Lexington, KY -For the last two decades, the media industry, both locally and nationally, has felt the sand shifting under its feet. The rapid growth of the Internet over the past two decades has altered the dynamics for the distribution of information on a global scale, and technologies with disruptive potential continue to bombard the business.
At the same time, the product of information is arguably more in demand than ever before. But what will people be willing to pay for, and how can companies get them to pay for it?
Add to this industrywide conundrum the largest economic recession witnessed in the United States during the age of the Internet, and it's enough to make the most hardened media professional feel queasy. Locally, the pressure has taken the form of decreasing ad revenues, layoffs and corporate restructuring for many organizations.
McClatchy Co., which owns the Lexington Herald-Leader, reported a $21.7 million loss in the fourth quarter of 2008, with classified and retail advertising plummeting 36 percent and 10 percent respectively for the year. In September, the Herald-Leader laid off 22 employees, bringing it to a total of slightly more than 70 positions eliminated for the year through buyouts, layoffs and open positions that would not be filled. McClatchy has announced plans to trim an additional $100 million from its expenses in the next year.
And the Herald-Leader is not alone. In the newspaper industry, the Louisville Courier-Journal, owned by the Gannett Company, laid off 51 employees, or 6.5 percent of its workforce, last fall. Gannett reported a 22.7 percent decrease in its overall advertising revenue for the fourth quarter of 2008 and has announced that it will require unpaid week-long furloughs for most of its 31,000 employees nationwide during the first quarter of 2009.
In radio, Clear Channel Communications, which owns six local radio stations, including WLAP, laid off roughly nine percent of its workforce, or 1,850 employees, in January. Calls to the local management regarding layoffs at their stations were not returned. Cumulus, the second-largest radio company in the country and the parent of six Lexington stations, including WVLK, laid off seven of its local employees in November.
And while smaller niche and local publications across the country, which typically haven't relied as heavily on classified or national retail advertising, have fared somewhat better, some have been forced to shut down entirely. In Lexington, the alternative publications Nougat and W Weekly (the latter having been owned by Business Lexington's parent company Smiley Pete Publishing) have ended publication within the last two years.
Most media organizations recognize that an entirely new business model will be required, but they have yet to discover what form it should take. Many local media organizations have invested in the Internet and initiated the use of online tools ranging from blogging and podcasting to Twitter and Facebook.
Online audiences are growing, both nationally and locally. Nielsen recently reported that traffic at the nation's ten largest newspaper Web sites grew by 16 percent overall in December. However, online revenues have been slow to follow. In the meantime, industry experts can only guess what the landscape will look like when the sand finally settles.
They Said It
What is today's biggest challenge for your industry, and what is the most exciting development on the horizon?
To get a better picture of the local media and advertising industries, Business Lexington asked local professionals to share their perspectives, asking them what they see as their industry's biggest challenge and the most exciting development on the horizon. A few were at a loss for words, but many were willing to share their views on the industry's present adversities and opportunities.
STEPHEN VEST
Editor and publisher of Kentucky Monthly
The biggest challenge
As with all media, all businesses, we are faced with rising costs. A larger issue within the industry is making sure we are vital to our readers and are presenting not only the information they want, but also need.
The most exciting development
Technology and social networks have made it much easier for us to interact with our readers and allow them to contribute their voice to our editorial mission.
DOUG HOGAN
News director, WTVQ-36
The biggest challenge
I believe the biggest challenge we face in local television news is product differentiation. At WTVQ-36, we focus on stories that benefit and engage viewers. We do a lot of issue-based stories and concentrate on how they impact people's lives. We have also developed some unique segments which provide valuable information to viewers and capitalize on the quality storytelling ability of our experienced staff.
Many times, people criticize local media for just covering what's "bad" and never reporting "good stories." We are getting an excellent response from our Kentucky Backroads segments, which profile the unique people, places and activities in central Kentucky, and we also have a new segment called "What's Cool in Your School" which focuses on innovative people and programs in our schools. We try extremely hard to get our viewers involved with the stories we cover.
The most exciting development
Looking ahead, I think emerging technologies and the digital conversion will continue to have the biggest impact and bring about the most exciting developments in our industry. At WTVQ-36, we consider ourselves more than just a TV news operation. We have multiple platforms for news delivery including our internet Web sites, our second digital channel, WTVQ2 which is home for our 10 p.m. news and our third digital channel, which is our 24/7 news and weather service. In today's operating environment, we are using these digital technologies to extend the WTVQ-36 brand to all these platforms in an effort to meet the changing habits of our viewers. Along with the full digital conversion, I believe more TV stations will take advantage of the internet for live reporting. New services like "Skype" are making it possible for stations to have broadcast quality "live shots" using the internet instead of a traditional satellite truck or microwave truck. With this technology, reporters can "go live" anywhere they can get online. All they need is a laptop computer with a wireless internet card, a cable and camera. This approach could revolutionize the way TV newsrooms approach live shots.
