Tuesday, July 31, 2007

Israel gets a second free daily

"Israeli," that country's first free daily, now has a competitor, "Israel Today," which is owned by one of men who started "Israeli." The new paper launched today with a circulation of 150,000 distributed at bus and train stations. The goal is to reach 300,000. (Jerusalem Post photo.)

Israel Today, or Israel Hayom, is owned by American casino billionaire Sheldon Adelson, who has close ties to former prime minister Binyamin Netanyahu, according to story in The Jerusalem Post, which explored the political aspects of the paper's ownership.

The 73-year-old Adelson (at left), who is No. 3 on Forbes list of richest Americans with a net worth of $20 billion, was partners with Shlomo Ben Tzvi of Hirsch Media in the country's first free daily, Israeli, which launched in January 2006. The partners got into a legal dispute and Adelson was barred from having any control over the operation of the Israeli. He then made an unsuccessful attempt to buy the paid Israeli paper Maariv. When that failed, he moved forward with his plans for Israel Today.

Israel Today won't be the last free daily that will open in that country. Read our July 2 item.

Friday, July 27, 2007

A look at The City Paper in Nashville

Albie Del Favero, publisher of The City Paper in Nashville, was candid when we asked him to discuss his free daily newspaper, saying it has been a struggle so far but that he's now making some progress. Free-Daily.com asked Del Favero the following questions:

Q: Your paper has been around since 2001, a competitor to the Tennessean — How is it going?

Del Favero: It's been a struggle since the very beginning and it's still a struggle, but we're beginning to make some progress. Part of our problem has been that we were started by and are now owned by two different individuals, neither of whom had any experience in the newspaper industry. We have also re-invented ourselves too many times and have never been consistent in the product that we deliver to either readers or advertisers.

Q: What can you tell me about sales in the past year?

Del Favero: We will probably close out 2007 flat or a little down against 2006. But that is more a result of internal problems and changes than it is a reflection on the acceptance of our product in the marketplace or the local economy.

Q: Is City Paper in the black?

Del Favero: No.

Q: How large is your staff? Please break it down by editorial, sales, circulation, production, etc.

Del Favero: Just under 40, counting sports stringers. We have 18 in edit, 5 in production, 3 in classified sales, and 7 in display sales, 1.5 in circulation and four in admin, including IT. We have several open positions in sales.

Q: What is your average daily page count?

Del Favero: We publish 24 pages Monday through Thursday and either 32 or 40 on Friday, which is our big real estate day.

Q: How do you distribute your product (by hand, thrown on driveways, placed in stores, work places, etc.)?

Del Favero: Place-based, primarily in office buildings, retailers and street boxes.

Q: Who is your target audience?

Del Favero: We are a general-interest newspaper, targeted primarily to well-educated adults aged 25-54 in our core county and contiguous suburbs.

Q: Since you started, what surprised you the most?

Del Favero: How little attention large retailers pay us, despite the declining reach and penetration of the Tennessean.

Q: Some critics of free dailies say they don't have the quality journalism you could find in paid dailies. What do you say to that?

Del Favero: I would say that you can't paint free dailies with a broad brush. Ask just about anyone in Nashville, particularly the movers and shakers in the community, and they'll tell you we do an infinitely better job of covering our local community, both in quality and quantity, than the Tennessean does.

Q: For publishers elsewhere in the United States, what have you learned that might help them put out a better or more profitable newspaper?

Del Favero: Since I'm not yet putting out a profitable paper, I'm not sure I'm qualified to dish out advice. But I would say that the key is that every market is different — I'm not sure there's a formula for free dailies, particularly in markets the size of Nashville and smaller, like there is for alt-weeklies or community newspapers. You've got to look for holes in the market, be able to zig when your primary competitors zag.

Here are some other profiles Free-Daily.com has done on start-up dailies:

Some sources aren't reliable

COMMENTARY: One of my purposes with this blog is to relay articles that have been written about the free daily industry. But it's hard to recommend some news sources that repeatedly make mistakes.

