While almost all big city newspapers are losing readers and seeing ad revenues drop, some of their counterparts in smaller metropolitan areas are doing just fine, thank you very much. The WSJ reports on just such a paper in Bismarck, N.D.:
With a local focus and a near-monopoly on its market, the Bismarck Tribune has helped its publisher, Lee Enterprises Inc., produce revenue and profit growth admired by many in the newspaper industry. The paper is among a tier of papers with circulations of 50,000 or less that is proving relatively resilient in the face of a prolonged slump among larger papers.
What's the secret of their success?
While big newspaper companies are increasingly battling the Internet and other sources of information and advertising, small papers have been able to keep a hold on their markets, concentrating on local politics, sports and community events.
If all politics is local than maybe the future of papers is too. That's definitely the opinion of some observers.
There also is money to made in these smaller markets. At least for now.
Benefiting in this smaller-is-better environment is the Bismarck Tribune's publisher, Lee Enterprises of Davenport, Iowa. The publicly traded company publishes 58 daily newspapers in 23 states. Most are in towns like Baraboo, Wis., Beatrice, Neb., and Muscatine, Iowa. Average daily circulation: about 29,000.
That puts Lee squarely in the heart of the country's newspaper business. Of the nearly 1,500 daily papers coast to coast, 1,200 have a circulation of 50,000 or less, according to the Newspaper Association of America, a trade group in Vienna, Va.
With a 2004 profit margin of 20%, Lee's newspapers eclipsed media powerhouses whose newspaper profit margins were in the teens, including Washington Post Co., New York Times Co., and Tribune Co., publisher of the Los Angeles Times and the Chicago Tribune, according to Mr. Morton. He estimates Dow Jones & Co., publisher of The Wall Street Journal, had a newspaper operating profit margin in 2004 of slightly more than 9%.
Smaller cities usually have more attractive demographics and face less competition. At least for now.
Compared with large metropolitan areas, small towns are proving more promising for readership. They generally have larger proportions of English speakers, higher education rates and older, more rooted populations. In Bismarck, less than 2% of the population is foreign-born; in New York, it is 36%. In Bismarck, 88% of residents are high-school graduates. In Los Angeles, 67% are.
The small markets are limited enough that, for now, competitors are scarce. Bismarck, population 56,000, has had little incursion, for instance, from Craigslist, a free online advertising service. That service has devoured classified advertising in many of the more than 110 locations where it has set up shop, forcing some papers to offer many classified ads free. For Bismarck, the nearest other paper of any size is in Dickinson, a city of 16,000 people located 100 miles west. Bismarck also has only one "shopper," or free paper, in town -- and Lee owns it.
In Bismarck the Tribune has achieved a dominant position in a thriving market.
With little competition, the Tribune sells nearly 28,000 papers -- or about one copy for every two people. By contrast, the Los Angeles Times, with a daily circulation of about 843,000, sells about one paper per four residents. The Chicago Tribune, with a daily circulation of about 586,000, sells one paper for every five.
"Mass media still is 'mass' in rural America," says Pat Finken, president of Odney Advertising, based in Bismarck. Most of his business is in rural states like North Dakota, where there are fewer media options for residents and ad prices remain low. "You can buy full-color ads in the Tribune for two grand or less," he says. "You go to Minneapolis, Chicago, you're talking $25,000 to $30,000 for a similar ad."
From 1990 to 2000, the population of Bismarck increased 11%. As North Dakota's population has aged and small towns have died, Bismarck has thrived. Hospitals are a big magnet, drawing the elderly.
The elderly. A key demographic group for newspapers, whether they like it or not.
That, in turn, has increased the number of doctors, nurses and other medical workers. A registered nurse at one of Bismarck's major hospitals can fetch a starting salary of $45,000. This has boosted the buying power of residents. According to the U.S. Census, retail sales per person in Bismarck in 2000 were $14,800; in Los Angeles, they were $6,400.
People who read newspapers with money to spend. An increasingly elusive paradise for publishers. But before you go out an drop your life savings into Lee Enterprises, you should be aware that the future is not necessarily all that bright.
There are questions about how long the small-town monopolies can hold up. High-speed Internet service generally isn't as widely available in rural communities as it is in big cities,but it is spreading. As more readers gain access to faster Web service, many are likely to spend more time reading and shopping on the Internet. And as readers go, so go advertisers.
The extent of Web usage in Bismarck isn't clear. Scarborough Research ranks San Francisco first among the top 100 cities, with 37% of residents having access to high-speed Internet; Roanoke/Lynchburg, Va., came in last on that list, with a 12% rate. Bismarck isn't big enough to be included on the list.
Can the Bismarck Tribune survive and thrive in the age of the internet? Fans of newspapers and industry insiders will be watching with interest.
No comments:
Post a Comment