Monday, January 12, 2009

More on an online-only Seattle P-I

I speculated the other day that an interested purchaser of Hearst's for-sale Seattle Post-Intelligencer could ignite an interesting battle by taking it online only and competing head-on with the P-I's current JOA partner, the Seattle Times—or that the Hearst Corporation, itself, could do so.

Support for this notion comes from Bill Richards at Crosscut, an online news enterprise covering Seattle and the Northwest, in a story entitled "Hearst may be remaking, not eliminating, The P-I." His analysis goes: (a) There won't be a buyer, because there were no takers in 2004 when Hearst issued an offering, so there won't be any now; (b) as I suggested also, the $14 million in reported 2008 losses are not sufficient reason for Hearst to kill it off—the corporation has plenty of cash and can take the hit, and in recent years they've spent a lot in the Seattle market to preserve their options; (c) "Hearst has given up on making newspapers profitable"; but (d) here's their "emerging strategy:"
Hearst dumps its print paper, in part because much of The P-I’s classifieds have migrated online, but forges a bunch of alliances with Web-based classified outfits so they can be integrated into a new e-paper and recapture some of that lost revenue.
An online P-I might make money for Hearst. Here’s where we veer off into speculation — but backed by some interesting data. Loyal Crosscut readers will recall we ran a projection a little over a year ago showing how an electronic paper might already be profitable. We created an imaginary paper, the Bugle-Interrogator, that was just about the P-I’s size (100,000 daily circulation) and using industry data we calculated killing the B-I’s print paper would save more than half its annual expenses. We also figured online ad revenue would arc upwards without a print option for advertisers, making an online B-I profitable.
Richards also mentions that Lincoln Millstein, Hearst's senior VP for digital media, was on the scene when Hearst Newspapers President Steve Swartz announced the 60-day sell, fix or close plan. Add to this Hearst's strategic investment in E-Ink, the outfit that invented and supplies e-paper screen technology for the Kindle and other e-readers, and the fact that (quoting Richards) "Swartz, who has a reputation as a corporate hard-charger, promised '100 Days of Change' for the Hearst’s newspaper division when he became its president last month"—and you can begin to imagine a plausible scenario in with Hearst makes Seattle a laboratory for trying out not only an online-only news "paper," but other more sophisticated strategies for digital delivery of news as well.

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