The Arkansas Democrat-Gazette is on its last legs as a printed daily newspaper, but those legs may have strength enough to carry the business into a new digital era.
Publisher Walter Hussman’s novel business plan — printing the paper only on Sundays and selling readers on a digital weekday edition formatted for an iPad provided by the company — is working, longtime executive Lynn Hamilton told Arkansas Business last week.
The plan was to convert enough $36-a-month subscribers to turn a profit while keeping the 100-employee newsroom intact. (The paper lost money in 2018 and will be in the red again this year, Hussman confided recently.)
And the digital rescue is proceeding smoothly, said Hamilton, the paper’s president and general manager, and could meet a tentative goal of completion by the end of the year. Hamilton recalled that Hussman’s idea was to find a way to cut production and delivery costs while maintaining modest profits and statewide coverage by a strong news staff. Digital sales are doing well enough to avoid news-side layoffs, Hamilton said.
“As expected, we’re seeing a higher level acceptance of the digital replica edition in Pulaski County than we experienced in outlying areas,” Hamilton said, noting that the paper has ceased print delivery in stages. The shift started in far northeast Mississippi County a year and a half ago and has proceeded to areas closer and closer to the capital. As of last week, only 25,000 copies of the weekday paper were still being printed, down from 175,000 just 10 years ago.
“In Maumelle, 90% of former daily and Sunday print subscribers are staying with us,” Hamilton said. “In Jacksonville, it’s 87%. North Little Rock and Sherwood are in the mid- to high 70s.”
He said downtown and midtown Little Rock are scheduled next for delivery disruption. “Our plan is to move to the far west after that and then work back to the east,” Hamilton said. The neighborhoods near Pleasant Valley would be the last to be lose delivery.
That timeline could change, though, he said. “We’re still hoping to finish by the end of the year, but the project may slide over into the early months of 2020.”
He expects the newspaper’s report to basically remain the same. “We have no plans to cut newsroom staffing or the quality of the news product. In fact, we’ve added a few positions to the news staff this year.”
In his own paper and through speeches and a lengthy interview with Arkansas Business, Hussman has laid out his plan for a less-expensive news system in a digitally disrupted media world.
“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.”
The biggest business paradigm shift? “We’re not counting on advertising to keep us afloat.”
Hussman, 72, laid out stark numbers last spring: The Democrat-Gazette lost money in 2018, though Hussman’s privately held Wehco Media Inc. wouldn’t say precisely how much. With nonrecurring costs related to the digital transition, the paper is sure to lose far more this year, Hussman said, though the Democrat-Gazette’s particular problems are in line with the broader industry’s.
Total ad revenues at newspapers in the U.S. have 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.
The publisher knew something had to give, and the costly daily production and transportation system for the print paper was an obvious target.
“No significant staff reductions have been made as yet,” Hamilton said. “Several longtime employees have retired recently, both in production and circulation, but no one was known to the general public.”
“We were at the University of North Carolina [Oct. 25] for the ceremony proclaiming the newly named Hussman School of Journalism & Media,” Hamilton continued. “Three weeks ago we were in Chicago where Walter explained to newspaper executives from all over America both his core values printed in the Democrat-Gazette every day and his thinking in creating the iPad program. He was cheered enthusiastically by several hundred people in both settings. His commitment to journalism is a ray of hope for all who believe in the importance of newspapers. And, Arkansas is indeed a primary beneficiary.”