Take MediaLifeMagazine.com. Today it has posted an article about the free daily in Bluffton, S.C.

I was excited to read about it. Then, in the third paragraph, my reading was halted by a glaring error: The article said free dailies are popping up in places such as Bluffton and "Eureka, Ore."?

I know of one in Eureka, California — but Oregon? Wait a minute! There is no Eureka, Oregon. But here's a link to a August 13, 2006 San Francisco Chronicle story about a newspaper war Eureka, California between the free Eureka Reporter and the paid Times-Standard.

We all make mistakes. But this is the third big blooper I've seen in MediaLife when it comes to free dailies.

On June 20, 2006, MediaLife made the ludicrous claim that Metro International brought the concept of free dailies to the United States in 2000. More than a dozen free dailies were already in existence when Metro arrived in the U.S. Here's a link to the history.

On June 11, 2007, MediaLife reported that billionaire oilman Phil Anschutz was going to expand his Examiner chain into Los Angeles this fall. Nearly two months later, and there's been no such announcement from the Examiner. In fact, we have learned from our sources that the Examiner is not expanding into any market.

On one hand, I want to post links to the latest news about our industry. On the other, I don't want to spread incorrect information. I encourage MediaLife to check its facts more carefully in the future.

UPDATE (AUGUST 12) MediaLife has corrected its article on small town free dailies, changing the word Oregon to California in two instances.

Thursday, July 26, 2007

Danish TV executive named Metro CEO

Metro International, publisher of 70 free dailies worldwide, has hired as its new chief executive Per Mikael Jensen, who currently heads Denmark's government-owned broadcasting service, a $355-million-a-year-enterprise. Perhaps more significantly, Jensen was previously Metro's Global Editor-in-Chief. (Jensen is pictured here, screen shot from Denmark's TV2.)

"I am thrilled to re-join Metro International, which I believe is one of the most interesting media companies there is," Jensen says in a press release. "Metro is a young company, with many young and talented employees and strong positions in a number of large advertising markets. It has significant potential to further develop its position."

He replaces Pelle Törnberg, who is scheduled to leave Metro on July 31. Metro International's Chief Operating Officer Chris Spalding will act as interim CEO and Dennis Malamatinas will assume the role of Executive Chairman until Jensen takes over on Nov. 1. The reason for the delay in the transition wasn't immediately known.

Monday, July 23, 2007

Metro International loses ground

Metro International, publisher of 70 free dailies worldwide, is in a nosedive as it looks for a new CEO to replace Pelle Törnberg (left), who announced Feb. 13 that he would be stepping down. Word is that a new CEO will be named within days. Good thing, too, since Metro's second-quarter financials (released today) are a disaster.
    • Metro reported a profit of $900,000 in the second quarter, compared to $4.6 million in the same quarter last year. Sales rose, but expenses are growing much faster.

    • The company's three U.S. papers still haven't made money. In fact, they're headed in the opposite direction. In the second quarter, Metro U.S. lost $2.07 million, up 92 percent from the $1.08 million loss reported in the same period last year. U.S. revenues grew by 12.6 percent, from $8.6 million in Q2 2006 to $9.7 in Q2 2007. But that 12.6 percent increase, while good compared to the rest of the U.S. newspaper industry, is not nearly enough to cover soaring costs. None of these papers are start-ups in their early fledgling years. Philadelphia is seven years old, Boston six and New York three. They should be making money by now. Since they're not, management should either shut them down or make radical changes.

    • Even in Sweden, where Metro started, profits are down — from $5.5 million in Q2 2006 to $3.9 million in Q2 2007.

    • In Spain and France, where other free dailies have taken off, Metro is getting pounded to the point that margins are at 3 percent.

    • How much money can Metro lose? On page 12 of today's report management reveals that they used another $10 million on the company's $90 million line of credit from Sweden's Nordea Bank. The total draw is now $57 million.
Whether the rest of the free daily industry likes it or not, Metro International is the leader in our sector. So it's disappointing to see these results. They create a ripple effect -- ripples that turn into waves for others.