ED LANE
CEO/publisher, The Lane Report
The biggest challenge
We see two key challenges. First, our editorial team works hard every day to provide meaningful and useful business and economic news for our readers. By keeping our readers well-informed, our publications become essential business tools. And second, creating first-class publications, with large and influential readerships, provides attractive environments in which advertisers may confidently invest their marketing dollars. Our company's prosperity is directly related to delivering demographically targeted readers that are valuable and attractive to advertisers.
The most exciting development
Technology advances allow publishers to continually improve the quality of printed and electronic publications. Technology also accelerates the worldwide collection of news, graphics and data. Today's publishing business is an intellectually stimulating information environment for our readers and staff.
WAYNE SNOW
Vice president, advertising, The Lexington Herald-Leader
The biggest challenge
Our biggest challenge is helping readers and advertisers understand that we are now an information company that provides a multi-media platform that allows them to access news and information and to reach customers in many different ways.
The most exciting development
What's exciting is that more than 100 million people still read a newspaper every day in America. And now with more than 1.2 million unique visitors to www.kentucky.com each month, our new interactive network will allow us to deliver 90 percent of the total online audience in Central Kentucky.
TOM EBLEN
Columnist, The Lexington Herald-Leader
The biggest challenge
The news media's biggest challenge today is finding a new business model, one that provides enough revenue to support good journalism. For at least 150 years, journalism has been paid for by advertising revenue. Digital technology has enabled many new forms of communication that compete with traditional advertising and journalism. This has left the media market fragmented and many advertisers and readers confused.
I think there will always be a huge demand for accurate news, reliable information and informed analysis and commentary. Without it, a democracy cannot function. The challenge now is how to generate the money needed to support the people who provide it. I think this will happen as readers become more discriminating about the information they consume, and as advertisers figure out the best ways to reach their target audiences. Until then, it's going to be a rough few years.
The most exciting development
The digital technology that has blown apart the media industry's business model has also provided amazing new ways for journalists to report news and tell stories, and for citizens to interact with journalists and each other. The catch phrase is that it has turned news from a lecture into a conversation. This is a great thing.
As a newspaperman, I'm no longer limited to text and photographs. I can tell stories on the newspaper's Web site or on my blog using those tools, as well as audio and video. I can post immediately to a worldwide audience, and I can use as much space as I need. Plus, readers can comment immediately on what I produce - offering their opinions, or sharing additional information.
Here's the irony: My company's profits have shrunk at the same time the audience for its journalism has grown. Far more people than ever before are reading and viewing Herald-Leader journalism; they're just doing it for free on the Internet. With so much information now available to people, the challenge will be for journalism to hold its own against the entertainment and advocacy that have become such a big part of the modern media.
MARY ELLEN SLONE/ LARRY CHILES
President, Meridian-Chiles, and Chairman, Meridian-Chiles
The biggest challenge
Delivering more than promised to clients and exceeding their expectations, neither of which is easy in a downturned economy. Creativity and nimbleness are key - while acknowledging that the true measure of creativity is "did it bring in business or sales?" Meridian-Chiles is employing every element in our toolboxes, as well as an abundance of Brand New Thinking, within each and every assignment we undertake.
All members of our team are focused on communication with our clients virtually on a daily basis. Why? Because the clients' competitive sets, their needs, and certainly their budgets change quickly - and after a combined total of 52 years in the advertising industry, we appreciate the "edge" this pro-activity provides!
The most exciting development
The emerging popularity of high-definition television with capability of interlock with Web sites to further explore products and services advertised will completely change how media is used for advertising.
Presently, over 98 percent of all people watch television and/or cable, according to leading research statistics: additionally, over 25 percent of leisure time is spent on the internet. In the future, having the ability to freeze a television program being watched and then to easily click on a Web site from a commercial playing will completely revitalize media mindsets. Meridian-Chiles offers this technology, in tandem with our affiliated company, eLink Design.
CHRIS EDDIE/ CHUCK CREACY
Publishers, Smiley Pete Publishing (Chevy Chaser and Southsider Magazines and Business Lexington)
The biggest challenge
"The reports of my death are greatly exaggerated." - Mark Twain. That being said, the print industry faces real challenges. Newspapers, for example, have business models and legacy programs dating back many decades. News carriers, reporters, wire services, printing presses and paper all cost a lot of money. And revenue streams such as subscribers, classifieds, legal notices and display advertising have dropped significantly. Making the transition from print to digital is the single largest challenge for our industry. Today, the next Matt Drudge or Arianna Huffington (The Huffington Post showed 6.5 million readers in January '09) is starting his blog on free software and a $15/month web hosting fee. This same blog could potentially garner a world-wide audience with millions of readers in a very short time. A site like this could produce millions of dollars annually for a very low initial investment.
