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Newspapers a growing, not dying, industry for Sound Publishing and parent Black Press

Don't tell Gloria Fletcher, who as president of Sound Publishing guides what has become Washington's largest and fastest-growing newspaper company, that print media is a dying industry.

Bellevue-based Sound, which owns 38 daily, weekly, community and monthly newspapers in this state, assumed ownership this month of its latest acquisitions, the Daily World of Aberdeen and three weekly newspapers in Grays Harbor County for an undisclosed amount of money.

Gloria Fletcher
Gloria Fletcher

"We don't believe this is a dying industry," Fletcher said "We believe in print but understand the value of the digital component as well."

Sound, as the U.S. subsidiary of Canada's largest independent newspaper company, has become more visible since Fletcher's arrival in April of 2012 with the purchase of the Daily Herald in Everett and the Seattle Weekly and Fletcher has, without a lot of fanfare, quietly become one of the state's most influential business women.

"Influential business woman" is a designation that would be uncomfortable for the low-key Oklahoma native, a 1984 honors graduate at the University of Oklahoma, who became publisher of her hometown Woodward, OK a year later.

Within three years, she had become an executive of American Publishing Co., overseeing a group of the company's newspapers. By the time American Publishing was acquired in 1999 by Community Newspaper Holdings Inc. and she was made vice president to oversee 38 newspapers in Oklahoma and the Central Midwest, Fletcher had a 4 year old and a one year old.

In her roles as a key executive of four publishing companies, she has carved out increasingly key roles and has thus helped break the mold of what traditionally had been, with a few nationally notable exceptions like Washington Post publisher Katharine Graham, an industry dominated by men.

Fletcher's belief in the future of newspapers fits well with the philosophy of Canadian parent Black Press, the Victoria-based company founded by David Black, who ran the company and grew it to dominance across British Columbia and Alberta before elevating president and COO Rick O'Connor to succeed him as CEO of the company.

Fletcher's philosophy mirrors O'Connor's as well, as he made clear in a telephone interview we had this week in which he said "the value of print is being undersold and the value of digital is being overhyped."

"I'm not saying we don't embrace digital," O'Connor said. "But print is still king, representing 90 percent of our revenue."

He notes that the newspaper industry is beset by a "lot of uncertainty and where there is a lot of uncertainty people tend not to invest," but notes that "when you look at Warren Buffet and other non-newspaper people investing, it's a sign of how smart people are viewing the prospects of the industry."

Among those non-newspaper people getting into print is, of course, Seattle's Jeff Bezos. founder and CEO of Amazon. His purchase of the Washington Post in the summer of 2013 created conversation and conjecture across the traditional media industry.

Bezos' Post purchase created an interesting convergence with Sound in that it was about four months before the Post-Bezos announcement that Sound purchased the Everett Herald from the Washington Post Co., providing the opportunity for m to joke to the Herald's new publisher, Josh O'Connor, that he might now be sitting in the chair Bezos had hoped to be sitting in.

The fact that a move into newspapers by non-newspaper people isn't always going to be a winning proposition was emphasized by word this week that Boston financier Aaron Kushner and his 2100 Trust LLC holding company, which was formed specifically for the purpose of buying and growing major newspapers, may be having serious growing pains. Perhaps even survival pains.

This week Kushner either stepped aside or was stepped on and forced out by investors from his role as publisher of the Orange County Register a week after the Los Angeles Register folded six months into Kushner's experiment to create a daily LA to compete with the Los Angeles Times. Kushner had purchased the OC Register a year before Bezos' acquisition of the Post.

Perhaps in keeping with the premise of his Trust, for which he remains CEO, he was replaced as publisher by former casino executive Richard Mirman, who has no newspaper experience.

And naturally Kushner's travails have been greeted with great glee by traditional newspaper people, as evidenced by a column in USA Today headlined "Kushner's bold bet on print ends up as a farce."

But Black Press' O'Connor and Sound's Fletcher are not worried about the problems of those who are newspaper believers but may lack the experience to deal with the challenges.

Black Press touts itself as "home to some of the oldest, most trusted community newspapers in North America."

In fact, Black Press itself has grown in size and prestige as a newspaper company by grabbing off once-marquee titles of once-dominant but now sinking media companies, as with Honolulu Star-Advertiser, which once carried the Gannett flag, the Akron Beacon-Journal, formerly a McClatchy newspaper, in addition to The Herald from the Washington Post.

The Black, and thus the Sound, business strategy is based on newspaper clusters, as with the importance of "cluster" in the Grays Harbor acquisitions. It is clusters that mark Sounds presence in East King County with its Reporter Newspapers, in Kitsap County and on the Olympic Peninsula, where it owns the daily Port Angeles Evening News.

The cluster concept is also in place for Black in Hawaii where, as a result of acquisitions that include two dailies related to the Aberdeen purchase, it owns all the English-language dailies on the islands.