We can just imagine what the guys at Dagsbrun, the Icelandic phone company, are saying to themselves. They're the guys funding the Russel Pergament's BostonNOW. Pergament wants to launch similar NOWs in other U.S. cities with their money. They're probably saying, "Wow! $57 million? What are we getting ourselves into?"

Billionaire oilman Phil Anschutz may have figured out the same thing awhile back. He was supposed to fund 70 free dailies across the country (if you believed the hype), yet he stopped at No. 3 in Baltimore in early 2006. Anschutz has money to burn ($7 billion at last count), but he's nobody's fool.

We're bullish on the future of free dailies but the future probably isn't these corporate, top-down, one-size-fits-all papers. Pergament has a good feel for Boston, where he has worked for many years, but would he give Fort Worth, Texas, or Columbus, Ohio, a paper residents would embrace? That's what's tricky about this business. It's a local business.

And that's good. The cost of starting a daily newspaper has never been cheaper. Yes, it takes millions, but not hundreds of millions. This would open the door for some truly local players to get into the newspaper business and start eating away at ad dollars now going to paid dailies.

As for Metro, a lot depends on who will become its next CEO. The tone he or she strikes from the first day will be crucial.

Wednesday, July 18, 2007

Editor opens free daily in N. Carolina

Fayetteville, N.C. is home to the nation's newest free daily, SmartNews. The editor and publisher of this new daily is Randy Foster, a newsman with more than 20 years of experience including six years at Fayetteville's paid daily, the Observer, where he was metro editor for a year and news editor for five years.

SmartNews has been printing four days a week for six weeks now with a daily press run of 8,000. Foster says the paper has about 200 delivery points, including more than 100 rack locations. "We have another 140 racks still in the box that we are finding locations for," he says.

Free-Daily.com asked Foster the following questions:

Q: Why did you leave the Fayetteville Observer?

I had grown frustrated working for other owners in environments that claimed to nurture and encourage innovation and initiative but really placed roadblocks at every turn. I'd worked for corporate-owned papers and privately owned papers, and found they are all basically the same. I am 47 and have held every job at newspapers but one: publisher. I've also consulted for other papers to help them look better, read better and be more efficient. Almost every paper I have worked for or with became General Excellence papers. Papers where I was the senior editor have all grown in circulation. I thought it was time that I put what I know to work for myself.

Q: SmartNews has been operating for [more than] a month now -- how is it going?

It has been an exciting experience. A day does not go by where we cannot observe significant, measurable growth. That's easy to say since we started from nothing. It started with just me and a friend I hired to help me establish the distribution infrastructure. Today we have 11 people working full-time, a paid intern and another 12 distributors working as independent contractors. We distribute 8,000 copies — hawked, home-delivered in different neighborhoods each day, and racks — four days a week.

On our first day, we had six people (friends, relatives and employees) and four of our five sons out trying to deliver 15,000
copies. Another six people we hired for distribution didn't show up (getting distributors to show up for the job has been surprisingly hard). We scaled back on distribution to better reflect our resources, and 8,000 copies, four days a week, has become a comfortable zone. My goal is to get back to 15,000 a day and add a Saturday edition sometime in the next six months, as we continue to grow our advertising base and our distribution force.

The paper is 16 full-color pages, tabloid. Content is a combination of staff and contributed local information and Associated Press.

Q: Who owns SmartNews (and please name names) and identify any other media outlets they may own?

Sarah and Randy Foster own SmartNews. Sarah has no newspaper experience but has written for a magazine as a technology columnist. She has a psychology degree from UNC Chapel Hill and was most recently a special education teacher. All of that is surprisingly helpful. She runs the business and advertising sides of the newspaper. I run the news, Web site and distribution sides.

Q: What has been the response from advertisers?

The first day I went out to pre-sell advertising, I sold ads to three of the first four places I visited. I figured that was a good sign. The going was harder after that, especially since I had to turn my attention to making all the other arrangements necessary to starting a newspaper from scratch (and believe me, there are was a lot to do).

