You kinda love Harold Hill when you watch “The Music Man,” even though you know he’s a hustler. But the “think system” only works on stage or screen with an audience of adoring and forgiving parents. However charming he was, Hill was still a hustler. And the think system doesn’t work in the news business. You have to be able to play or you’re in trouble with a capital T.
Aaron Kushner was a hustler* who blew into Orange County, California in 2012, as though it were River City, Iowa, and he had some band instruments — er, newspapers — to sell. I kinda rooted for him, but I also kinda knew the Orange County Register and Freedom Communications had trouble in their future.
When Kushner bought the Orange County Register and announced a bold, expensive print-first initiative, I thought it would probably crash and burn quickly, but I wanted it to succeed.
I didn’t blog either of those thoughts immediately. I won’t dig back through my social media posts to say whether I might have expressed either or both views on social media. But I didn’t want to flesh either thought out into a blog post. I didn’t want to say I was rooting for it because I knew it would crash. And I didn’t want to say it would crash because I was rooting for all my friends in Orange County, and because, well, I was risking a crash myself (and had just walked away from one).
The truth is, a lot of people probably shared similar skepticism (with or without the rooting) when I joined TBD and Digital First Media (neither of which had those names when I joined them). TBD didn’t last nearly as long as Kushner’s ventures in Southern California, and DFM has lasted just a bit longer. It’s hard to measure the lifetimes of ventures, since you could pick different starting points for DFM, and do you pick the end as when a company starts its descent or when it’s over? Neither Kushner’s run at Freedom or DFM’s run is over. Yet.
Either way, I’m in no position to gloat about Kushner’s crash, which continued Tuesday with his announcement that he and co-owner Eric Spitz resigned their executive positions at Freedom Communications and the Orange County Register. They previously shut down their ballyhooed expansions into Long Beach and Los Angeles and made several rounds of job cuts in Orange County and the Riverside Press-Enterprise, another Kushner purchase.
I hoped Kushner would be successful, but I didn’t see how he could be. Hell, I’d root for a guy who started manufacturing typewriters (I love typewriters), but I no longer use typewriters and I wouldn’t invest in their future.
I had several friends at Orange County (I used to consult and train for Freedom in my American Press Institute days, before Kushner bought it) and more friends joined as Kushner staffed up for his print offensive and the Long Beach debacle. As I said when the Long Beach “war” started, I root for any media venture. I want a healthy media environment that supports lots of varied outlets. Some of my favorite memories are from competition in two-newspaper towns.
Digital media is a tough enough field (as GigaOm’s suspension of operations this week showed). For a struggling newspaper to double down on print, well that was a business based on fantasy.
When Kushner bought what was left of Freedom in 2012, the newspaper industry was in a tailspin, having lost two-thirds of its biggest annual revenue source from 2005 to 2012. I just did the math on that: the Newspaper Association of America reports that print advertising revenue was $47.4 billion in 2005. Just seven years later, the year Kushner jumped in, national print ad revenues were down to $18.9 billion. But I used the inflation calculator to determine that that 2005 figure was really $55.6 billion in 2012 dollars. That’s a 66 percent drop. Buy-low-sell-high might be an investing cliché and a successful strategy for fluctuating stocks, but when you buy a business whose primary revenue source has dropped for seven straight years, you might actually be buying high.
Yep, newspaper print ad revenues fell another 9 percent nationally in 2013, to $17.3 billion (that’s a 69 percent inflation-adjusted drop since 2005). Increases in digital advertising and digital subscriptions (and anything else that’s increased) haven’t offset that loss. Newspapers maintain profits, if they do, by cutting costs. We don’t have 2014 figures from NAA yet, but I’m going to guess another decline approaching or in double-digit percentages; the past seven years, the percentage decline has not been less than 8 percent.
You keep hearing people at newspapers say that print advertising still pays most of the bills. But that’s no longer true. In 2013, print advertising dropped below 50 percent of total newspaper revenue. Other things pay most of the bills now, and other things don’t require high costs like labor, paper, ink and fuel to produce and distribute.
In that climate, it’s inspiring and exciting to hear someone say he believes in print, and see that he’s backing up his belief with his money (Kushner hired a slew of journalists). I’m sure for a year or so, working at the OCR was a blast. I saw the enthusiasm in friends’ Facebook posts. I felt happy for my friends who were already there and for more friends who joined the adventure in key positions. But I felt dread, too. Some of those friends have already left. I hope they regard it as a great opportunity and fun while it lasted (as I do with my TBD and DFM experiences). Whether they lost their jobs or are struggling to continue, I hope they’re not bitter about the crash. I’m not bitter about mine.
I don’t know what the future holds for Kushner or Freedom. He’s probably rich enough to just be an owner and no longer run the business. Or he may join DFM in trying to sell, possibly with the same buyer claiming both Freedom and DFM’s Los Angeles News Group, either in a Tribune Publishing consolidation with the Los Angeles Times or a challenge to Tribune.
The folks in River City had fun while Harold Hill was around. But there aren’t enough trombones in all of Orange County to persuade me to bet on print. The only bet for now is managing the decline of print and working harder and smarter than newspaper companies have on figuring out the digital future.
* I should admit that some people might think the Harold Hill metaphor works for me, too, especially given the time I’ve spent in Iowa. Hell, I’ve even played pool in Mason City, hometown of Meredith Willson, who wrote “The Music Man.” One person who thinks I’m a hustler might be Ryan Chittum, who likened me to a World War II dead-ender. I think and hope the staffers I persuaded to join me at TBD and DFM don’t think they got hustled (If you do, please let me know. I can take it and I should know if you think so; I don’t care about anyone else).
I busted Chittum for overuse of metaphors after that dead-ender piece, so I should beat him to the punch by acknowledging that I’ve pushed the Harold Hill metaphor a little far in this post. (Mimi pointed out that I mixed musicals in the metaphor at one point; I’ve fixed that.) I blame the chemo drugs (I wrote it in the hospital, mostly late at night). If I haven’t already pushed it too far, these videos should do the trick: