Monday, July 23, 2007

A look at Philly newspapers after a year under new management

Last year McClatchy put the parent company of the Philadlephia Inquirer and Daily News up for sale. There had been major newsroom cuts at both papers in recent years in response to shareholder pressure. In reporters' circles, the speculation was that anybody who bought the company would be likely to close the Philadelphia Daily News rather than continue publishing two daily papers that compete with one another for subscribers.

But a funny thing happened. Philadelphia businessman Brian Tierney announced that he had put together a team of local investors who could buy the company from McClatchy. Although Tierney was best known as a Republican media consultant (he managed Republican Sam Katz's failed 2003 bid for Mayor), Tierney said he was putting politics behind him to run Philadelphia Media Holdings, the new company that would manage the newspapers.

A year later both papers are still open, and Tierney has made some changes in the way business is done. Weekend circulations continue to fall, but while newspapers around the country are losing subscribers, The Inquirer's weekday circulation rose by more than 2,000 over the last year.

But the company isn't making much more money off its website than it was a year ago, which is disappointing. If there's one reason why circulations are falling, it's not because people are paying less attention to the news than they once were. It's because they're getting it from other places, whether that means The Daily Show or the web. And The Inquirer and Daily News have some great reporters turning out some great pieces of journalism. It'd be a shame to see more layoffs because the company can't figure out how to produce revenue from their work online the way it has historically done with its print editions.

That said, about 5% of the company's revenue (and 20% of its profit) comes from the web page, which equals $25 million. Given the amount of web traffic the site has, experts say that number should be closer to $45 million. In other words, there's room to grow.

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