We went into a dry spell the first few weeks of publication, although advertisers welcomed us and said they were happy to have an alternative. But summer is a bad time to start a paper in some ways. A lot of decision makers are out of the office, and budgets have been written in stone. A lot of our advertisers are spending unbudgeted money to be in our paper.

The bright side is that things are improving by the day and will continue to improve as we head into the holiday season.

Q: How large is your staff? Please break it down by editorial, sales, circ, etc.

    • Editorial: 2 editors (plus two correspondents, a paid intern and three stringers)

    • Sales: 4

    • Circulation: 2 (plus 16 independent distributors)
Q: In the month since you started, what has surprised you the most?

1. How hard it is to get people to do what they say they're going to do. We have had about 20 people who we hired for distributor jobs who never showed up, for example. We have a verbal commitment for a weekly full-page ad but have not been able to meet up to sign the contract and get the check. It seems every step of the way there have been dropped balls. It took me weeks just to find someone to bid on our printing, and then another two weeks to get the bids.

2. How thirsty people are for an interesting newspaper. I've been in the business a long time and have read about and written about the gloom and doom predictions for the newspaper industry. And working for dailies, I could see why people wouldn't want to pay for them. As an editor, most of the stories I read I only did so because I was paid for it. They're dull, irrelevant, arrogant, inaccessible — even among papers that say they are trying to change all that. The mantra these days is "local, local, local", but I think "interesting, interesting, interesting" is even better. We're aiming for interesting and local. And it is working. SmartNews is an easy sell. People who have read us come back for more — eagerly. So what surprises me is that newsprint is not dead; dull newspapers are.

Q: A lot of journalists reading this probably want to start their own free dailies, but haven't summoned the courage to do so. What would you tell them?

1. It's expensive. Even with a small staff, our expenses are running at about $12,000 a week, and that's without paying ourselves. So you need to make sure you have your finances ready. We're fortunate because our expenses could have been a lot higher. I didn't need to hire a design editor, or a copy editor, or a wire editor, or a photographer or even a reporter, because I could do it all myself as we get ourselves established.

2. Listen to advice, but go with your gut. No one person has all the answers, so get ideas from a lot of sources. But you're the one who has to sort it out and make the decisions.

3. Smile at the nay-sayers. No one is more resistant to innovation and entrepreneurism than your colleagues in the newsroom. Think of them all as devils advocates. Take their advice seriously, except when they say it will never work.

4. Associated Press has a lot of really good stuff. It's a great way to affordably jumpstart the content of your paper. You just have to be selective.

Q: Some critics of free dailies say they don't have the quality journalism you could find in paid dailies. What do you say to that?

My paper has less quantity, but more quality. We've scooped the paid daily and the alt weekly a few times already. In two cases, they're stories the big daily wouldn't touch because of its own baggage. A university chancellor resigned and we interviewed her; the paid daily never even tried. A TV series was based on a book by a former local reporter and we interviewed her; the paid daily never tried.

"Quality not quantity" is reflected in how I staff the paper. I pay premium wages, and I mean premium. I'd rather have a few great people than a roomful of people who don't know how to excel.

Here are some other profiles Free-Daily.com has done on start-up dailies:

Tuesday, July 17, 2007

Publisher replaced at amNewYork

Christopher Barnes is out as publisher of Tribune Co.'s amNewYork after 11 months on the job, and the company isn't commenting on his departure. A spokeswoman quoted in Newsday, a sister paper, said it was unclear whether Barnes would remain with the company. Replacing him is Terry Jimenez, Newsday's chief financial officer. Jimenez will keep the CFO position while assmuing the mantle of amNewYork. Before joining Newsday in 2005, Jimenez held positions at the Chicago Tribune and the McDonald's Corp. The changes were made Monday. Barnes replaced Russel Pergament, who has since returned to his old stomping grounds in Boston to form BostonNOW. (Photo from journalism.co.uk.)

Friday, July 13, 2007

Many large media markets lack free dailies

Four of the nation's top 10 metropolitan areas don't have a free daily. Yet New York and Boston each have two. And San Francisco and Washington each have three.