In fact O'Connor makes it clear that he is enough of a believer in the importance of clusters that he says "where we are already operating is where we intend to invest," saying in response to one of my questions that expansion in the Western U.S. outside of Washington is unlikely.

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Those concerned about Bezos' plans for Washington Post might look to Orange County

In the several weeks since Amazon founder and CEO Jeff Bezos stunned the media world, and beyond, with his purchase of the fabled but flagging Washington Post for $250 million cash, I've been asked enough times by friends and business associates for my thoughts as a journalist that I decided to share them in a Flynn's Harp.

 

I might have been concerned by Bezos' purchase of the Post and the equally surprising, though on a lesser stage, purchase of the Boston Globe by Boston Red Sox owner John Henry, except for what has happened in Orange County with the purchase a year ago of the Register, the area's major daily newspaper.

 

The newspaper was purchased last July by Aaron Kushner, a 40 year old former CEO of a greeting card company, and his partners, including Eric Spitz, a top executive of companies in various industries, including a last pre-Register stop to help revive a classic brewing brand as CFO at Narragansett Brewing Co.

 

Inthe 13 months since then, the editorial staff has almost doubled, from 200 to 350, and the print newspaper is filled with news, and increasingly with ads.

 

While over the past year the Register's average print circulation has declined slightly to just under 160,000, the average weekly print circulation of Freedom's 26 weekly community newspapers, two of which have been converted to five-day operation, has nearly doubled to more than 180,000.

 

Kushner came in musing "why would anyone make some customers pay while others were getting the same thing for free?" So quickly came a pay wall for web visits and it's now a $1 a day for subscribers, whether they get their news online or in print.

 

And he and Spitz, who oversees daily operations at the Register as president of Orange County Register Communications, have filled the newspaper with editorial stuff, including the addition of 22 weekly sections, and it's become a place where most reporters in the country would happily take a job

 

After Bezos' and Henry's purchases I sent Kushner an email saying I had originally thought he was a media aberration, but now think of him and his partner as the leaders of a trend for the future of newspapers.

 

What's the trend? That people with significant financial resources and business acumen, and committed to public service and giving back, will decide that new ideas could revive an industry that was challenged but not comatose. After all, a lot of weekly and small-daily newspapers were doing quite well.

 

Will there be those who buy newspapers for the wrong reasons and abuse the power of the press? Perhaps. Maybe even in the mold of William Randolph Hearst who prided himself on deciding that the U.S. needed to go to war with Spain over Cuba and helped bring the war about with the editorial influence of his newspapers in major cities across the country. Who of the new breed could abuse their new-found power and influence more than the newspaper titans of the past?

 

But there are also positive "outsider" examples from the past, as with the two Kansas City entrepreneurs who, with no newspaper background, decided a local business newspaper was needed to create a more positive attitude about business. To their surprise, they found that their Kansas City Business Journal also was a profit center if they let the editors simply cover the business news honestly and without interference from them. So they opened business journals in a network of cities and created American City Business Journals.

 

Spitz, in a piece last week in the Wall Street Journal, closed with this: "Perhaps the industry's new leaders will have innovative ideas that will make it strong again, or maybe they'll discover that the business isn't as broken as everyone thinks and that readers are actually willing to pay for news that matters to their daily lives.

 

"I'd guess that we all got into this business for the same basic reason. We share a common belief that newspapers matter to our society and unite the communities we serve. Sometimes people buy companies because they want to do some good. Thomas Jefferson said 'an informed citizenry is at the heart of a dynamic democracy.' I think he was right."

 

The history of the Register, in fact, offers a profound irony for the apprehensions of the media establishment about what Bezos might have in mind for possibly bringing his viewpoint to the newspaper that covers, and presumably influences, Congress and presidents.

 

Santa Ana was the headquarters and the Register the flagship of a media chain named Freedom Newspapers, whose far-flung holdings were guided by the Hoiles Family, who sought to bring a libertarian viewpoint to the communities served by their newspapers.

 

As a young man working for United Press International, I had the opportunity in the early '70s to visit occasionally with Clarence Hoiles, the elderly publisher of what was then simply The Santa Ana Register and the overseer of the family's newspaper empire.

 

Clarence, one of the most gentlemanly, actually courtly, newspaper executives I dealt with, was the son of founder R C. Hoiles, who was once described by Time magazine as "the weird uncle Harold of the newspaper industry" for his views of how newspapers should operate, and seek to influence.

 

Both father and son wore on their sleeve the Libertarian philosophy that their newspapers were expected to evidence. That extended to the now-fabled requirement that when public schools were mentioned in the articles that were to appear in the newspapers, that phrase had to be changed to "government schools" (meaning they were tax supported) before the stories could be published in a Freedom newspaper.

Bezos has no such journalistic skeletons in the closet of the Washington Post so his actions will be viewed against the backdrop of a respected line of predecessors. But the key step that will be watched most closely should be his ability to return the Post to a path to profitability.

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