Strategic Planning at the Chronicle Gazette Table of Contents A. Introduction B. Newspaper publishing industry today C. Why newspapers are facing declining circulations and revenues D. How companies in the publishing industry are adjusting their strategies to cope with today’s challenges E. Steps taken by the Chronicle Gazette for dealing with today’s challenges F. Conclusion Introduction: The Chronicle Gazette is one of today’s leading newspapers in the United States, with a circulation of 225,000 customers. Over the past few years, it has been facing a steady decline in its customer base and revenues.
This is mainly due to the increase of people using the internet as their means of gathering news and information. The newspaper publishing industry in the United States is going through some difficult times with declining revenues. Both subscription and advertising revenues have been steadily declining. One of the main causes for this downfall is that readers are using the internet to get news and other information for free, and they are reluctant to pay. The current state of the economy in the United States and the global recession has cut down the advertising revenues for the newspapers.
The cost of publishing has increased, which has caused the majority of the newspapers to increase their prices. This has further distanced consumers from purchasing the traditional newspapers and has made the online news websites even more popular. The main purpose of this report is to analyze the newspaper industry for The Chronicle Gazette presenting them with information to help boost its circulation and increase their profits. The report will analyze the newspaper industry in the United States giving details of its present status and future position.
It will also present facts on the factors that have lead to the decline of the industry. The report will analyze the trends in the newspaper industry and the strategies adopted by some of the leading companies in the industry. It will provide details on the measures adopted by the companies in the publishing industry and how they overcame the losses. By assessing the internal and external factors affecting the industry and the publishers, the report will present the measures to be adopted by The Chronicle Gazette to help increase the advertising revenues and increase its readership base. The newspaper publishing industry today:
The main products of the United States newspaper industry are the daily, weekly, monthly, and Sunday newspapers. The publishing industry consists of approximately 2,000 companies with their total annual revenues reaching nearly $30 billion. The main source of revenues for the industry is advertising, subscriptions, and market stand sales. Advertising revenues make up the majority of the newspaper industry’s earnings. The leading companies still operating in the industry include News Corporation, The New York Times Company, Gannett Company, Tribune Company, The Washington Post Company, and the Hearst Company.
The total daily circulation of newspapers in the industry in the United States is nearly 50 million. One of the main drivers of the United States newspaper industry is the state of the economy. The struggles of the economy have had a direct impact on both advertising and circulation. The majority of the overhead costs incurred by companies in the industry are fixed. That means that profitability is driven by sales and marketing. The marketing strategy of companies needs to be strategic and innovative to increase circulation and boost profits.
The larger companies have the advantage due to their size and economies of scale, and use shared resources in publishing a number of newspapers. Small publishers are better suited to serve the smaller markets. Declining circulation and revenue: Over the past few years there has been a steady declined in the readership of newspapers. An increasing number of people are now using the internet as their source to view news for free. Due to the advancements in the internet, people now have free access to news and information twenty-four hours a day, seven days a week.
Most of the time the news content is available in real time and can be accessed anytime and almost anywhere in the world. The majority of the online news providers do not require a fee. As a result, the number of readers willing to pay for the news has gone down, causing a direct impact on the sales of the printed newspapers. Over the last ten years there has been a significant reduction in the total number of newspaper copies circulated in the United States. The total number of newspaper copies circulated, both daily and Sunday in 2000 was 115,194,000. By 2008 this number had dipped significantly to 97,712,000.
By the end of 2010 the total number of copies circulated was 43. 4 million. Simultaneously, advertising revenues have also steadily declined over the years. Advertising revenues have dipped from $48,670 billion in 2000 to $24,821 billion in 2009. 2010 was relatively calm compared to the hair-raising dips in revenue of 2008 and 2009. Advertising revenues for 2010 dropped roughly 6. 3 percent, to $22. 8 billion. That was relatively low compared to the 26 percent drop in 2009. With the losses of the three previous years newspaper advertising is down roughly 48 percent, nearly half of what is was five years ago.
Expenses continue to climb, especially for news print, where the price is running 20 to 30 percent higher than it was a year ago. Earlier rounds of staff cuts and savings from outsourcing have cycled through and newspapers are continuing to look at new pinches on staff and other expenses. Over the past ten years, there has also been a consistent dip in revenues and profits for the newspaper publishers. On the average, the reduction in circulation numbers was under 1 percent. With the internet growing in importance and popularity, the readership base of the newspapers has been affected. People are able to access news online for free.
