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| What’s next for the team behind Syria Deeply? Arctic Deeply Posted: 20 Mar 2014 10:29 AM PDT Syria isn’t the only news topic worth going into Deeply. Since Syria Deeply, a news site solely focused on covering the crisis there, went live in late 2012, Lara Setrakian hasn’t hid the fact that she wants to create additional sites that closely cover specific topics. At Columbia’s Tow Center, she’s been engaged in a research project around the idea of news sites that cover a single subject in depth. News Deeply, the media company the former ABC News and Bloomberg TV correspondent cofounded, has considered plenty of topics to focus on, but later this year it plans to launch its next platform: Arctic Deeply.
“It’s underreported, it’s highly consequential, and there are many layers of complexity,” she said. “Most importantly, for me, I have a certain catchphrase I’ve coined with our team — that we should be covering species-level issues. If it’s a species-level issue, and we’re not seeing it adequately covered in the news cycle, than that makes it a candidate.” Other candidates for the Deeply treatment? Possibly Congo, Myanmar — or even Alzheimer’s. But they’re focused on not growing too quickly, Setrakian said. Deeply is most concerned with continuing to build its Syria site while it gets Arctic Deeply off the ground. “The most important thing is choosing one and focusing on execution until we find that it’s reached an adequate level of development,” Setrakian said. Arctic Deeply’s main sponsor is the World Policy Institute, a New York-based think tank. Setrakian said she is in conversations with other think tanks and institutions, but would not disclose them since the deals aren’t final. Setrakian is also considering publishing Arctic Deeply content in languages other than English, but that will depend on who its other partners are. Similarly, Syria Deeply is in the process of developing an Arabic-language version that is slated to launch in the coming months. Syria Deeply, on its best days, attracts 10,000 unique visitors, Setrakian said, but its content is also often crossposted on other partner sites, which allow more readers to view the content. To that end, they also this week unveiled a redesigned Syria Deeply website which ditches WordPress for its own custom content management system. Setrakian said she believed the site had outgrown WordPress and its new system will allow it to more seamlessly display stories, maps, and timelines while allowing it to apply the framework to Arctic Deeply and its other future sites. “We had, for example, the issue of bringing so many third-party widgets to bear and creating a modular design, which was sensible for a prototype but it slowed down our load time,” she said “It also made us very susceptible to whatever happened to each one of the third-party bits and pieces. So when it came to speeding up the user experience of our content, we felt that we needed to create something of our own.” Last Saturday, March 15, marked the third anniversary of the Syrian civil war, and with the conflict showing no signs of abating, Setrakian said strong, nuanced coverage of Syria is needed more than ever. Syria Deeply has two full-time employees and a network of two-dozen freelancers contributing from both inside and outside Syria. And while explanatory journalism is all the rage of late, Syria Deeply has emphasized its ability to provide context for Syrian conflict since it began operating in late 2012, more than a year after the conflict began. News Deeply plans to apply the same principles to the forthcoming Arctic Deeply as it adds new staff and creates a similar group of contributors who can cover the myriad topics that stem from the arctic. It aims to optimize the way the content is presented to best suit the topic — so while videos are prevalent in its Syria coverage, users might expect to see more maps or charts on Arctic Deeply because they’ll better suit the topic, Setrakian said. “We learned how to create an optimal mix of on-the-ground content and external knowledge and reporting,” Setrakian said. “I think that’s vital, because usually you get just one or the other, and I think it’s extremely important that we integrate inherent knowledge, which is what we get from our Syrian writers, with that capacity to serve as translator and editors for a global audience. That’s become our specialty and it has enhanced our deliverables and it has enhanced our credibility quite a lot.” Photo of polar bears by Alex Berger used under a Creative Commons license. |
| The newsonomics of selling Cars.com Posted: 20 Mar 2014 05:41 AM PDT Sometimes, you see the train wreck coming. Tony Ridder, the last CEO of Knight Ridder, saw the classifieds pileup ahead and would talk about it in our company meetings by the mid-’90s: the replacement of print classifieds with databased, searchable online listings. To their credit, he and his cohorts at Gannett, Tribune, Washington Post Co., Belo, McClatchy, Times Mirror, and Central Newspapers (bought by Gannett in 2000) invested in and built out several competitive “digital classifieds” companies. Now, one of those companies — Cars.com, built out in 1998 — is up for sale. That sale tells us a lot about the experience of newspaper companies on the web. Just as importantly, it raises new questions about those companies’ abilities to wring future revenues from auto dealers. As one industry insider puts it: “It will be a disaster at the operating level.” In fact, one could make