Why would this free daily succeed?

COMMENTARY
The San Francisco Bay Area has become the most saturated place in the country for free dailies. But that hasn't stopped another one from starting. Today, the Palo Alto Daily Post began publishing, becoming that city's second free daily. It's the third paper in that town of 60,000 people if you include a weekly paper. And it doesn't have a website or an online, multi-platform strategy. Yikes!

At this point, you'd think the Palo Alto Daily Post would have two strikes against it -- a lot of competition and no desire to go online.

On the other hand, I can think of three reasons why the smart money would bet on the success of this paper:

1. The Post's publishers are entering a market already accustomed to the free daily concept.

2. This paper has figured out that the Internet doesn't help them. Think of all the readership printed newspapers have lost because they put their stories online. People now know that if they want to read a scoop, they should go online. But online advertising isn't working out for newspapers. Nobody is able to fund the costs of newsgathering with an online edition. Maybe the Post guys have figured that out.

3. And the Post guys are none other than Dave Price and Jim Pavelich, who have started several profitable free daily newspapers over the years in Colorado and California. They know what they're doing.

Oh, and one more thing. They know Palo Alto. They started the Palo Alto Daily News in 1995, which became arguably the most successful community free daily in the nation ("community" as distinguished from "commuter"). Under their aegis, the paper added editions in a number of surrounding cities. And they sold the paper in 2005 for $25 million, according to the following article in the New York Sun headlined "Heresy in Silicon Valley: Traditional Newspaper Launches." Here are a few excerpts:

In another act of brazen heresy against the prevailing dot-com culture here, the Palo Alto Daily Post, which published its first issue yesterday, has no Web site. At a time when most newspaper owners are looking to the Internet to revive their struggling industry, the new paper's owners, James Pavelich and David Price, brusquely dismiss the need for an online presence.

"We're a newspaper," Mr. Pavelich said in an interview yesterday as he returned from shuttling his inaugural edition to newsboxes around town. "The Internet is a form of broadcast to me. We're not broadcasters. We just don't have the time to run two businesses."

... Earlier this year, the Daily News moved its offices out of Palo Alto, to neighboring Menlo Park. Messrs. Pavelich and Price swooped in, tweaking the competition by renting space in the same building it just vacated. "It was kind of comical to us and we jumped at it," Mr. Pavelich said.

Executives at the Daily News did not return calls seeking comment.

... The Daily Post's inaugural issue featured articles about city volunteers quitting over mandatory fingerprinting and a physician facing charges for prescribing medicine over the Internet to a Stanford student who committed suicide. At 28 pages, the paper is just a tad thinner than the gaunt metropolitan dailies from San Francisco and San Jose.

Alan Mutter took a decidedly negative tone about what he described as a newspaper war brewing in Silicon Valley:

While Palo Alto is an economically and demographically succulent market where real estate prices continue to climb even to this day, the upscale community hardly seems like a place where multiple, profitable free newspapers would be likely to thrive.

Mutter goes on to say that, in his opinion, Palo Alto isn't a good place for free newspapers and that the subway terminals that Metro attempts to dominate are far better vehicles.

OK, in a year or two we will see who is right. In his interview with the New York Sun, Dave Price points out that when he started the Palo Alto Daily News in 1995 "we had a number of people who were supposedly experts in the newspaper industry saying we wouldn't last six months ... We proved them wrong. Not only was the paper a success in a business sense, it won a tremendous number of awards."

Cablevision empire adds amNewYork

The profitable, 300,000-plus free daily amNew York will be sold, along with its parent Newsday, to Cablevision for $650 million in a bid that has critics howling. They say Cablevision overpaid and they question whether profits from Newsday will even cover the debt service for $650 million. Newsday had profits of $90 million last year, which means Cablevision is willing to pay 6.5 to 7 times cash flow.

What this means to amNewYork is anybody's guess. There has been little media coverage about that part of the deal. It's hard to imagine amNewYork being sold off since it depends greatly on Newsday for content and ads. But if Cablevision overpaid, cutbacks will certainly follow at the newspapers which could hobble amNewYork at a stage when it is becoming a force in New York media.

Examiner cuts back on home delivery days

The Examiner announced Thursday that it only deliver papers to homes two days a week in its three markets, San Francisco, Baltimore and Washington, D.C.

The Examiner is also moving its "weekend edition" from Saturday to Sunday starting July 13.

As a result, the Examiner will no longer be distributed to homes or businesses on Mondays, Tuesdays, Wednesdays, Fridays or Saturdays. On those days, the paper will only be available in news racks and stores.

