Saturday, August 22, 2015

A good - and bleak - look at Postmedia's drift toward the rocks

The Globe and Mail’s James Bradshaw has a good piece on Postmedia today, confirming the bleak future and lack of any real plan for Canada’s largest newspaper company.
No one can see an end to revenue declines that have come every quarter since Postmedia scooped up Canwest newspaper properties as they headed to bankruptcy, the article confirms.
And Postmedia management has no idea what to do about it and no vision for a sustainable future for the company, at least based on Bradshaw’s piece.
I especially liked CEO Paul Godfrey’s comments on the cuts that have damaged the quality of the newspapers and service to advertisers.
“We’ve said over the last five years, three or four times, God we can’t go any further [with cuts], we can’t go any further. And yet we always have been able to,” he said. But at what cost? “That’s the big question,” he said. “I don’t think anyone knows when they’ve gone too far until they’ve gone too far.”
Candid, I suppose. But hardly suggesting management with a plan.
Godfrey also confirmed Postmedia’s attempt to build digital audiences and revenues with tablet and smartphone products hasn’t worked.
“Mr. Godfrey is pressing ahead with a “four-platform” revamp, which has built new apps for smartphones and tablets and redesigned print editions and websites at the Calgary Herald, Montreal Gazette and Ottawa Citizen. The rollout has been on pause while the company retools some aspects – “We learned a lot; everything we did wasn’t great,” Mr. Godfrey said – but will resume soon with the Edmonton Journal and Windsor Star.  According to figures from the Alliance for Audited Media, however, daily circulation of digital editions on phones and tablets at the Citizen and Gazette are about 11,000 for each paper, excluding copies used for education, compared with about 65,000 and 55,000 copies respectively for print.”
But “pressing ahead” hardly seems accurate. Godfrey announced that four-platform plan in the company’s 2012 annual report, promising "a laser focus on accelerating the transformation.”
Three years later, only three papers have implemented the plan, apparently without much success.
There are no magic solutions for newspapers. But Bradshaw’s piece paints a bleak picture of the future for Postmedia and its network of papers.
I’ve written about Postmedia’s woes and lack of direction before. Just search on Postmedia on the blog, or check out my recent piece for The Tyee here.

Friday, August 21, 2015

Glacier Media, and more bad news for the future of newspapers

It’s a bad sign when even newspaper companies no longer like the business.
Glacier Media’s latest quarterly report, released last week, suggested the corporation has pretty much given up on a long-term future for its 30 newspapers across B.C.
Vancouver-based Glacier had been seen as a newspaper company (to the detriment of its share price). But it also has information services aimed at more specialized markets - real estate, agriculture, energy and mining, for example.
And that, management says, is where the corporation’s future lies. Newspapers are in decline. The company’s plan is to extract cash during their remaining time and invest it in businesses with growth prospects.
Glacier puts it fairly bluntly: “The Company’s objective is to grow its business information assets and the portion of cash flow generated by these operations, which have higher growth profiles and valuations, and harvest the cash flow from community media assets and reduce the related financial and operating exposure.”
Conventional wisdom has been that small community newspapers - the core of Glacier’s holdings - have a brighter future than urban dailies.
But the corporation no longer shares that optimism.
Newspapers do “generate significant cash flow and provide scale for the Company,” the quarterly report says. “Efforts will be made to restructure community media assets to create greater direct value and simplicity for Glacier, or monetize where appropriate value can be realized.” (Restructure usually means cuts. Monetize means sell, which raises some other interesting questions. )
It’s hard to argue with management’s conclusions.
Glacier’s newspaper revenue fell 9.8 per cent in the last quarter, continuing a long skid. And that is after the corporation swapped papers with Black Press in December to eliminate competition in parts of the Lower Mainland and on Vancouver Island and, theoretically, increase profitability.
Newspapers still provide about 65 per cent of the corporation’s revenues. (Hence the reference to providing “scale.” Glacier is a small company without the newspaper revenues.)
But the newspaper profit margins are shrinking. On an operating basis, the business information division produced earnings equal to 27 per cent of revenue; for newspapers the return is nine per cent. (Before joint administration costs, interest, taxes and depreciation.) 
This is the first time Glacier has reported the results of its two divisions separately, as it moves to redefine the corporation.
There was another first. Glacier bought the Victoria Times Colonist in 2011, as part of an $87-million deal that included two other small dailies and 20 weeklies. Postmedia’s community papers in the Lower Mainland were likely the prize that Glacier wanted.
The corporation has acknowledged, vaguely, that it is not the sole owner, describing “certain assets acquired from Postmedia” as “Joint Ventures and Associates.”
In the latest report, after the swap with Black Press, it specifically put the Times Colonist in that category, without saying who was the “associate” involved.
An informed bet would be that Glacier’s associate is David Radler, Conrad Black’s long-time business partner jailed for mail fraud. The corporation has partnered with Radler in newspaper properties in Alberta, the Okanagan and the U.S. He is still, apparently, taking a management or advisory role at the Times Colonist.
Which raise some interesting speculation about the plan to “monetize” its newspaper assets. The Times Colonist, as a daily newspaper in a mid-size city, never fit with Glacier’s focus. It’s even possible Postmedia forced Glacier to take the Victoria daily if it wanted the Lower Mainland community papers.
If Glacier wants out, Radler is the person most likely to take over.
Footnote: I have sat through this movie before. My stints as publisher in Peterborough and Victoria came as the Thomson Corporation made one last stab at bringing growth to its newspapers in Canada and the U.S. It decided, after four or five years of effort, that the future was bleak. It sold the newspapers and invested in high-value information services. Glacier is taking the same route.