Money conscious readers have stopped buying the newspaper and started to use the internet for news and information. In addition, the global economic recession has added to the woes of the newspaper industry. The rate of decline in the circulation of newspapers in 2005 was around 2 percent. This increased further in 2007 to 3 percent and in 2008 to 4 percent. By the end of 2009, the rate of decline in newspaper circulation in the United States had more than doubled to 10. 6 percent. For the six months end September 30, 2010, the rate of decline had slowed from the alarming pace of last year to 5 percent for daily.
Sunday circulation also fell at a slightly lower pace, 4. 5 percent compared to last years 7. 5 percent. During the period from April to September 2010, the circulation of daily newspapers in the United States was reduced by 5 percent to 44 million copies sold per day, up 5 percent from the year before. The circulation of Sunday papers fell by 4. 5 percent, which was up 3 percent from the year before. Advertising revenues have also been affected and plunged in 2009 by 27 percent. In 2010, advertising revenues still fell to about 6. 3 percent, not nearly as bad as the previous year.
The declines in subscription and advertising revenues have caused the newspaper publishers across the United States to try a number of new measures to try and overcome the downfall. Almost all major newspapers have started publishing their news online and maintain an independent website. However, the newspaper publishers are still having difficulties finding more advertising revenues for their online content. Without the needed advertising revenues they cannot negate the losses from the printed advertisements. The major newspapers have tried to charge readers a certain fee for access to their websites, but most readers are reluctant to pay.
They will just find newspaper websites that have free access to their online content. Status of the newspaper leaders: The leading newspapers in the United States newspaper publishing industry are, The Wall Street Journal, USA Today, and The New York Times. The Wall Street Journal is currently the largest selling daily newspaper in the United States. It is owned by News Corporation and is published by the Dow Jones and Company. As of March 2011, the week day daily edition of The Wall Street Journal has a circulation base of 2. 1 million subscribers. Its weekend edition for the same period has a circulation base of 1. million subscribers. The Wall Street Journal also has a very strong e-subscription base. As of April 2011, the Wall Street Journal has the highest number of internet readers for its online editions with 414,000 subscribers. The Wall Street Journal has recognized the importance of the internet to the newspaper industry. In 1996 The Wall Street Journal Online was launched. They formulated their business strategy accordingly. They publish their news online, but not all of it is free. They have adopted a price model of free and paid access. A fare portion of their new coverage is free to all online readers.
This includes political news, opinions, sports, and arts and entertainment news. They charge their readers a fee for certain niche business and financial news. The subscribers are willing to pay for this content because they might not be able to get it anywhere else. The online edition of the paper has not had any problems attracting significant traffic to the website since the majority of the news content is available to everyone. This has allowed them to bring in more advertising revenue. The Wall Street Journals success has been from adopting a publishing model that offers both free and paid content.
They have been able to attract more traffic to their electronic editions by publishing its popular content for free. The Journal has also been able to charge its readers by providing some of the news that nobody else has. USA Today is a major daily newspaper in the United States that is owned by the Gannett Company. USA Today was established on September 15, 1982 and is known for breaking news down to easy to read and comprehend stories. Each edition consists of four sections news, money, sports, and life. The paper does not have a weekend edition.
As of March 2011, according to the Audit Bureau of Circulations the paper has a circulation of 1. 8 million copies. The New York Times is another major daily newspaper in the United States. It was founded and has been published in New York City since 1851. The paper is owned by the New York Times Company. As of March 2011, The New York Times had a circulation of just under 1 million copies for its daily newspaper, and its weekend edition had a circulation of 1. 3 million copies. Its website is the most popular American online newspaper website, receiving more than 30 million visitors per month.
Access to the newspapers website is controlled through a metered firewall. Frequent users, someone that accesses more than 20 articles per month have to purchase digital subscriptions. Access still remains free for light users. The circulation The New York Times has steadily declined. The current circulation of approximately 950,000 copies is the lowest since the 1980’s. Why newspapers are facing declining circulations and revenues: The Internet and the increased in usage by people for all their news and informational needs have had a significant impact on the circulation and financial aspects of the newspaper industry.