the case that the likely sale is both a prudent move and burning down part of the house to get firewood. Auto classifieds have been as big a part of newspapers as comics, sports, and the weather report. It’s long been part of the package and remained part of the business, if a little more distantly, through Cars.com’s ownership by newspaper companies. That newspaper–car dealer relationship is about to weaken in lots of markets. The weaker the relationship, the lower the money flow. The lower the money flow, the lower the number of journalists employed. Same story — just another sequel. Cars, real estate, and recruitment have been the three main remaining classified categories, after Craigslist devastated the market for “private party” ads. What may be the next step, post-Cars.com sale? “If Gannett and its partners are willing to give up the dividends of Cars.com, how much longer are they going to own CareerBuilder, which is more of a cash cow?” asks Peter Zollman, cofounder and head of the AIM Group and Classified Intelligence Report, which tracks the industry globally. CareerBuilder, owned by Gannett, Tribune, and McClatchy, is the largest digital recruitment site in the country. Cars.com is being fished on the marketplace at a $2.5 to $3 billion number. That kind of money will bring an impressive one-time cash to its five owners. $3 billion: That’s a big number for a shrinking industry. It’s more than 10 percent of all the ad money newspapers will take in this year; it’s a third of all the reader revenue they’ll take in. It would fund, at an average $80,000 a year, a total of 37,500 newsroom jobs for a year. That’s just about the number that are working in American newsrooms today. Of course, the best thing to do with that money is to invest it into the digital transition, in technology and in people. But little of that is likely to happen. Let’s explore why, looking at the newsonomics of Cars.com’s sale. Overall, our tale of Cars.com is a tale of value. Value created. Value harvested. Value to be transferred. Value gone. Cars.com is a straightforward buy-sell-research-finance-advice site. It is considered the No. 2 car site in the U.S., after Cox-owned Auto Trader, and produces annual revenues of $400 to $500 million. Over 16 years, Cars.com has built a lot of brand equity atop a stunningly simple name. Much of that brand equity has been built in local markets, as The Washington Post, The Miami Herald, The Dallas Morning News, the Chicago Tribune, The Sacramento Bee, and Des Moines Register have all made it a centerpiece of their online commerce and boosted its recognition in print as well. The five companies with ownership stakes in the parent of Cars.com, Classified Ventures — Tribune Co. (28 percent), Gannett (27 percent), The McClatchy Co. (25 percent), Graham Holdings (the Graham family-led company that sold The Washington Post to Jeff Bezos — 16 percent), and A.H. Belo (3.3 percent) — have doubly profited from their stakes in Cars.com. As owners, they get a significant annual dividend. As preferred sellers, they enjoy wholesale rates, meaning they get to keep more of the dollar when sell Cars.com products in their local market to car dealers. The financial benefit, then, is significant for these companies still unable to show overall revenue growth and forced to cut costs year after year to maintain a relatively small profit. If the largely debt-free Cars.com sells at the top of that valuation, $3 billion, the owning newspaper companies will first reap a one-time windfall:
We can tick off the other reasons to sell:
For the other two sellers, it’s clear the money won’t help the struggling newspaper business at all. Graham Holdings no longer has an interest in the Post. The Tribune seemingly isn’t providing a cent of of its post-bankruptcy cars/apartments windfall to the newspapers as it spins them off. The great value — $3 billion worth — built largely by newspaper brands will be mostly gone. Ironically, it will strongly finance a move to broadcast, by both Tribune and Gannett. Value created. Value harvested. Value to be transferred. Value gone. That lost value, though, is only half the equation. Cars.com operating revenues are a significant ongoing revenue source for all these newspaper companies’ papers. By the nature of the original Cars.com agreement, the newspapers “owned” cars in the market. They’ve enjoyed special wholesale rates on the Cars.com products they sell local dealers. Wholesale prices mean that their car revenues are highly profitable. Undoubtedly, that favored wholesale treatment will go away once a Cars.com sale is made. There may be a one-year or longer “glide” in which the newspapers are allowed to keep their preferred rates. Sooner than later, though, the new owner of Cars.com will want to eliminate those wholesale prices — immediately improving its own profit margins. If and when all the McClatchy, Tribune, and Gannett newspapers and The Dallas Morning News lose that favored relationship, they’ll be in the same boat as other papers. Some of those other newspapers have themselves been Cars.com affiliates, selling dealer packages in their markets. But they didn’t get wholesale rates — they got retail ones. More recently, some of those retail affiliates, a number of them owned by Digital First Media, have lost or ended their relationships with Cars.com. The result: a loss of 50 percent or more in auto revenue. That’s the kind of post-Cars.com challenge the 121 dailies collectively owned by Tribune, Gannett, McClatchy, and A.H. Belo will face.