Thursday, June 11, 2015

Why are people defending Evan Solomon? I'd fire him

I’m baffled by people arguing that CBC host Evan Solomon shouldn’t have been fired.
The conflict of interest seems obvious.
Solomon was inviting rich and powerful people on his TV and radio shows. He made a secret deal with a friend and art collector to try and get some of those people to buy some of the works from his collection in return for a 10-per-cent commission.
So how tough are the interview questions going to be? If Solomon wanted to persuade former Bank of Canada governor Mark Carney to spend thousands of dollars on paintings from his friend Bruce Bailey’s collection, is he going to risk alienating him during a 10-minute interview?
We’re not talking small change. Solomon pocketed $300,000 in barely 12 months on works sold to Jim Balsillie, co-founder of Research in Motion (now Blackberry). Solomon’s access to Balsillie came because he was ostensibly trying to woo him as a guest on his interview show.
So he used his CBC position to make contact with Balsillie and, when they met for the first time, brought Bailey along as a guest. If Balsillie had appeared on the show - that never worked out - would Solomon have put his big commission cheques at risk with a tough interview?
And, more importantly, what would a reasonable viewer who learned of the secret deal think about Solomon’s independence or commitment to journalism?
Solomon has not spoken about the deal, or the firing. In a written statement, he claimed he had disclosed the arrangement to CBC management.
But that appears to be a half-truth. He signed the 10-per-cent deal with Bailey in August 2013, and kept it secret until this year, when he and Bailey got in a $1-million fight over the commissions owed and the truth was going to come out.
Personally, it seems sleazy to me to be steering people to buy art, supposedly as a friend, without revealing you’re getting secret payments if they buy. That’s a conflict worth declaring in personal life.
The whole affair also highlights - again - the palsiness of celebrity journalists and the powerful in a club with its own unwritten rules. (I’ve written about distance between journalists and the people they cover in The Tyee.)
There are good questions still to ask. Why did CBC only act when the Toronto Star reported the story, rather than investigating more thoroughly when Solomon belatedly revealed the arrangement?
And, as Bruce Livesay asks here, how come Solomon got a quick chop when Amanda Lang, also caught out in a serious conflict, was defended by CBC brass.
But Solomon betrayed the trust of the corporation and viewers by creating a clear conflict between his roles as journalist and commissioned art salesman. His credibility is gone.
I’d fire him.

