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Whatever the spin, bankruptcy is not a good thing

by Peter Weinberger

A few weeks ago, Digital First Media, who jointly operates Inland Valley Daily Bulletin owner MediaNews Group and the Journal Register Company, announced the Journal Register filed for bankruptcy the second time in 3 years. They own a number of small-to-medium daily newspapers throughout the country, and have a partnership with the Inland Valley Daily Bulletin in Ontario.

I’m not writing this column to gloat that a competitor is having serious financial problems. Anytime we lose a newspaper and their website servicing communities with local news, it becomes a lose-lose situation. Even though I have been critical of the Bulletin’s coverage on occasion, they provide an important service to the communities of the Inland Empire. (I think we have Claremont covered.)

Not that the Daily Bulletin is going to stop publishing. Their parent company will restructure again in some way to reduce “legacy debt,” including ways to trim costs.

The plan by current CEO John Paton was a “digital-first” approach. This idea is really not new, where newspaper companies try to offset dropping print revenue by increasing website advertising. Dozens of new ideas have been tried, from daily deals, blinking banner advertising, and online paid advertorials that look like news content to business directories, print-online ad packaging and more.

The COURIER has incorporated some of these ideas on our website by creating a Claremont business directory, banner advertising (the non-blinking kind) and even links to copies of the print ads published in the newspaper. Has our website advertising grown? Yes. Would it offset a 50 percent drop in print advertising? No.

Fortunately for us, that’s a fate we have never faced due to the strong support of our readership and advertisers.

For the Journal Register Company, overall revenue in 2005 was twice the size it is now in 2012. So although their digital advertising revenue continues to grow consistently, it’s just not making up for the losses in print advertising.

So what’s next for the Daily Bulletin? Readers may notice very little on the surface. But it will be more difficult for them to operate their business because of a precarious future.

It’s my hope they can figure it all out sooner than later.

 

Post office becomes a competitor

I’ve written in earlier columns about our dealings with the United States Postal Service. The COURIER remains one of the few newspapers delivered through the mail. We are committed to this method (even at twice the cost of hand delivery) because it’s far more reliable for our subscribers.

But as losses continue to mount at USPS, they are desperate to cut costs and increase revenue. The hard part is because of their monopoly on mail delivery, the post office is bound by postal regulations not to impact revenue of the businesses they serve throughout the country.

That now has changed with a deal they cut with Valassis, one of the largest direct mail companies in the United States. Basically, the post office is giving them a huge discount in an effort to increase their direct mail volume and revenue. In other words, more junk mail is in your future.

This may seem like a solid business approach, but newspapers insert advertising inside their print editions and cannot compete with this new Valassis pricing advantage.

After months of negotiations with postal regulators, including reviewing many other money-making options, the National Newspaper Association (NNA) was informed of this exclusive arrangement. The deal was done. Obviously, we publishers beg to differ on the impact.

At this point, there’s not much the newspaper industry can do because the judge and jury for making this decision is, well, USPS.

Valassis has called the COURIER on a number of occasions wanting to insert printed ads from the advertisers contracted with them. But they set a price so low, we would simply lose money by using them.

The COURIER also limits the number of inserts in our newspaper, because we feel readers can only handle so many. This is why our advertisers who insert with us report such a strong response. But we also lose business from Valassis because they can deliver to every household in Claremont at a cut rate because of their special arrangement with USPS. And there’s no limit to the amount of junk mail the post office will deliver.

So in my humble opinion, this deal stinks. USPS is so desperate for revenue they will use their monopoly status to simply run over their own customers.

I can only say to our advertising customers, you get what you pay for. We would not be in business for 104 years if our advertising was ineffective. People read and respond to our ads, whatever the format.

That cannot be said with junk mail, when 90 percent simply goes from the mailbox directly to your trash can.

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