The big problem in competing against the incumbents: Many dealers consider Auto Trader and Cars.com must-buys for leads, devoting the first 50 percent or more of their budgets to the two of them. They can be sold against, but the Cars.com newspaper affiliates often used the basic platform to Cars.com to improve their overall pricing, and to open the door for the “bells and whistles” they could sell around the platform. The loss then is two-fold: a loss of pricing power and of the ability to offer must-have products. Tim Landon sums up the Cars.com-less future for the newspaper titles that seem destined to lose it: “You don’t realize how important the Cars.com relationship is in your market until you lose it.” Landon, now president of Wrapports Ventures in Chicago, was in at the creation and major development of Classified Ventures and CareerBuilder in his 20-year career at Tribune. How much of a possible new loss in advertising dollars are we talking about? It’s substantial, though tough to put hard numbers on. Newspapers can count Cars.com revenue as “digital advertising” or auto classified, and may even mix the two. (One source told me of a recent sale that was print/digital but recorded as “95 percent digital” to meet marketers’ changing mandates. For instance, Ford Motors recently required that its coop ad program be 50 percent digital by summer.) The industry’s ad rollup collection of numbers compiled by the Newspaper Association of America, meeting this week in Denver, is based on whatever numbers are provided by publishers, even if their own definitions differ. The rollup shows both how much has been lost in “classifieds.” In auto classifieds, the industry reported $1.1 billion in 2011, the last full year for which there’s data. That’s down from a $5.3 billion high in 2000. (Of the $23 billion or so the U.S. industry took in advertising last year, about $4 billion was in classifieds overall. That $4 billion is down from the $19.6 billion high water mark of 2000). More to the point is the current digital newspaper ad revenue for the U.S. daily industry. Figure that number to be about $3.5 billion a year. That’s where most of the Cars.com-related revenue is allocated. We know that automotive is one of the best digital categories. In fact, given the post-recession rebound in auto sales, automotive has been one of the strongest — if not, the strongest — categories of growth over the last year. While EBITDA, or earnings, have been greatly stressed at all publishers, those with Cars.com-based selling may see 15 to 30 percent of their total earnings derived currently from the cars business. For larger metro-sized newspapers, that puts Cars.com-related earnings in the double-digit millions — and that profitable revenue may soon be at risk. Overall, figure that about 8 to 15 percent of all newspaper ad revenues are related to auto. That makes the Cars.com changeover a very big deal. The impact at McClatchy may be indicative. For 2013, 9 percent of McClatchy’s ad revenues, print and digital, were in automotive. Who may buy Cars.com? Peter Zollman says the potential purchasers range from private equity companies like Apax (which bought out the Guardian’s UK Trader holding) to Hearst and Advance to Barry Diller’s IAC to international classified growth companies (with newspaper legacies) like Schibsted and Naspers. Then, there’s Gannett, which could exercise a probable right of first refusal on a sale. Is Gannett ready for another big purchase after its Belo TV deal? Whoever buys Cars.com, this new moment in newspaper digital history is worth marking. It’s that question of creating and cashing in on value. It all makes good, short-term financial sense — and it all leaves news-producing companies in tougher operating shape, going forward. As the quiet local layoffs continue to mount, month after month, this latest development seems to be another notch in the local dailies’ unending decline. |
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