Saturday, August 25, 2007

San Francisco inundated with free dailies

Above are a number of newspapers I picked up while visiting San Francisco. They're all free. Which is great for readers but bad for publishers. San Francisco has got to be the nation's most saturated market when it comes to free newspapers, both daily and weekly.

Among the dailies, I count 9 titles: San Francisco Examiner, San Francisco City Star, San Francisco Daily, Palo Alto Daily News, San Mateo Daily Journal, San Mateo Daily News, Burlingame Daily News, East Bay Daily News and Redwood City Daily News.

And if that weren't enough, the region boasts several very readable alt-weeklies: SF Weekly, Bay Guardian, East Bay Express, Metro (San Jose) and The Bohemian. Plus a number of community weeklies too numerous to name even on a Web site.

MONEY IN TOILETS: There is more print media in the Bay Area than one can imagine. Perhaps it's due to the perceived weakness of the perennial paid dailies of the region, the Hearst-owned San Francisco Chronicle, MediaNews Group's San Jose Mercury News and Contra Costa (County) Times, and the New York Times' Santa Rosa Press Democrat. Each of those paid dailies have their strengths, but they're also boring: How do they match headlines in the free press such as "The City may throw millions into toilets" (SF Examiner, Aug. 23). And on that same day, when the Chronicle was writing about high school seniors passing exit exams, the SF Daily's headline was "Seniors having plenty of sex, survey shows," referring to those who graduated from high school many decades ago.

While all of these free papers are fun to read, obviously some aren't making money. Denver oil billionaire Phil Anschutz owns both the San Francisco Examiner and the City Star. It was the first place I headed when I arrived in town. It's right across from the bus station. The guard didn't let me past his podium, however.

EXAMINER CAN'T SURVIVE: But on the phone, an account executive told me the Examiner's circulation was 160,000 a day. I asked her how many pages, and she claimed the average page count was 60, though the three days I was there, it never got above 48. Still, assume it's 60. It would cost at least $9,000 a day to print that big of a paper (assuming newsprint at $610/ton), which comes to $2.9 million a year.

Assume the Examiner's payroll approaches $3 million a year (30 people at $100K including benefits), and the Examiner is at least a $5.9 million operation. With rent and other expenses, maybe $7 million.

So I take a rate card and go through a week of issues. Most of the pages are entirely editorial with no ads, or just house ads. On the 20 or so ads in every issue, assuming that the Examiner got top dollar on every ad, and assuming that every movie ad was paid (Anschutz is the nation's biggest movie theater owner), the Examiner generates perhaps $1.7 million a year in billings (and that's being generous).

I know Anschutz is rich, but how long will he put up with those kinds of losses?

Sadly, when you walk through residential areas, you see doorsteps with Examiners in plastic bags piled up -- unread. Piles of them. That's bad advertising for free papers. It says the paper is unwanted. It makes me think of the lawsuits the Examiner is facing in Washington and Baltimore from angry residents who don't want the free paper.

READER DEMAND: Unwanted is not the term you'd apply to the SF Daily, whose blue newsracks were empty by noon each day and their paper is stuffed with ads. It's no exaggeration to say that 70 percent of their column inches are advertising, and they have many more advertisers than the Examiner, which has been in San Francisco since the Civil War. Clearly the SF Daily is making money.

Publishers Dave Price and Jim Pavelich seem to have the touch when it comes to attracting readers and advertiser. You see people reading it in restaurants, shops and even people stopping by racks to grab a copy — perhaps because they don't have an internet edition.

But getting in touch with them proved to be impossible during my three-day visit. Here's what Amsterdam professor Piet Bakker found when he visited the SF Daily. And here's a local TV story about them.

The SF Daily had its share of hard news stories, but also things that made me laugh out loud like "Bullwinkle blamed for climate change" -- a story about how a moose belch would equal the greenhouse-gas output of a car going 20,800 miles. Or a horoscope that tells Aries readers: "If you drink, don't park. Accidents cause people." (Get it? It took me a minute!)

In the mid-1990s, Price and Pavelich started the Palo Alto Daily News, a paper about 30 miles south of San Francisco in a suburb best known for being the home of Stanford University. In the 10 years that they owned that paper, they started separate editions in San Mateo, Redwood City, Burlingame and Berkeley. They're now owned by MediaNews Group, which also owns a number of other Bay Area papers.

The battle of the free dailies in the Bay Area is just that -- a battle. We didn't even bring up the free weeklies, which were more interesting than alt-weeklies we've seen in other cities. It will be interesting to see who wins this battle of attrition.