Wednesday, May 06, 2015

Six thoughts on that Alberta election

Six thoughts on the Alberta election.
First, this is not that wild a swing. Rachel Notley is a moderate. That’s how she got elected. And, with occasional exceptions like Ralph Klein in his first years, the province’s Conservative governments haven’t been extreme either, with a populist willingness to spend on health and education, and even arts, when it’s politically useful. That’s how they kept getting elected. (Even Klein wasn’t really that extreme. He cut health spending by 15 per cent in his first three years in office, but then put the money back. From 1992 to 2001, Alberta's health spending increased by almost exactly the same percentage as British Columbia's.)
My dad at 90
Second, it’s hard to overstate what a total botch Jim Prentice made of this election. I spent last week in Alberta - it was my dad’s 90th birthday - and there was massive disdain for the premier. Despite a fixed election date law, he was seen to have called the vote out of opportunism. He told Albertans they should “look in the mirror” to see who was to blame for the province’s current woes, ignoring the fact his party was in power and persuaded Albertans to support its policies. He proposed increasing taxes for individuals, but not for corporations. He welcomed the mass defection of Wild Rose MLAs to the Conservatives and tried to guarantee some of the defectors party nominations. He was ineffectual in the leaders’ debate, delivering a patronizing “Math is hard” comment to Notley that made him look sexist and arrogant. By campaign’s end, all Prentice had to offer was threats that people should vote for him to stave off some unclear menace. He looked arrogant and out of touch.
Third, the NDP owes a lot of its success to the incompetence of the Conservatives. Even 10 days ago, when I landed in Medicine Hat, there was a sense that the Conservatives could survive if Wild Rose supporters were prepared to hold their noses and vote strategically to block the NDP. But with each day, the polls showed the Conservatives running farther behind, in third place in many ridings. Strategic voting lost any appeal. The party’s brand stunk of failure.
Fourth, voters didn’t just ignore the warnings of doom from the corporate supporters of the Conservatives. Their presumption in assuming the right to tell people how to vote damaged Prentice. The four major daily newspapers - apparently on orders from their Toronto-based, U.S-controlled head office - endorsed Prentice, and were also ignored.
Fifth, the new NDP government is likely going to have some big problems. I was newspapering in Peterborough in 1990 when Bob Rae won a surprise NDP victory in Ontario. Our New Democrat candidate was a high school teacher who had run with no expectation of winning, and then found herself energy minister. It did not go well. The Alberta New Democrats had four seats in the legislature. Now Notley needs to come up with a cabinet. Even with qualified people, there is a learning curve and there are bound to be missteps.
Sixth, give credit to Notley. She made a connection with voters, raised the idea that taxes are a useful way to pay for services and noted that different segments of society have different interests. Voters liked her better than the other leaders and trusted her more, enough to reject the fear-mongering. That’s a great asset for any new premier.

Thursday, April 16, 2015

Another bleak update for Postmedia, with a shark waiting to be leaped

It looks like Postmedia has moved into asset-strip mode, based on its latest quarterly report.
The results were dismal, as they have been every quarter since the corporation bought the newspapers of near-bankrupt Canwest in 2010. Revenues are down 11.3 per cent for the first six months of the fiscal year, about $42 million. Expenses were down 10.8 per cent, or $32 million.
Postmedia management appears to have no solutions. They are cutting expenses, but not fast enough to match falling revenues. At the same time, the cuts are reducing value for readers and advertisers, which leads to more revenue losses. It’s a relentless downward spiral.
Paul Godfrey
Earnings before interest, depreciation and taxation were $190 million in 2011. This year, they will be about half that amount. The company is about two years away from being unable to meet the interest payments to the hedge funds that put up the cash to buy the Canwest properties. 
CEO Paul Godfrey initially talked about strategies to increase revenues at the 10 dailies across Canada. He was enthusiastic about  “Digital First,” an early initiative that has been a bust. Digital revenues - subscriptions and advertising - will be about $88 million this year, unchanged in four years. If the future is digital, Postmedia is in trouble.
The latest quarterly update includes a telling note on costs. 
Postmedia has outsourced production at three newspapers over the last 18 months.
Corporations usually contract out because its cheaper. But Postmedia reports production expenses jumped 25 per cent for the first half of this fiscal year, “primarily as a result of outsourced newspaper production of the Calgary Herald in November 2013, the Montreal Gazette in August 2014 and both The Vancouver Sun and The Province in February 2015.” The increased costs are about $9 million a year.
The contracting-out program does free up some real estate for sale, which will let Postmedia reduce its debt load.
But a corporation can look at that process in two ways.
If the debt repayment results in interest-rate savings greater than the increased production costs, the company is protecting its long-term sustainability.
If, however, the increase in production costs is greater than the interest savings, then the company is more focused on loan repayment than its future.
Postmedia looks to be taking the latter approach.
In Vancouver, Postmedia sold the press building for $17.5 million and handed the full amount over to Unifor, the union representing employees. The union agreement had strong language preventing contracting out; the payment was compensation for accepting the change. The deal saw $11.5 million in severance for affected employees, and $6 million paid to Unifor that it can spend “as it sees fit for the benefit” of affected employees.
In Montreal, the press centre was sold for $12.4 million. The Calgary Herald building - constructed in 1980, when newspapers managers thought the future was bright - is assessed at $41 million. Even if it brings $50 million, the interest savings will be barely half the increased production costs.
Which makes Postmedia look like a corporation in the process of wringing value from its assets before selling the remains, or writing them off.
Postmedia’s purchase of Quebecor’s 175 English-language newspapers, including the Toronto Sun and 32 other paid-circulation dailies, doesn’t change that. 
Quebecor sold cheaply at $316 million, or about $1.8 million per newspaper. (Quebecor had spent something over $1.5 billion assembling the group of newspapers since 1998.) The business has been trending steadily downward, but the properties still produce about $85 million in earnings before interest, taxes, depreciation and interest. And Postmedia hopes to make $60 million by selling the newspaper’s offices, and leasing space. (Again, not necessarily a sound long-term decision.)
But the deal does not change the fundamental problems facing Postmedia.
There is a point where business owners decide that the best strategy is to extract the most value in the limited time remaining. Based on the quarterly report, Postmedia looks to have reached that point.

