A select group of 50 Publishers, CEOs and other
senior newspaper executives from 23 countries

Daily News

Here are the summaries of presentations from the Friday and final sessions at the World Forum on Newspaper Strategy 2002, organised by the World Association of Newspapers and Ifra.

A full conference report will be available exclusively to WAN individual members. For information about becoming a member of WAN, contact Donna Pentier, Director WAN Training & Events, 25 rue d'Astorg, 75008 Paris France, Tel: +33 1 47 42 85 00, Fax +33 1 47 42 49 48. E-mail: dpentier@wan.asso.fr

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A Blueprint for Media Investment
Neil Blackley, European Media Analyst & First Vice President, Merrill Lynch & Co., United Kingdom

Media consumption is a growth industry, says Mr Blackley. "It now represents 40 percent of people's lives, and that includes sleep," he says. "Consumption is still growing."

Merrill Lynch has analysed 22 subsectors of media based on six parameters: growth, margins, consolidation opportunities, cash generation, management and valuation. Mr Blackley provided conference participants with a detailed "blueprint for investment" for each of these areas.

In terms of growth, the forecast says the fastest growing sectors will be European pay TV, console games and filmed entertainment, following by marketing services, radio, education, science and technology publications and market research.

And, in an area of particular interest to the newspaper business, Merrill Lynch has also analysed the advertising sector.
"We forecast a very muted growth in 2003 of 2 percent to 3 percent," Mr Blackley said of the global advertising market. The forecast takes into consideration concerns that consumer spending will fall. But, at the same time, advertising should still grow as corporate profitability improves, he says.

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A Media Model for the Future -- Today
Kerry Northrup, Director of the Ifra Centre for Advanced News Operations, USA

After two years of preparation, the Ifra Newsplex prototype newsroom will open in mid-November to examine innovations in environment, organisation and technology for the multiple-media newsroom.

In the time that he has been directing the project toward its debut, Mr Northrup has learned some lessons about news organisations that perform best in the new media marketplace.

They work in a combination of media channels, he says. They have a service relationship with the marketplace. They place priority of credibility and reliability. They are technologically endowed in the core information management and communication functions. And they maintain small, highly trained core staffs for the highest value editorial functions.

"We need a different type of newsroom that has processes, technology, and people in it that are able to work in multiple media and who are service-oriented to the news consumer," he says.

In addition to its research and evaluation tasks, the Newsplex newsroom, in Columbia, South Carolina, will be a place where a new generation of journalists will learn their trade, and it will also provide professional training to today's journalists to help them adapt to the new media environment.
This represents a major change for the industry, said Mr Northrup, who noted that the newspaper remains much as it was when it was first created. "The basic situation is that the newspaper hasn't changed very much, and this is one of the issues that is driving our uncertainty about the future, because our market is changing," he says.

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The Added Value of Multimedia
Juha Blomster, Executive Vice President, Alma Media Corporation, Finland

The people are Finland, perhaps the most technologically knowledgeable on the planet, are among the world's greatest users of mobile telephones, internet and electronic banking.

That makes them an ideal test market for multimedia innovation, says Mr Blomster, who presented a case study of his media group, which includes television, radio, 30 newspapers, business information, contract printing and interactive divisions and is the sixth largest media company in Scandinavia.

It is a case of successful media convergence, built around the 104 year-old Kappalehti business newspaper. The company now provides business information to news consumers through all the company's media, using the Kappalehti brand.
"We say, 'media complete each other 24 hours a day'. They don't compete with each other, they are more complimentary products," says Mr Blomster. "We found customers read newspapers in the morning, magazines in the afternoon, watch television in the evening, listen to radio while commuting, use internet during the work day -- our point of view is that to meet these needs, we have to have the products."

Mr Blomster provided a set of rules for making a profitable multimedia company: define the core business precisely and concentrate on it; know the customer needs; make the products easy to understand; make sure to develop a committed management and organisation (it isn't easy); keep the organisation slim; manage projects from the beginning to the end; remember that the purpose of the business is to make money, and don't accept losses; remember that content is still the king and should be worth paying for; and, even if content is the king, it is the brand that makes the money.

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In-house Versus Outsourced Advertising Sales
Tim Greve, Managing Director, asdirekt, Germany

The audience was warned before Mr Greve began examining the choice between in-house and outsourced advertising sales: "don't expect definitive answers. It works only if it is done right -- either way."

Mr Greve's company is the customer centre of the Axel Springer publishing group, handling customer service for all the group's newspapers and magazines, which reach more than half of the total population of Germany.

In recent years, there has been a profound change in the German advertising market, where decreasing volumes and increasing competition has led to an increasing need to reduce the cost of sales.