The most exciting development
The print companies that are able to understand and harness the power of all of the digital options available will have some competitive advantages. In a word, the answer is content. If you have great content, you will have an audience. The details of how that content will be delivered will be hashed out over the next few decades. There are a lot of new models emerging. Community-generated content is now the rage, and one that we have based our publications on. Another concept that we are very interested in is called "crowdfunding." Crowdfunding allows freelance journalists to pitch story ideas and get funding from the community. Journalists would pitch ideas on our website, and anyone would have the ability to contribute any amount toward the goal of funding reporting on that subject. These stories would be written by professional journalists, edited, fact-checked and published in print and online. We also believe that there is great opportunity in creating local social networks (or leveraging existing ones) in order to funnel news to the end user. The fact is, no one knows how news will be consumed in 10, 20 or 30 years. We believe that it is better to keep innovating and stay atop whatever the technology du-jour may be.
KIP CORNETT
President, Cornett Integrated Marking Solutions
The biggest challenge
Reaching and engaging a target audience is more complex than ever before. The tools to do so have exploded in numbers. The window you have to earn their attention is smaller. And they have resources at their fingertips to tell the world if they love or hate your product.
The most exciting development
Please see above.
CONNIE JO MILLER
Agency principal, Group CJ
The biggest challenge and the most exciting development
As I see it, the biggest challenge in the communications business and the most exciting development are almost one in the same - it is all about the pace of technological change.
Technology has allowed this growing population exposure to a huge amount of information. The vast number of sources people have today for entertainment and information means we have to be smart and on target when we choose our vehicles to deliver the message. It is not just about buying TV and newsprint anymore; we have to be extremely innovative with the methods in which we convey our brands. We must be very open to other points of contact with our customers and potential customers. And to top it off, the message has to be more relevant and intelligent than ever before.
In the two decades I've been in the agency business, the number of ways to communicate, the increase in "touchpoints" has been amazing. From the TV screen, to the computer screen to the phone screen, "these times they are a changin." Here's a testament to that: It took television almost 13 years to reach an audience of 50 million - Facebook did it in two.
The challenge is to stay fresh and keep up with the change and that takes young, creative minds coupled with savvy business experience and a double dose of enthusiasm!
CHAD CROUCH
President, Cre8tive Group
The biggest challenge
Today's biggest challenge is the overwhelming sense of fear in the marketplace. Many companies are frozen stiff by this turmoil, unsure how to move forward. I have always liked the quote that I have heard attributed to Henry Ford, which says, "For a man to stop marketing in order to save money, is like a man who stopped a clock in order to save time." It is a logical fallacy that when times are tight, the first place to cut is in your marketing and advertising. However, those who seize this as an opportunity to capture market share and differentiate themselves will come out of this tough time as the clear winners.
The most exciting development
The most exciting development on the horizon in our industry will be the ability to have high speed internet access - anywhere, anytime. Taking advantage of this new level of ubiquitous access will require that businesses and organizations not only know "how" to communicate through this technology, but more importantly "what" they should be saying for maximum impact. While the technology will continuously evolve, the ability to communicate with your audience will be the constant.
TIM GILBERT
President/general manager, WLEX-TV
Biggest challenge
Doubt. Let me explain. During the merger, acquisition and consolidation mania of the past 15 to 20 years, media companies of all shapes and sizes took on unusually high levels of debt. When the current recession hit, these media companies (newspaper, television, cable and satellite and terrestrial radio) found themselves in the position of making payments on this debt with greatly reduced revenues as advertisers' budgets were diminished. The confidence that marked the era of expansion has been replaced by a pervasive pessimism about the future of traditional media. With time-honored revenue sources being negatively impacted by on-line competitors and with stock prices at all-time lows, these companies are trying to devise ways going forward in which they can survive.
Most exciting development
Traditional media remains the dominant supplier of local content. If we embrace this strength and expand upon it, our future will be bright. There is no magic bullet. Television will maximize the digital spectrum, leverage its online assets and break new ground in Digital Mobile Technology. But we will need to focus all these efforts on the expanded delivery of local news, information and entertainment in order to succeed. We must fully believe that our best days are ahead of us and employ the skills we have honed over the past years to maximize our future opportunities.