far we’ve been impressed with what’s happened. But we’re living in a world today where you don’t put a stake in the ground and say yes, we will do paywalls, or no, we won’t do paywalls. You test everything that has a possibility of succeeding and you make decisions based on tests and market research. So we’ll see the tests through, and John as CEO will decide which models work and which models don’t.
Martin Langeveld: MediaNews has several partnerships with Gannett in California and Texas/New Mexico. And Alden has about a 10 percent stake in Gannett — in dollar terms it may actually be [Alden’s] biggest newspaper media holding. [CORRECTION: As of Dec. 31, 2010, Alden actually held 3.9 percent of Gannett.] Are there other regional partnerships with Gannett in the cards? Does this Alden connection potentially extend to more deals with Gannett?
Dean Singleton: You know our relationship with Gannett goes back many, many, many years and it’s been a very good relationship. We’ve done some very good things together. Anything we do with any company will be based on whether it makes sense for both companies. It will not be done because of who owns our shares. People who buy all of our shares make a decision to buy the shares in our companies because they believe it’s a good investment to make. But strategy isn’t determined based on who owns the shares of the companies. It’s based on what works for the companies — what the boards of directors of each company determine works for each company — and if there are deals that make sense for MediaNews and Gannett, we would explore them. If they don’t make sense, we won’t. I think who owns the shares of your company is a separate issue than what makes sense from a business strategy standpoint.
Martin Langeveld: Looking back on your own career building the second-largest newspaper company in the country, is there anything that in retrospect you wish you would have done differently? Any major mistakes, or any major opportunities that you missed?
Dean Singleton: On a company basis, probably not. I think all of us in the newspaper business should have seen the changing media environment sooner and dealt with it sooner. If you look at the industry, most everybody in the industry through the years has done the same things. When the internet started to be a factor, we all put our newspapers up on the web they way we published them in print. We gave them away for free and we sold advertising around it. If CPMs were today what they were 10 years ago, it would have been a great business model, but I think newspapers — and all of us are guilty — were slow to react to the changing environment.

Knowing what we know now, we could have done a lot of things different, but the interesting thing about the newspaper industry, and one of the reasons why I think consolidation is important, is — just because MediaNews and Journal Register decide to have a strategy that we like, that doesn’t mean the rest of the industry will have the same strategy. But when we’re talking to advertisers, especially national and major account retail advertisers, they have to do a national strategy when they’re promoting their goods. They can absolutely love the strategy that one [newspaper] company has, but if they can’t buy that strategy nationwide, it’s not very good for them. Our industry has not worked together very well in the past to have common strategies for advertiser solutions. I think we’re getting better at that, and there are some projects going on now that would say that we’re getting better at it, but the industry should have begun working closer together 10 or 15 years ago in developing strategies. So do I wish the industry had done something differently? Yeah. But it couldn’t be done by one company. Even today, one company can’t make a big difference unless a lot of companies buy into the same strategy.

Martin Langeveld: Is that something you’re going to be working on particularly?
Dean Singleton: Well, I’ve always tried to hard to get the industry to work together. On some fronts we’ve been successful and on some fronts we haven’t. At least today there’s an understanding in the whole industry that the industry must work together. But it’s a lot easier to work together when you have common management and common goals.
Martin Langeveld: What about your own health? I know that you’ve had to slow down some. Are you still going full speed, do you see yourself continuing for some time with this leadership role?
Dean Singleton: I love this business, I’ve been in it since I was 15, and I love it and I care a lot about it. And I expect to be involved in it. My health itself isn’t an issue. I’m very healthy. It’s just the mobility that’s a problem. I don’t walk anymore. [Multiple sclerosis] deals more with mobility — I have no health issues other than MS, and I’ve had MS for 25 years. It does slow you down in terms of mobility, but I still come to the office every day and work long hours and get very excited about what we’re doing. I can’t see that changing.
Martin Langeveld: Thank you, I really appreciate your time.
POSTED     Sept. 9, 2011, 10:30 a.m.
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