Friday, October 10, 2008

An overlooked baron of free dailies

Reports about the free daily newspaper industry usually overlook one of its most successful publishers, David Black of Victoria, British Columbia (not related to Canadian-born British former media mogul Conrad Black).

One reason is geography — the financial media and those who cover newspapers are on the East Coast while Black's empire is in western Canada. Another reason is that his company, Black Press, is privately held, so it doesn't furnish quarterly earnings reports, which would put the company on the radar screen of those who cover the newspaper industry.

But do some digging and you'll find Black Press owns 170 newspapers in British Columbia, Alberta, Saskatchewan, Manitoba, Washington, Oregon, Hawaii and Ohio. They include the Akron Beacon Journal and Honolulu Star-Bulletin. But the majority of his publications are small, profitable community newspapers.

Black's newspapers have state-of-the-art websites, but he's making money with print.

"I'm bullish on newspapers, especially community newspapers,'' Black told Bloomberg News. "I think they are a really solid business.''

Most of Black's community papers are weeklies, but he has two interesting free daily operations:
    • the 10,600-circulation Kitsap Free Daily serving Kitsap County on Puget Sound, west of Seattle. Black owns six weeklies in the same area, and their sales reps are able to cross sell between the daily and weekly publications. The group shares the same printing press, back office operations, news reporters, etc., making the arrangement cost effective.

    • and a 81,900-circulation group of 17 free dailies in British Columbia. The average circulation is 4,818 with the largest being the Victoria and Nanaimo editions at 10,000 each. Black has stayed out of Vancouver, where two free dailies (Metro and 24 hours) operate, and instead has concentrated on the suburbs and small towns. It's a far flung group, too, with 200 miles between the westernmost paper, in Comox, and the easternmost, in Kelowna.
Most of the stories in the 17 papers are the same except for a few local reports. However, the zoning allows each community to have its own nameplate and gives local advertisers the ability to just advertise in one edition if they choose (see rate card). Similar to the situation in Kitsap, Black owns weeklies in the towns where he has free dailies, so advertisers in the weeklies are often upsold into the free daily. Because of this arrangement, Black was able to say that the papers were immediately profitable soon after he started them in 2005.

Black told the Globe & Mail newspaper in 2005 that the key to making these newspapers succeed is keeping costs low and distributing them efficiently, where people gather. His free dailies also challenge the notion that free dailies can only survive in large cities with mass transit systems.

To read more about David Black, see this profile by the Seattle Weekly in July. The photo of Black is from the Seattle Times.