A former colleague at one of the dailies e-mailed me last night to question my previous post about Seattle becoming a zero-newspaper town.
This person suggested that we can't "unscientifically apply" the joint operating agreement formula on one side without unscientifically applying it on the other: There's a significant production cost savings in producing and delivering a single newspaper, "and there's a significant upside in revenue should (yeah, I know, big if) things ever turn around economically."
Moreover, this person wrote, "I just don't believe a market like Seattle is going to be left without a big media advertising vehicle in some format, owned by someone. Show me another city where it's happened."
It is indeed a radical prediction. But I can't imagine how a printed Seattle Times survives, even without the P-I.
First, having the P-I out of the picture doesn't change the balance sheet that much.
There will be savings in not producing two newspapers at the plant in Bothell. But the press run for the Times will be greater, so you're not cutting the paper bill radically, and transportation costs won't change dramatically because you're sending out the same number of trucks. (I could be wrong about that.) Sales overhead remains the same. It's a combined sell already.
Times circulation will be less than what it is today with the two papers combined because a lot of people will simply stop getting a paper — which means less ad revenue for a Times-only product.
But more to the point, if the Times hasn't been sending Hearst any profit from the JOA since 2000 anyhow, doesn't that still leave the Times losing double-digit millions per year? How much is really saved by producing one newspaper with less than the previous combined circulation? Is it $22 million a year cheaper? Because that's what it needs to be.
As for the loss of a big advertising vehicle, that's exactly what's happening — the market is fragmenting to the point where newspapers aren't all that crucial to advertisers. What advertiser is really left in the lurch by the absence of a printed newspaper? Inserts can go to direct mail, which has nearly 100 percent penetration and more geographic precision.
I had long assumed that newspaper brands would survive a rocky transition to all-electrons. But in the past six months I've come to believe that a meltdown is upon us. We have a really bad economy. Newspapers are carrying insurmountable debt due to too much consolidation. And technological change has decimated advertising revenue. It leaves little room for people like Seattle Times Co. CEO Frank Blethen to make bad decisions, such as buying papers in Maine for too much money in 1997, not budging a little and avoiding a strike in 2000, and losing an expensive lawsuit to Hearst.
I hope they close the sale of the Maine newspapers soon and the joint operating agreement is dissolved quickly (for everyone's sake). But I don't think that's going to be enough.
Something will fill the void felt by news consumers, and I'm trying to imagine what that might be.
To be continued ...