The growth of free dailies in the United States hasn't been predictable or logical. At least that's what we found when we took a list of the country's top 50 metro areas and looked at which ones have free dailies. Here's what we found.
    1. New York has two, Tribune Co.'s amNewYork and Metro New York. It's believed that am makes money, Metro doesn't. (This analysis doesn't include Spanish-language dailies or trade publication dailies, like Daily Variety or Women's Wear Daily.)

    2. Los Angeles has zero. The suburb of Santa Monica has one. The Orange County Register has launched a tabloid paper called the OC Post, but it's paid. Some have suggested the OC Post would thrive if it were free. Rumors that billionaire oilman Phil Anschutz would expand his Examiner chain to L.A. appear to be wrong (see separate item).

    3. Chicago has one, the RedEye (one word), owned by the Chicago Tribune. It's profitable and just launched a weekend home-delivered edition. The RedEye appears to be picking up the young readers the Chicago Tribune has lost. And it seems to be an effective way of reducing the circulation of the rival Sun-Times, a paid tabloid that often is sold side-by-side the free RedEye.

    4. Philadelphia has one, Metro. This appears to be the most successful of the three Metros in the U.S. (Boston and NY being the other two locations) and it is said to be close to making a profit. When Metro started in 2000, it obtained an exclusive contract to distribute on train station platforms with a local transit agency. Both the Philadelphia Inquirer and New York Times sued, saying a government agency can't sell distribution rights on its property. Metro won, but it was a hollow victory. Metro soon discovered that the people riding public transit weren't the desirable demographics ad agencies wanted to reach. When the contract expired, Metro did not want to renew, and nobody else took their place.

    5. Dallas-Fort Worth -- one free daily, Quick, owned by the Dallas Morning News. The Belo-owned Morning News used Quick to fight off a startup called the American Journal, which disappeared less than a year after it started. Quick has blossomed since then into daily that, like RedEye, is catching younger readers who aren't reading traditional paid papers.

    6. Miami-Fort Lauderdale -- none. Maybe one reason is that Miami and Dade County have become increasingly Spanish speaking, but Broward County (Ft. Lauderdale) certainly has enough English-speaking potential readers.

    7. Washington -- three. The newest is The Politico, which was launched earlier this year by the Albritton family, owner of the town's ABC affiliate and the defunct Washington Star. Anschutz has an Examiner there, with a number of conservative commentators, who apparently are trying to compete with the paid Washington Times for that segment of the market. Washington's biggest and most successful free daily is the Express, which was launched by the Washington Post out of fears that Metro would be coming to town.

    8. Houston -- nada.

    9. Atlanta -- nope.

    10. Detroit -- zip.

    11. Boston -- two. Metro and the new BostonNOW, owned by an Icelandic phone company that plans to launch 10-12 free dailies across the U.S.

    12. San Francisco -- three. The Examiner, the San Francisco Daily and The City Star. This could be the most saturated media market in the country. It's also home to three alternative weeklies, several community weeklies, a handful of glossy city magazines and Web sites of every stripe. Six more free dailies operate in the suburbs, giving the Bay Area a total of nine — the most of any market in the country and maybe the world.
No free dailies in markets 13 (Riverside-San Bernaardino-Ontario, CA), 14 (Phoenix), 15 (Seattle), 16 (Minneapolis-St. Paul), 17 (San Diego) or 18 (St. Louis).
    19. Baltimore — one. An Anschutz Examiner. Rumors that the incumbent Baltimore Sun is planning one too.

    20. Tampa-St. Petersburg — one, the "tbt*" which is owned by the St. Petersburg Times (which, in turn, is owned by the Poynter Institute) and is targeting the 18-34 audience. It may also have an impact on the rival Tampa Tribune (owned by Media General) like the Chicago RedEye has had on the Sun-Times.

    21. Pittsburgh -- one. A suburban paper, the Greensburg Tribune-Review, is delivering a free afternoon daily (called Trib p.m.) to selected Zip codes in steeltown. (See our May 13 item on this paper.