The global economic recession has also added to the financial woes of the newspaper publishers. As a result, the circulation figures are at an all time low. This has affected the other major source of income for the publishers, which are revenues from advertising. Businesses are now looking at advertising space on the internet as a more viable option than print advertising. This is due to its cheaper cost and visibility. To help overcome the losses from a decline in readers and advertisements, newspaper companies had to increase their news stand and subscription price.
Some publishers now only supply their newspapers to profitable areas. They have cut down or have stopped the circulation to remote and far to reach places as the revenues received do not cover the cost of delivery. The newspaper industry in the United States is highly controlled. Publication takes place at the local levels in various cities and towns, but the ownership and governance is controlled and centralized in the major cities. The Top 50 newspaper companies control nearly 80 percent of the market. There has been an increase in ownership of newspaper chains; they have grown in both numbers and size over the years.
There is more competition between newspapers in larger towns and cities. Newspapers in the smaller towns have very little competition. There has been some change in the policies of the government and in the views of the political parties toward the newspaper industry. The political parties do not extend the kind of support to the newspapers that they once did. Even they are spending more time and money on online promotions and campaigns to extend their reach at a minimum cost. Due to the economic recession, the budget allocations for advertising at most newspapers have been restricted.
Advertisers are also very choosy in budget outlays for their print advertising. As a result, most businesses are only willing to advertise in the newspapers with large circulations. This causes the smaller newspapers to suffer losses that will eventually cause them to shut down operations. The major factor for the decline in the readership base of the newspapers is that the younger generation has ditched the printed newspaper for the online source of news. Free news is available on the internet that meets their news and informational needs. Online news can be viewed anytime day or night and can be view from almost anywhere in the world.
The news can be accessed in real time coupled with video coverage if wanted. Recent studies show that the average age of readers today is 60. This is not the ideal demographic for most companies. The newspaper companies will not be able to increase their circulation figures if they are unable to attract young customers and increase their readership base. There has been a decline in the percentage of adults who read newspapers on a daily basis in the United States. Between 1990 and 2010 the number of people who said they read the paper on a daily basis dropped almost 15 percent.
The number of women reading a daily newspaper has also dropped over the last decade. The newspaper industry must analyze this important demographic of the market and work on strategies to attract more women readers. One idea is to introduce special women sections in the newspaper that cover topics such as health, beauty, family, and careers. Advancements in technology have changed they way news is received, reported and delivered to the customer. The increasing use of the internet and mobile technology has changed the way most businesses are run.
These factors have influenced the newspaper industry in the United States to adopt new business models. Many newspapers have digitized their news through their websites. Currently there are more than 900 websites ran by newspapers in the United States. A majority of these websites carry online advertisements. The competitive landscape has changed in the newspaper industry with the entry of new media, mobile devices, and concepts. Internet companies, such as Google, Yahoo, YouTube, Facebook, and Twitter provide online news coverage along with videos attracting the younger audience.
They have been able to take the readers away from the traditional printed media, to the virtual world. They are able to attract a lot of traffic to their websites because a vast majority of the content they offer is free to access. Due to the increase in traffic, they have been able to draw advertisers away from print advertising to online advertising. The cost of online advertising is less expensive when compared to print advertising. The cost to maintain and operate a website is also less in comparison to printing newspapers.
All of these factors have ensured that the new media companies have been able to increase their customer base while minimizing their operations costs and then maximize the profits. The traditional newspaper publishers have been struggling to adopt new technologies in their business, which does not allow them to increase their profits. In the current era of globalization, there has been an increased emphasis on protecting the environment. Businesses now have an increased social responsibility to function in a manner that protects and enhances the environment.
The same applies to the newspaper industry. In the past few years, newspapers have been made more aware of the benefits of protecting the environment and have been taking measures towards this. The majority of the newspapers are using recycled paper to publish. They are encouraging newsprint manufacturers to use more recycled material and less virgin fiber for printing newspapers. A number of publishers are taking steps to minimize their use of printing paper. For example the Washington Post and The Los Angeles Times have decreased their widths to 50 inches to economize their use of news print.
Porter’s Model: The Porter’s model is a strategic tool developed by Michael E. Porter in 1979. It is a tool that is used to assess and analyze the competitive forces in a market. It was developed on the basis that competitive strategy must be formulated, taking into account the opportunities and threats in the industry. Porter identified five forces that determine the competitive landscape of industries and markets. The five forces are competitive rivalry between suppliers, threat of new market entrants, bargaining power of buyers, power of suppliers, and threat of substitute products.
