Columbia Missourian tests new model
The paper cut two print editions and reduced its annual deficit.
Apr. 23, 2009
Inside a multimillion-dollar building donated to the world's oldest laboratory newspaper, the Columbia Missourian's general manager Dan Potter picks up last month's budget to learn if the newspaper's new business model is working.
"We've worked our butts off," he said.
March was the pilot month for a new business model that reduced the Missourian from a seven- to five-day-a-week print publication.
"Expenses were going up," Potter said. "If we kept doing the same thing, it was just going to get worse and worse and worse and worse."
The university has subsidized the newspaper's annual deficit by more than $1 million per year since 2006. The subsidy comes in addition to a $250,000 laboratory fee the university has paid the Missourian every year since 1997.
"There were a couple of years where that was enough to keep the Missourian in the black," said Dean Mills, the dean of the School of Journalism. "But the era of the Missourian being profitable ended." Provost Brian Foster started looking for a way to control the Missourian's expenses when he noticed them skyrocketing the past few years.
"Just everything went up," Foster said. "It was drawing attention."
Foster wanted a more systematic method of recognizing the Missourian's function as a laboratory without subsidizing its annual deficit. He said he doesn't expect the newspaper to turn a profit because of its lab function.
"We don't insist that our biology lab turn a profit," Foster said. "In that sense, a research lab's main point is that it does the research. The hospital isn't there mainly for educational purposes. Nobody would say it's just a lab."
The problem is figuring out how to support the Missourian more officially than by subsidizing its annual deficit, Foster said.
"How do we put a reasonable price on the Missourian?" Foster said. "Is it a million dollars? Is it a hundred million?"
A group of university officials, including the chancellor and budget officer, raised the Missourian's lab fee from $250,000 to $650,000 in March, coinciding with the new business model.
"What the university did was lend a hand to kind of make up for all those years it hasn't raised the lab fee, making up for times," Potter said. "We've been very grateful and appreciative."
Fewer expenses reduced March's operating deficit from almost $88,000 last year to about $10,000 this year.
"We know it's only one month, but we think it's indicative," Potter said.
In December, Potter promised university officials he could lower the newspaper's annual operating deficit from $1.1 million in 2008 to $378,000 in 2010.
The new model cuts Monday editions -- which typically attract less advertising than other days -- and Saturday editions.
Potter estimated each month in the new model could operate at a deficit -- or negative net income -- of no more than $31,500.
"We beat the budget we committed to the university by 66 percent," Potter said about March. "That proves to me we identified the right strategy."
The university is still willing to subsidize a deficit, Mills said.
"It's a value to the community," Foster said. "We're of course willing to support that."
Skyrocketing costs and a grocery war
Foster said expenses account for the Missourian's deficit more than anything else.
In November 2006, the Missourian stopped printing on its own refurbished press, outsourcing instead to the Jefferson City News Tribune. Potter said the Jefferson City press prints at a lower cost, faster and with higher-quality color than the press the Missourian then owned.
"It was kind of a no-brainer," Potter said.
Potter started reducing jobs 18 months ago, firing 40 percent of full-time staff and not refilling vacant positions to save $450,000 in salaries.
Real estate ads, classifieds and other advertising industries have fallen tens of thousands of dollars in the last decade, concurrent with rising expenses.
"It was the perfect storm, in a sense," Potter said.
Six years ago, The Columbia Daily Tribune won Columbia's grocery clients by charging low advertising prices in the "grocery wars."
"That was a huge loss," Mills said. "The Missourian was in the red a few years after that."
Ad sheets, radio shows, television stations and free online providers such as Craigslist are cannibalizing more of the Missourian's advertising.
"It's the pattern around the country," Mills said. "And if you look around the country, there's no city of this size that supports two newspapers. There's only so much advertising to go around."
Discounted subscriptions -- as low as 50 percent off the regular $100 price -- have reduced the Missourian's circulation income, which rebounded in March for the first time in a decade.
Hundreds of thousands of readers access the Missourian's free online content monthly. Potter said charging a low subscription price is challenging unless a newspaper offers unique content, but the Missourian is considering online models priced sensitively to readers.
Advertisers have paid less for using columbiamissourian.com compared to print ads since the Web site launched in the early '90s.
Back then, Potter said, "We priced advertising so cheap it was stupid."
A three-year plan
Mills said there's nothing magical about testing the new model for three years.
"It's not as if at the end of three years we turn into a pumpkin if nothing happens," Mills said.
He and Foster selected this model out of four or five Potter had presented them.
Most alumni didn't like proposals to partner with a local newspaper or switch to an all-digital publication, Potter said.
"They weren't against tweaks or changes, but they didn't want us to get too far away from the frequent-publication model," Potter said.
Student reporters preferred going all-digital, said Assistant City Editor Chad Day, a senior.
"But that might just be because of the younger demographic," Day said.
Open discussions of the possible changes became part of the curriculum in the newsroom, Day said. Potter said he wondered if the Missourian could become the first newspaper to print midweek and on the weekend while maintaining a vibrant online presence.
"But it's just not there yet," Potter said.
Once students realized getting rid of print wasn't viable, Day said they began supporting the model that cut Saturday and Monday.
At least 52 other daily U.S. newspapers eliminated Mondays in the last year, and 20 have scrapped Saturday editions, according to The Associated Press.
The Saturday edition reached 43,000 households regardless of subscriptions, at a printing and distribution cost of $400,000. Cutting both days saves about $475,000.
"Smaller printing bills mean smaller distribution bills and a smaller staff to run the operation," Mills said.
Potter sent subscribers a letter inviting feedback, worried they might desert the newspaper because of the cuts.
"I thought they ought to be able to talk to the guy directly responsible for these changes and beat me over the head if they wanted," Potter said.
The Missourian didn't lose any subscribers, but Potter did receive some negative feedback. And as a reader himself, Potter said he still checks his porch Monday for a paper out of habit.
"And I go back inside and read online," he said.