"The good old days of order taking are gone -- I think forever," says Mr Greve.
The problem is, although the days of routine unsolicited sales are gone, "the staff mentality was still, 'we're in publishing, we make loads of money no matter what we do," says Mr Greve. "You either change the mentality of your staff or you change your staff -- that's your choice if you do it in-house."

Or, put another way, "either put serious change management to work or change the way you do business. If you want to change things internally, this is what you have to get right."

Mr Greve presented several business models and said the ability to implement these models -- for markets and channels, sales and for organisation -- was the key to in-house success. The first task for newspapers is to decide if they can tackle the challenge. If not, he said, they should consider outsourcing.
Before making the decision, it is necessary to measure operational efficiency, targets and costs. "If you can't measure it, you can't manage it," he says.

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Don't call it Convergence
Leon Levitt, Executive Vice President for Digital Media, The Arizona Republic, USA

The term "media integration" has replaced "convergence" at The Arizona Republic and its Gannett-owned partners, KPNX-TV and the azcentral web site.
But whatever you call it, it seems to work in Phoenix -- not only in the newsrooms, but in the advertising department as well.
In August, the three media created a dedicated sales unit to sell integrated media.

"It is something we do every day, now it's the way we do business," said Mr Levitt. "The core product, the newspaper, is eroding, and quite frankly it has been for 20, 30, 40 years. While we would never consider abandoning the core newspaper -- that is the mother ship -- we have to look at it differently than we did in the past, as something that has everything for everyone, which is standard in the industry."

Mr Levitt presented the benefits and difficulties of the integrated sales force. The main benefits: significant incremental revenue with little risk (10 to 12 million US dollars expected in 2003 from the nine-person integrated unit) and increased reach. A reach of 53 percent from one advertisement in the Sunday newspaper rises to 76.8 percent when combined with one commercial on KPNX and 79.4 percent when the web site is included.

"You can see when you start to aggregate unique users across platforms that it gives you a great story to tell advertisers," says Mr Greve. "This represents a fundamental change in how we go to market. We don't only depend on the core newspaper, we're selling aggregated unique readers, unique visitors across multiple platforms and channels."

The challenges include different business models for television and newspapers as well as different corporate cultures. Resistance from ad agencies -- who are losing commissions to the new unit, which goes directly to advertisers -- and other conflicts as well as different advertising department structures were also among the challenges.

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Core Values and Full Potential
Graham Elton, Partner, Bain & Company, United Kingdom

Circulation and advertising market share for newspapers are declining in many markets. It is a grim picture, but some newspapers have managed to grow despite the difficult conditions.

How do they do it? The secret is to focus on the core business, says Mr Elton. "There is a lot more mileage in your businesses," he says. "It's all about determining what is the full potential of the business, and then go about delivering it."

A study of the top 2,000 businesses in the United Kingdom and the United States shows that, over the past ten years, 78 percent of the most successful in terms of sustained growth all had just one core business, Mr Elton says.

"There is a lesson there for all of us -- those who stick to the core business have done particularly well," he says.

Mr Elton's presentation examined ways to obtain full potential in circulation, advertising revenue and operating efficiency, illustrated by examples of success.

Among them:
--The Guardian in the UK, which managed to hold its market share despite strong competition by building reader loyalty;

--The Economist, whose scientific use of direct marketing doubled its US circulation from 200,000 to 400,000;

--The New York Times, which invested in home delivery and marketing to grow its circulation 7.5 percent in a declining market.

"There is room for improvement in all our core businesses -- none of us have maxed out on revenues and costs," says Mr Elton.

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Shaping the Future of the Newspaper
-- A Briefing on Circulation Management
Jim Chisholm, Strategy Advisor, World Association of Newspapers

Increasing the frequency of readership can have an exponential effect on advertising revenues, Mr Chisholm says.

Using the United Kingdom example, Mr Chisholm showed that upmarket readers tend to read newspapers less frequently than lower income readers yet generated more advertising revenue in terms of revenue per issue sold.

His analysis indicated that if the frequency of their readership is raised to six days a week, the advertising revenues they generated could be as much 30 times higher than that generated by lower income readers over the same period. Readers must be valued for the advertising they generate as much as the cover price revenues, he says.

"We all expect people with higher incomes to attract more advertising, but the implications of this is they could be generating 30 times more advertising," says Mr Chisholm. "The importance of the profile of readership does not have a small impact on the amount of advertising you attract, it has a seismic impact on the advertising you attract."

Mr Chisholm's presentation was made in the context of the Shaping the Future of the Newspaper project, an initiative of WAN and its strategic business partners to identify, analyse and publicise all important breakthroughs that could benefit the future of newspapers all over the world. WAN produces a series of six annual SFN reports on new operational and strategic developments in the press. More information can be obtained at http://www.futureofthenewspaper.com.