The strategy of the business should be designed in a way to change these competitive forces to the advantage of the company. Applying the Porter’s model to the newspaper industry shows that there is always a possibility of increased competition. New players could enter the market. They could bring with them innovative methods or ideas. With regards to the bargaining power of buyers, there could be changes in the demographic distribution of the readers. If the majority of the current readers are old, then maybe the newspaper should change its approach to attract more youth to buy the paper.
With the availability of free online news, readers do not want to pay for online news content. The newspaper publishers need to have a mixed strategy that combines the free and paid access. The more popular portions of the website could be made accessible to everyone. While pay walls can be designed for niche news that targets specific readers. Suppliers could influence prices by charging more for producing the newspaper. Then they have to worry about substitute products in the form of television and the internet. They newspaper industry is finding out that it is difficult to tap into the young adults market successfully.
The majority of them look to the television or the internet as the source for their daily news. The publishers need to understand the specific needs of today’s youth and formulate their strategy accordingly. One way they can increase their youth readership base is to provide web coverage in the areas that interest them. How publishing companies are able to cope with today‘s challenges: The newspaper industry in the United States is faced with challenges of reduced readership and the increased costs and competition from new media companies, such as Google. A majority of the newspapers have online versions of their editions on websites.
They have also other measures to increase circulation and improve profitability. Newspapers have increased the prices for both the subscriptions and single buy purchase. They are also analyzing the markets they serve to understand the cost-benefit dynamic of each market. As a result, some newspapers have cut back on circulation to remote areas where the revenues earned are more than the cost of delivery. The Wall Street Journal is one of the leading newspapers in the United States, which has changed its market strategy and business model to overcome the challenges in the publishing industry. Through its website, www. sj. com, the paper provides online access of its news content to readers. As of April 2011, the Wall Street Journal had 414,025 e-subscriptions. Though the website is available online, not all of the content is free. The Journal has formulated a mixed price strategy where it provides both free and paid content. The popular sections of the news content, such as politics, sports, arts and entertainment is free. Niche coverage such as editorials, opinions and articles on business and financial topics can be viewed only for a fee. In-depth coverage, analysis, opinions and reviews are available only to paid users.
By adopting this strategy of free and paid access, the Wall Street Journal has been able to increase its e-readership base. The free access to popular content attracts more traffic on its website. This brings in more advertising revenues and increases profitability. At the same time, it helps in building a relationship with new readers. They are aware of the useful content available on wsj. com and are willing to pay for more in-depth coverage and analysis. Another important measure taken by the Wall Street Journal is embracing the digital revolution and becoming a part of it. The Wall Street Journal is available on Apple’s iPad.
This move helps the Journal to widen its market and tap younger readers who are technologically savvy. As of May 2011, the Journal had sold more than 10,000 subscriptions and generated $2. 4 million in revenues from the iPad. There are companies at the other end of the spectrum in the newspaper industry who have adopted drastic measures to cope with the challenges. The Seattle Post-Intelligencer was facing significant losses for a few years. In 2008, the paper’s losses amounted to $14 million. As a result, its owner The Hearst Corporation decided to shut down its print operations.
The Company had to make the hard decision of stopping publication of the 146-year old newspaper. It stopped delivery to nearly 117,600 weekday readers. In March 2009, the Seattle Post-Intelligencer rolled out its final print edition. It decided to publish only the online version of the paper. The paper reduced its staff headcount drastically from 165 to 20. Since the paper transformed into an entirely digital web format, its website has had 4 million visitors per month with 40 million page views. With a reduced headcount, the website covers major topics, such as politics, sports and local happenings by itself.
It also sources stories through wire services and other news agencies. The website also makes use of 150 local bloggers for regional content. Steps taken by The Chronicle Gazette for dealing with today’s challenges: The Chronicle Gazette needs to make some changes to its strategy and business model for improving its position. The Company needs to understand the markets it serves and change its offerings to attract customers and widen its subscription base. It has to study its cost structure and perform a cost-benefit analysis of its printing operations.
The key measures that need to be considered by The Chronicle Gazette to increase its subscription and advertising revenues are presented below: Set up a website and go online with news content: The Chronicle Gazette needs to move towards digitizing its news quickly by setting up its own website. Today’s readers have access to multiple online sources of news such as, Google, Yahoo, MSN and YouTube. In this Internet era, people want to view news content online. Younger readers prefer to read news online. The paper needs to understand that it is competing with these online sources for both reader attention and advertising.