Friday, March 13, 2015

Andrew Weaver, the National Post and media accountability

The National Post devoted just 160 words to the news it had lost a defamation suit launched by Victoria  climate scientist and Green MLA Andrew Weaver and had to pay him $50,000. Even that brief report didn’t come until two days after other media reported the B.C. Supreme Court decision.
It was a striking contrast to the Post coverage when television personality Ezra Levant lost a similar defamation suit in November. That was big news and reported in an 800-word article.
The piece had a catchy headline “Levant guilty of defamation, must pay $80K; 'Reckless.'” The lead was dramatic. “In his blogging about Canada's hate speech laws, rightwing personality Ezra Levant defamed a young law student as a serial liar, a bigot and a Jew-hating ‘illiberal Islamic fascist,’ bent on destroying Canada's tradition of free expression, a judge has found.
The Post’s coverage of its own defamation defeat wasn’t just shorter, it was duller. 
The headline was “Climate scientist wins defamation suit against National Post.” The lead lacked the Levant story’s flair. “A B.C. Supreme Court judge has ordered the National Post to pay climate scientist Andrew Weaver $50,000 in damages in a defamation suit over articles published in 2009 and 2010,” the Post reported tersely.
The Levant judgment was more damning. But a finding that the Post and three of its writers - including the business editor - all defamed Weaver seems like big enough news to rate more than six paragraphs.
And when the Post decided to appeal the judgment this week, that rated a story twice as long as the original story on the verdict. 
Not to single out the National Post. Generally, the news media can dish it out, but aren’t so good at taking it. 
The Toronto Star ran a seriously flawed article on Gardasil vaccines last month. The front-page play and banner headline - “A wonder drug’s dark side” - suggested great importance. The stories of young women who suffered serious problems after vaccination were heartrending.
They far overshadowed the story’s cautions that, despite the headline, there was no established link between any of the women’s illnesses and the vaccination. There was overwhelming scientific consensus the vaccine is safe and effective.
The article drew immediate criticism. And The Star’s reaction was to deny any possible problem and to bash the critics. Editor Michael Cooke indulged in insulting Twitter exchanges. Columnist Heather Mallick responded with a generally baffling piece. The Gardasil vaccine story, she wrote “was not about the drug itself — it is safe and effective — but about parents and girls not always being told what they need to know in order to make informed decisions, and being dismissed by doctors when they became terribly ill.”
It’s impossible to reconcile that claim with the actual headline or the story. 
And Mallick dismissed one critic of the story casually. “Here’s a tip: don’t read a website run by a rural doctor whose slogan is ‘wielding the lasso of truth,’” she wrote. Leaving aside the assumption that rural doctors know nothing, Dr. Jen Gunter is an ob-gyn certified in Canada and the U.S. and practises in San Francisco. 
The Star eventually admitted it blew the story. The public editor set out the problems, the publisher apologized.
But the first response was self-righteous defensiveness, and attacks on anyone who dared criticize.
That’s a newsroom instinct. Partly, it’s justified. Anyone who has spent time in news management has faced pressure from the powerful, or people who think they are powerful. Managers know staff are watching to see if they cave.
But it’s also a way of avoiding justified criticism, or self-examination. 
There was a legitimate story in The Star report, especially around the level of informed consent. But it was lost in the torqued presentation. The point of the story, to any reasonable reader, was that the HPV vaccine Gardasil could leave you terribly sick and permanently injured. There is no evidence that is true, and noting that in a few paragraphs is not enough.
The Globe and Mail’s response to columnist Margaret Wente’s serial plagiarism followed the same pattern of initial defensiveness and dismissal of the person pointing out the problem. (An “anonymous blogger,” the Globe’s public editor sniffed.) There is an instant tendency to reject any criticism as uninformed or malicious, attack the critics and claim some imaginary high ground.
The news media got away with that kind response in the old days, when they were more powerful and critics had a hard time finding a platform.
But times have changed. Wente’s serial plagiarism was discovered and documented by Carol Wainio, an artist and university professor. She shared it on her blog and the compelling evidence was widely shared on the Internet. 
Attacking the messenger doesn’t work when people can see the evidence for themselves. 
It’s a welcome development. Newspapers can quit funding ineffectual press councils (as the major daily newspapers in British Columbia have already done). News media no longer need public editors or ombudspeople or readers’ representatives.
If they mess up, they will be held to account in public forums. News media that welcome the new accountability and the chance to learn from mistakes - which are inevitable - will increase their engagement with their audiences. 
And those that opt for defensiveness or unjustified attacks on critics will find credibility fading away.