Walter Hussman Risks Business 'In Order to Save It'


Arkansas Democrat-Gazette Publisher Walter Hussman Jr. was describing his gamble to save his newspaper, so of course he brought up the tree-climbing rabbit.

“My dad was a fabulous businessman,” Hussman said, “and he used to ask people if they’d heard about the rabbit that climbed a tree. Somebody would say, well, rabbits don’t climb trees. And he’d reply, ‘I know, but this one had to.’”

The rabbit in this parable is the Democrat-Gazette. Hussman took over its forerunner 45 years ago, led the paper to victory in a celebrated newspaper war, and nurtured it through feast, famine and now existential threat. Climbing the tree is executing a risky plan to limit printing to Sunday only while convincing subscribers to read the “exact same newspaper” on iPads provided by his company.

“We’ve got to climb that tree, even though we’re not supposed to be able to do it,” Hussman said in his first interview since announcing the paper’s goal of ending weekday printing this year. Like it or not, Hussman said, the World Wide Web has unleashed “an economic tsunami” on the economics of print.

More: Read the full transcript of this interview with Walter Hussman.

Hussman has spent $12 million on thousands of iPads, and he’s ready to spend millions more on reaching out to subscribers one by one. In October, the paper reported paid daily circulation of 100,135, but that figure includes single-copy sales; Sunday circulation is about 150,000, according to figures from the Arkansas Press Association.

Hussman figures that if 70% of subscribers convert to the iPads, which readers can keep as long as they’re paying their $34-a-month subscriptions, he can maintain his current newsroom staff of about 100 producing a digital replica edition.

Not Counting on Ads

He’s not yet sure what the change will mean for advertising rates, which traditionally cost far less in digital formats than in print, but he succinctly summed up the biggest business paradigm shift: “We’re not counting on advertising to keep us afloat.”

The newspaper business, which once relied on ads for two-thirds of its revenue or more, now asks readers to pay more of the freight through traditional and online subscriptions.

Hussman sees the imminent threat as greater than the David-and-Goliath battle the old Arkansas Democrat waged with the older, more prestigious Arkansas Gazette in the 1970s and ‘80s, even bigger than war with the nationwide Gannett chain after it bought the Gazette from Little Rock’s Patterson family in 1986.

In 1991, Gannett surrendered, selling the Gazette’s assets to Hussman for $68.5 million. For comparison’s sake, the Daily Oklahoman, another capital city’s paper with a long history, was sold last year for a mere $12 million.

“We’re not competing against a single competitor now; we’re facing the complete disruption of the business model for newspapers,” Hussman said. “We’re competing with free news and a total shift in the way folks want to advertise. I picked up this saying somewhere: Sometimes you have to risk your business in order to save it.”

He said fellow business leaders might wonder why he’s spending $12 million on iPads, the same sum commanded by an entire newspaper in Oklahoma City. “How many people are going to spend $12 million on a proposition that might not work, compared to saving that $12 million, selling and just putting that cash in the bank? We’re taking a big risk. Are we just worse businesspeople than those not willing to risk it? No.

“If we sold the Democrat-Gazette, who would we be selling it to? Some company that doesn’t intend to keep publishing forever. They’d cut expenses to the bone, sell the real estate, get all the cash out of it, and based on what they paid, they’re going to get an internal rate of return that’s acceptable, even if it’s just for four or five years.”

Hussman, who has an MBA from Columbia University, was taught that the goal in business is to maximize return to shareholders. “But that just won’t work for good newspapers, because to be any value at all they have to put readers first. Now that there are fewer families owning newspapers, I really worry about that mindset surviving. Newspapers are a public trust, and as more papers close or become shadows of what they were, we lose that watchdog function.”

Stark Numbers

Hussman, who is 72, laid out stark numbers in a letter to subscribers published on May 18. The Democrat-Gazette lost money last year, and with nonrecurring costs related to the transition is sure to lose far more this year. Total ad revenues at newspapers in the U.S. had plunged from $46.6 billion in 2000 to $11.8 billion by 2017, a 75% decline, and the trend continues. (By contrast, Facebook alone had revenue of $40 billion in 2017 and $55 billion in 2018.)

“Back in 2000, newspapers still got 22% of all the ad revenue spent in the United States. But by 2017, it was down to under 5%,” Hussman said. He cited the usual suspects, Google and Facebook, companies that struck gold as readers migrated to online news, locking up the lion’s share of digital advertising.

Hussman had hoped to continue introducing his iPad plan town by town, and then neighborhood by neighborhood in the Little Rock area, but advertisers began to ask questions.

“They said, ‘Why should I keep advertising if you’re not going to have a newspaper?” Hussman said. “So we went to meet with them. There was a large auto dealer, and we said, look, your ad is on the same page it’s always been on, and look what you can do with your ad. There’s a link to your website, and you’ll be able to do things with interactive ads that you could never do just in print.”

IPad readers will get bonuses, too, Hussman said, including more color pictures, the ability to adjust type size, an option for having the news read aloud and capacity for downloading up to 60 daily editions of the paper. “You can read the paper in Chicago and when you get home, there won’t be a pile of newspapers waiting.”

Hussman said announcing the print reduction generated “a lot of misinformation” on social media. “People think we’re going to give them a website or a blog. They’d never seen a digital replica, and some folks had never seen an iPad. Everybody loves websites these days, and we like ours,” he continued. “But websites are not going to save journalism.”

Try It; You’ll Like It

The paper started its experiment in Blytheville, 186 miles distant, in March 2018, and its print footprint has been retreating closer to Little Rock ever since. “We would go into a town and tell people what we were doing; then we’d get a meeting space at a local hotel and sit down with subscribers one on one and show it to them. They didn’t like it at first; they wanted to keep print, but after they used it for several weeks, they’d say, ‘I can’t believe I’m saying this, but I like it better.’”

The iPad plan applies only to the Arkansas Democrat-Gazette, and not to the 12 counties covered by the Northwest Arkansas Democrat-Gazette, a sister paper. So is there something different about the northwest — market penetration, newer presses? “No, it’s just a different newspaper … We’re trying to do one newspaper at a time, and the one that we’re doing is the Little Rock edition of the Arkansas Democrat-Gazette.”

While the paper is certain to save on distribution jobs and expenses, Hussman said production and printing jobs could possibly be saved. “We don’t know exactly. The presses are not going to be as busy, so we’re looking at taking on commercial printing work. If we get enough, conceivably we could add people. We have over 100 staffers in our newsroom today, compared to, for example, The Denver Post with 60.”

Hussman completely rejects the idea that now would be a good time to reevaluate content. He won’t be cutting international and national news, for instance, in favor of more focused or local content.

“People who travel a lot tell me our paper is head and shoulders better than most, city to city,” Hussman said. “And that’s not just because of our local reporting, which is good. I think it’s because we publish a complete newspaper. That’s what Arkansans like, and have come to expect for decades and decades. People don’t like change, and it’s a huge enough change going from paper to screen. So the content is not going to change at all.”