Comparing Hearst, Tribune, Scripps

From Mermigas on Media, Aug. 22:

The jury is still out on whether any of these publishing scions, including Tribune Co., Dow Jones, the New York Times, E.W. Scripps, and Gannett, can make a successful transition into an electronic information age with their editorial legacies intact.

… Scripps is succeeding where Tribune is stumbling.

Scripps broadened its horizons early in the game by investing in niche networks that continue to dominate cable as well as the Web and merchandising circles. The gangbuster success of Food Network and HGTV more than offset its rocky investments in cable and online shopping.

Scripps’ cable unit, which generated nearly half the company’s annual revenue and nearly twice that of its newspaper operations, is the reason why its stock price outperforms its peers in a market that has been unforgiving to media for years….

By comparison, Tribune invested its money and resources a decade or more ago in Chicago cable outlet CLTV, one of the first and strongest local 24-hour cable news operations, and the startup television network the WB, which is morphing after 12 years of red ink into the CW….

Neither Tribune nor Scripps, nor many of their newspaper brethren, have been able to make the necessary commanding leap into online classifieds in order to keep from losing that vein of gold to the unlikely new competitors like Craigslist. Merrill Lynch analyst Lauren Rich Fine estimates that over the past decade, newspapers have lost $7 billion in classified ad revenue to online competitors, which are just getting started. Most publishing players lack the means to constructively offset those losses with new revenue growth. Hence, Fine’s “scary” five-year projection that has pure play publishers like Tribune collectively posting marginal losses on flat (1.4% growth) revenue by 2011.

The research firm Outsell predicts that the newspaper industry faces a $20 billion revenue shortfall by 2010 based on the continuing decline in paid circulation and advertising that not only threatens its historical 20%-plus operating margins but its basic business model.

That appears be the fate Hearst Corp. is attempting to avoid by amassing its nearly 75% stake in Hearst-Argyle Television, keeping the float tiny and essentially moving it toward going private while aggressively continuing to take minority stakes in advanced broadband enterprises such as Brightcove and Sling Media that are breathing new life into its old broadcast business. Hearst gets it. It understands that it is not enough to talk about integrating.

Not very cheerful. But interesting.

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