    22. Denver -- one, the Denver Daily News, an independent.
No free dailies in markets 23 (Cleveland), 24 (CIncinnati), 25 (Portland), 26 (Sacramento), 27 (Kansas City), 28 (San Antonio), 29 (Orlando), 30 (San Jose, CA), 21 (Columbus, OH)
    32. Virginia Beach-Norfolk-Newport News, VA -- one, Link, a youth oriented free daily owned by The Virginian-Pilot in Norfolk last year (See our May 5 item on Link.
No free dailies in markets 33 (Providence, RI), 34 (Indianapolis), 35 (Las Vegas), 36 (Milwaukee), 37 (Charlotte, NC) or 38 (Austin, TX), 39.
    39. Nashville -- one, The City Paper, independent.
No free dailies in market No. 40 (New Orleans), 41 (Memphis), 42 (Jacksonville), 43 (Louisville), 44 (Hartford), 45 (Buffalo, NY), 46 (Richmond, VA), 47 (Oklahoma City), 48 (Birmingham, AL), 49 (Rochester, NY) or 50 (Salt Lake City).

While some markets probably have too many free dailies (San Francisco, Washington, Boston) most of the Top 50 cities don't have any. As paid papers crumble, the opportunities in these unserved markets look more attractive.

(If you see any errors in this report, please e-mail me at free-daily@hotmail.com.)

Thursday, July 12, 2007

Examiner chain has no expansion plans

When billionaire oilman Phil Anschutz bought the struggling San Francisco Examiner in 2004, his people let it be known that he was going into the free daily business in a big way. They let it leak that Anschutz's Clarity Media had registered the name "Examiner" in some 70 markets, prompting speculation that he would start free tabloids in those cities. A year later he started the Washington Examiner and in early 2006 launched the Baltimore Examiner.

Since then the Anschutz team has said little about expansion into other markets. But the story behind-the-scenes is that Anschutz put the rollout of new dailies on hold while he extricated himself from a legal morass involving a Denver telephone company he founded, Qwest.

The reprieve gave Clarity's management time to show that their concept of a free daily could make money. But now that Anschutz is out of the woods on the Qwest front, his newspapers are still losing money. As a result, we're told that no expansions are planned in Los Angeles (contrary to a June 11 report by the Web site MediaLife) or any other markets.

Apparently things aren't so bad that he's ready to pull the plug, but we're told "the clock is ticking." Anschutz isn't afraid to cut his losses. Ever hear the story about Anschutz's son-in-law who used the billionaire's money to fund a business-news radio station in Denver? The station never made money. One day Anschutz had enough of the losses. He walked into the station in the middle of the day, ordered that the power be cut, and then final paychecks were handed out to the staff as they filed out of the darkened building.

Monday, July 02, 2007

Israel will soon have four free dailies

After years of declining readership and closures, it appears the newspaper business in Israel is changing. Haaretz.com's Sami Peretz says four free dailies will soon be operating in Israel — there's the "Israeli," owned by Shlomo Ben-Tzvi's and American billionaire Sheldon Adelson. It is circulated at gas stations and train depots. The two partners have had a falling out, and Adelson is starting a second free daily, called "Israel Today" or "Yisrael Hayom," which will go to mail boxes. And there will soon be two new papers from Arnon Mozes and the David Weissman-Eli Azur team that will be passed out at various point of sale, such as supermarkets.

Peretz writes:
    For journalists, this is wonderful. After years of cutbacks, we finally are receiving offers, and alternative employment opportunities are popping up - and that is good.

    As for publishers, this is all a big headache. They will now be exposed to serious salary demands, and will be forced to invest resources in improving and upgrading their products in order to adapt to the changing market.

    But all this is only in the short run.

    In the long run, there are still a lot of questions hovering around the newspaper business. It is hard to imagine that today's newspapers will keep their readership while the new freebies manage to flourish.

    The significance is that after a bloody one- to three-year fight, we will once again see the newspaper business shrink - in terms of both the number of papers and jobs for journalists.

    Only the best and the brightest - and the strong - will survive, because that is how it is in free-market capitalism. There may be free papers, but there are no free lunches.