E.W. Scripps held their earnings call on November 8. It was the first full quarter since Scripps implemented a paywall for its newspaper portfolio.
Across our footprint, we have about 550,000 home delivery subscribers. And so our approach is to cement our relationship with those folks and provide more value and then also receive value in exchange for that from that 550,000. So if we can increase the amount of revenue coming from that 550,000, that's an important piece of this whole strategy. And although it's not necessarily being realized right now, but if you can get an extra $0.50 a week or $1 a week from that group, that's a pretty substantial increase in the revenue stream. The digital-only right now at 20,000, that -- we look at that as how good of a job are we doing penetrating the nonsubscribers in our addressable markets. If we have 550,000 home delivery subscribers, the folks who are not subscribing number about 1.5 million. And so the 20,000 is a small but important and growing number against that 1.5 million.
So the opportunity for us is to ramp up that digital-only offering. Now that's going to require a lot better job on the consumer marketing front, engaging in digital marketing, being much more sophisticated in the way that we look at analytics and data to help us target likely subscribers on our digital products and really start to drive that number, where the marginal cost of delivery, once you have those folks is very, very low. So that's an important piece of the whole strategy and really something that we're focused on. So we're encouraged at the 20,000 level. We're -- and that's growing. And the activation rates of home delivery subscribers is the other number that's important. The higher the number of activations, the bigger the number of folks that are engaging with us, the more likely they are to then renew at higher rates. And that's the causal relationship and logical sequence there.
Let's put the 20,000 digital-only subscribers in perspective. It's 1.3% of the number of nonsubscribers identified above in Scripps markets.
San Angelo's Standard Times subscribers were 3% of Scripps total subscribers in 2012. That would correspond to 600 new digital-only subscribers at $14.99 per month or $108,000 per year.
How many regular readers chose not to pay for access to content and essentially went away? Those numbers were not shared in the call. Any drop in eyeballs should impact digital advertising revenue:
Digital advertising provided approximately 7% of our newspaper segment operating revenues in 2012.Consider the Standard Times' subscription rates when I moved to San Angelo in the mid 1990's.
1996 - 32,000 Daily paid, 39,000 Sunday
2000 - 29,000 Daily paid, 35,000 Sunday
2008 - 24,000 Daily paid, 28,000 Sunday
2012 - 18,000 Daily paid, 22,000 Sunday
While San Angelo's population grew, the Standard Times subscriber base shrunk by 44%. The drop for Scripps as a whole was a more precipitous 54% for Daily circulation. It fell from 1.4 million in 1996 to 580,000 in 2012.
In the earnings call Scripps stated the newspaper division had 550,000 subscribers. That means 30,000 net people dropped their paid relationship with Scripps the first nine months of the year. Adding 20,000 digital only subscribers didn't come close to keeping Scripps' total subscribers level.
There was another oddity in the earnings call. Scripps management can't wait for the 2014 & 2016 political seasons to unfold. It seems political ads are profit rocket fuel for a media company. Scripps becomes a profitable company in election years. That might explain the wide berth given America's abysmal political leadership.
The paywall numbers are unimpressive. I find it hard to believe this is the strategy that will return newspapers to their heyday.
Update 11-30-13: The Standard Times has a new city editor and watchdog journalism advocate. Can the watchdog report on the hand that feeds it?