The move will likely reduce complaints about unwanted Examiners being thrown on driveways and doorsteps.

Like other newspapers that have reduced the number of days they publish, the Examiner is emphasizing that its web site will be beefed up.

It wasn't immediately known why billionaire oilman Phil Anschutz would trim the sales of his newspapers. With oil at $122 a barrel, gas at $4 a gallon and movie tickets at $9.50 (he's the nation's largest owner of cinemas), it's hard to imagine him noticing that his newspapers were losing money.

But there is a famous story about Anschutz's aversion to losing money. He set up his son-in-law, Tim Brown, with an AM radio station in Denver in 2002. The 10,000-watt station lost money, which reportedly angered Anschutz. One day in 2004, Anschutz walked into the station and ordered that the power be cut immediately. He shut down the station on the spot. As employees walked out of the darkened building, they were handed their final checks. His son-in-law was quoted in the Denver Post as saying it was the hardest day of his life.

RedEye weekend edition hits 100,000 mark

RedEye, the Chicago Tribune's free daily, is reporting that its year-old weekend edition now has 100,000 opt-in subscribers.

The news comes as the latest figures from the Audit Bureau of Circulations show that the Tribune's daily circulation had fallen 4.4 percent in the past six months to 541,663 and its Sunday edition had dropped 4.6 percent to 898,703. The growth in RedEye's readership has more than exceeded the Tribune's losses during the period.

The Monday-Friday RedEye edition has a circulation of about 200,000. But with an estimated pass-along rate of 1:4, RedEye says its readership is about 800,000. In fact, a Gallup survey commissioned by RedEye says its readership grew 17 percent over the previous year.

The weekend edition is distributed free to readers who sign up, or "opt-in," for delivery. Unlike the Examiner chain, which indiscriminately throws its papers on doorsteps and driveways in San Francisco, Washington and Baltimore, the weekend RedEye only goes to where it is wanted. Not surprisingly, advertisers like this approach.

"RedEye Weekend has been embraced by readers and provides Best Buy with a unique way to reach engaged consumers with an advertising message aimed at showing customers 'why Best Buy this week,'" Marsha Lawrence, senior strategist at Best Buy, said in a press release from RedEye announcing the 100,000 milestone.

The release quotes RedEye GM Brad Moore as saying, "We've developed a loyal following with our readers and getting 100,000
of them to sign up for a home-delivered weekend edition further validates it. ... We're excited about the opportunity this provides for advertisers looking to target them at the Zip code level."

RedEye says that several features developed for its weekend edition have developed a strong following in the past year including the Weekend Playlist, Deja View, Pop Picks and a fashion column by Clinton Kelly (from TLC's "What Not to Wear").

"RedEye is for Chicagoans who value their time as much as the news and information that helps them lead socially active lives, so we couldn't just leave them hanging without their fix on the weekend," said Tran Ha, editor of RedEye's weekend edition.

Cards urge fines for unwanted papers

The Examiner is stirring up trouble again with its practice of throwing newspapers on the doorsteps or driveways where it is not wanted.

This time, an unknown person in San Francisco is attaching cards to Examiners that say "The SF Examiner is TRASHING OUR CITY." A resident who agrees can sign the card and mail it to City Hall, according to the website SFist.

The cards began appearing soon after San Francisco Supervisor Ross Mirkarimi, one of 11 members of the city's legislative branch, proposed fines for newspapers that deliver to homes where residents have requested that the paper stop delivery. His legislation is expected to come before the Board of Supervisors in June.

Examiner Publisher John Wilcox claims that his paper will stop delivery if requested, but the "comments" section of the SFist posting suggests otherwise. A sample:

"These things are flung helter skelter all over the sidewalks, no delivery person is paying attention to addresses."

"As you call and send those forms, also remember that the Examiner is owned by a rich, right-wing nut."

"email them. that worked for us and our whole block now hasn't received it for over a year. make sure to include in the email your not interested to read such incompetent journal first thing in the morning IN A PLASTIC BAG."

"I have emailed and called them. Neither works."

"I like them on the sidewalk. They give me a near lifetime supply of dog s--- bags."

This isn't the first time the Examiner's delivery method has caused trouble. Residents in the suburbs of Washington, D.C. are upset and those around Baltimore convinced a state legislator to introduce a bill that would fine publishers who deliver unwanted papers. The legislator withdrew her bill when the Examiner and other papers promised to clean up their act.