In this scenario, it is advisable for The Chronicle Gazette to have an online version of its paper in addition to the print edition. This move will ensure that the paper can connect with newer younger audiences. It will also help boost its image in the market as it will be perceived as in tune with the times and ready to open up to the needs of the readers. This will help in bringing in more advertising revenue for the company. Once the website is set up and ready to be launched, the next key issue to be addressed is whether the content is free or paid.
It is best suited for the company to have both free and paid news content on its website. Before making the decision, the newspaper needs to study its audience and understand which sections of the news covered is more popular. The website should be designed in such a way that the popular sections of the news are available for free and pay walls are in place for in-depth coverage and analysis. In the initial stages, making the popular sections of the news free attracts more visitors to the website. This will help the paper in connecting with the readers and establishing a relationship.
It creates visibility for the website in cyberspace. When the visitor traffic on the website is more, the newspaper can attract more advertising revenues. Pay walls should be in place for articles on special coverage, opinions, reviews and specialized local content. Pay walls should target niche readers who are looking for in-depth coverage on specific topics. Regular visitors to the website are aware of the quality of the content available. They will be willing to pay for detailed coverage and analysis. The Chronicle Gazette can source local and hyper local content through tie-ups with local news agencies and websites.
Minimizing costs and increase efficiency: Due to the global recession and declining revenues, newspapers across the publishing industry in the United States are making efforts to cut costs and encourage optimum utilization of assets. The Chronicle Gazette should carefully study its cost structure. It should work towards cost reductions in the operations of its business. The cost reduction efforts must not be confined to a single function. It should be undertaken in all the functional units, including printing, advertising, editorial, production and distribution.
The Chronicle Gazette should perform a cost benefit analysis of the various markets it serves. It could cut back on circulation to those areas where the revenue generated does not justify the cost involved. The newspaper should focus on maximizing the utilization of its assets. The players in the newspaper publishing industry are reorganizing their production and distribution process to reduce costs. The Chronicle Gazette should undertake measures to organize its production and distribution functions so as to reduce costs and increase efficiency.
This could be in the form of outsourcing or coordinating with other players in the supply chain. Leaner organization structure: The Chronicle Gazette should study its organization structure and ensure that the human capital is being effectively used in the business. Editorial staff must contribute effectively towards content creation. There roles must be well defined and their contributions must help in achieving the organizational goals. This step does not necessarily mean cutting down on editorial staff. It should be directed towards increasing the productivity and efficiency of the staff.
The newspaper should understand that journalists’ contribution is very important for the success of the company. It should focus its efforts on providing enough opportunities for the staff and utilizing them effectively. Embrace digital platforms: All the major newspapers in the industry are exploring new business models and looking to be part of the digital revolution. The Chronicle Gazette should explore new media platforms and technologies to distribute its content. It should look at attracting newer and younger readers by digitizing its content through websites and mobile devices.
It could explore the possibility of distributing news content through smart devices like Apple’s iPhone and iPad or through the Droid technology. Conclusion: The Chronicle Gazette has to understand that there is always a demand for good quality news content. Even though subscription and advertising revenues are down, there is a constant demand for quality and unbiased news and information. The Chronicle Gazette needs to focus on its core competencies by eliminating unprofitable areas of operation. It should focus on content creation that meets the needs of the majority of its readers.
An increasing number of readers are demanding specific and relevant news coverage and analysis. This could be in the areas of politics, sports, arts, entertainment or local news. The Chronicle Gazette should cater to this audience and not just focus on general news. The Chronicle Gazette needs to take action quickly and swiftly to revive its fortunes. It should take measures to be part of the digital bandwagon by distributing its content through websites and mobile devices. The Chronicle Gazette has to take cost reduction measures and improve the efficiency of operations.
It should aim to utilize its employees and assets to maximize returns. It should re-engineer its production and distribution processes to be able to deliver news content across various media platforms. These measures will ensure that The Chronicle Gazette focuses on its core strengths and builds on it to bring in more subscription and advertising revenues. References: 1. Newspaper Association of America. (2010). Total Paid Circulation. Retrieved on 07/09/2011 from http://www. naa. org/TrendsandNumbers/Total-Paid-Circulation. aspx 2. Newspaper Association of America. (2010). Advertising Expenditures.
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