Tuesday, August 06, 2013

Scripps Earnings Call & Standard Times Paywall

E.W. Scripps released earnings on Monday.  Their conference call had several interesting revelations regarding their newspaper division, which includes The Standard Times.   Here's the state of the newspaper division:

Subscription revenue decreased 1.9 percent to $28.1 million. During the quarter, Scripps launched bundled digital and print subscriptions in 11 of its 13 markets.  More than 20 percent of subscribers established their digital accounts with full access to content on their smartphones, desktops and tablets. The rollout was late in the quarter and therefore did not impact second-quarter subscription revenue. 

The second quarter includes April, May and June.  Rather than late in the quarter an executive revealed the roll-out happened early, with most papers doing so in April and May.  The Standard Times implemented its surprise roll-out pay-wall May 1.  Also embedded in this strategy is a price increase.  Newspaper executives refused to give an average price increase to an analyst.  

Newsprint expense decreased 13.7 percent, due to lower volume and lower price.

Under questioning Scripps executives revealed 7% or half the decline came from lower volume, while the other half came from cheaper newsprint prices.   The 7% volume decline could be due to skinnier papers or fewer subscribers.  Executives said they currently have 550,000 customers with home delivery.  That represents 35% of households in those newspaper markets,  Executives said 65% of households have no relationship with Scripps, at least not a paying one.  

Scripps is "hiring and developing digital-only sales people, streamlining the digital sales process, and creating digital content." 

Executives said they plan to add 100 digital sales people, which they expect to be very aggressive in pushing Scripps content (70%) and other organization's content (30%).  They plan to add digital sales and sales management people in many newspaper markets.

Interestingly, political campaigns and health care providers/insurance companies provide profitable ads for Scripps TV and newspaper properties.  Those have been down in 2013.  Scripps counts on healthcare/insurance turning around this year and political ads being a bonanza in 2014.  

Scripps does not want to cut sizable expenses on the newspaper side.  If that became necessary, they would reduce distribution frequency.  Currently, they believe it's important to continue home delivery and publish papers seven days a week.  Their clear expectation is their new paywall with enhanced digital content will stop the hemorrhaging of subscribers.  Their plan is to grow.  

Update 8-16-13:  The San Francisco Chronicle removed their $12 a month paywall after nearly five months.  The Dallas Morning News instituted a change of its own.

Update 10-26-13:  Scripps 3rd quarter earnings call will be Friday, November 8th. It will be interesting to hear their paywall story. 

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