circulation – Memphis Flyer

What in the world is going on at Memphis Publishing Company these days? The Commercial Appeal is still embroiled in labor disputes with all of its unions. To cut costs, the company is offering buyouts to employees over 50 who have reached the top of their pay scale. And on top of all that, the paper’s circulation numbers are falling at an alarming rate.

The CA’s declining circulation should come as no surprise. Readership of daily newspapers in the U.S. has been declining for years, and there seems to be no stopping this negative trend. An Associated Press story that ran in the CA on May 2nd reported that in the six-month period from October 2006 through March 2007, average weekday circulation for the nation’s top 25 papers was down a modest, if significant, 2.1 percent from the same period the year before. Sunday circulation for these papers was down 3.1 percent.

Curiously (or not), the CA failed to mention its own circulation numbers or illustrate in any way how Memphis’ paper of record compares to the nation’s top 25. Is editor Chris Peck’s devotion to “community journalism” and reader-supplied content paying off? And what about publisher Joe Pepe’s plan to break the CA into six separate neighborhood editions with specialized local content? Is that serving the CA at a time when other newspapers are floundering?

Perhaps the CA didn’t reveal its own numbers because they aren’t good ones. At least not according to the latest figures from the Audit Bureau of Circulation (ABC). The CA‘s most recent publisher’s statement, obtained from the ABC, showed an average weekday circulation for the six-month period ending in March 2007 of 146,252 copies. That’s down 9.7 percent from 161,956 copies for the same period in 2005-06. And that’s not the worst of the news.

The CA‘s Sunday edition fared much worse, showing a 14.9 percent drop — from an average of 216,705 copies in March 2006 to 184,418 copies in March 2007.

“I really don’t know what’s going on in Memphis,” said Jennifer Saba, an associate editor at the industry journal Editor & Publisher. “It looks like they’re bleeding heavily.”

Saba pointed out that not only are the CA‘s circulation numbers down, the newspaper’s discounted circulation is up.

The ABC breaks newspaper circulation into three categories: Paid circulation includes all sales where the customer pays at least 50 percent of the cover price; discounted circulation includes customers who pay less than 50 percent; and then there is the category of “other paid,” which includes third-party distribution and other deeply discounted types of distribution.

During the period between October 2005 and March 2006, the CA‘s average discounted circulation was pegged at just 95 copies. During the same period ending March 31, 2007, that number rose, Saba noted, to 8,846 copies.

Pepe spent much of last week in meetings with representatives from Scripps Howard, the CA’s parent company, and could not be reached for comment.

So what could be causing the CA‘s numbers to tumble so far so fast? Publishers often cite the Internet as having a negative impact on circulation, but Memphis isn’t exactly the most wired city in America. Although its growing online readership may be a contributing factor to the CA‘s dip, there’s just not enough broadband in Memphis to explain such a large loss over such a short period of time.

According to Saba, the CA’s Web site reaches 6 percent of Memphis’ adult population. That figure, combined with the print edition’s circulation, brings the CA‘s reach to 59 percent of Memphis’ adult market.

One explanation for the decline could be that the CA has undergone a major physical transformation. Efforts to cut costs have resulted in a physically smaller product relying heavily on wire-service copy that, for Internet users, is often dated by the time it makes it to print.

Although breaking the CA up into six separate editions may have given advertisers an opportunity to buy more space at a reduced rate, it has also balkanized readership and broken the paper into smaller sections with more back pages on which to advertise.

Most changes at the CA appear to be either cost-cutting measures or efforts to pursue specific market demographics that have not traditionally used the daily paper. Could the CA‘s slide simply be the result of listening to consultants telling them how to attract people who don’t read the paper instead of listening to the wants of its actual readers?

“To me,” Saba said, “this says people aren’t reading the paper.”

On Wednesday, March 21st, Joseph Pepe, president and publisher of The Commercial Appeal, issued a memo filled with good news and bad. He acknowledged the paper’s implementation of “many cost-saving measures” and noted the creation of nine new advertising zones. Then he dropped the bomb. “These steps have not been enough to stabilize our profitability,” Pepe wrote, announcing yet another round of employee buy-outs to reduce the Memphis Publishing Company’s payroll costs.

By week’s end, employees of three more Scripps newspapers received similar notes from their publishers. In each case, management cited declining ad revenues and stressed that “attractive” buy-out packages, with severance pay and short-term insurance plans, are a realistic, humane alternative to layoffs.

At a glance, this looks like an evenhanded act of corporate benevolence in the face of irreversibly dire circumstances. But that’s not exactly the case.

If daily newspapers are dying, it isn’t because they’re not profitable. It’s because the 15 to 20 percent profit margins that would make most CEOs giddy just aren’t enough for modern media conglomerates. And instead of making a full-frontal assault on the real problem — dwindling circulation — newspapers across the country continue to reduce the size of their products, cut staff, and lean more heavily on wire copy and reader-supplied content. Scripps has followed in the footsteps of newspaper giant Gannett, which, as newspaper scholar Aurora Wallace aptly cited, “champions the local in the abstract as it commits fewer and fewer resources to its service.”

Scripps execs pulled a head-fake in January by suggesting that the company might sell or otherwise separate itself from the “sagging” newspaper division. Then, almost immediately, they said they wouldn’t. The reversal was duly noted by Ad Age magazine in a January 22nd column explaining how Scripps — “a mid-tier media company from Cincinnati” — became a Wall Street favorite with stock prices at a 52-week high and poised to climb. Scripps has the 16th-largest online audience in the country. It’s bigger than Comcast, Viacom, G.E., and CBS. Scripps also made an expensive but wise decision to own all content created for the company’s ever-more-profitable cable holdings.

Buy-outs at the CA and other Scripps papers come on the heels of news that the projected decline in first-quarter revenue, a figure originally pegged at 5 to 7 percent, might be closer to 6 to 8 percent. The numbers don’t inspire confidence, but previous efforts to staunch the bleeding by cutting staff and gutting their newspapers have done little to attract more readers and more revenue. Does anybody really think that this time things will be different?

Newspapers across the country are struggling to maintain their big bottom lines, but Scripps is in a unique position to reinvest and rebuild its print division. Its diverse holdings and healthy outlook should create an environment conducive to enlarging newsrooms, stepping up local coverage, and broadening product visibility. But instead of reinvesting in the communities it hopes to profit from, Scripps is once again applying leeches. Consider this: The CA has reduced staff in six of the past seven years. If you think that doesn’t affect the quality of local news coverage, I’ve got a bridge in Brooklyn to sell you.

In 2006, advertisers spent $46.6 billion on daily-newspaper advertising nationwide, down 1.6 percent from 2005. Circulation took its largest plunge in 15 years. Nevertheless, newspapers remain profitable, and since they often set the editorial agenda for local radio, television, and Internet news sites, they are arguably more important and influential than ever. Scripps has taken risks in the development of its cable and Internet properties. The company has the resources to be similarly courageous with its newspapers, but instead they are in death mode.

“You’re either dying or growing,” Pepe told the Flyer in 2006. “You’ve got to pick one.” Based on the uncannily similar language in the memos distributed to Scripps employees last week, it would appear that the CA‘s parent company has made its decision.

Chris Davis is a Flyer staff writer.