Full Court Press

Publisher Carol Hudler knows how good The News-Press has it in an industry struggling with rising expenses, declining readership and growing competition for those all-important advertising dollars.

"I go to these industry conventions and keep real quiet in a corner so people won't hate me," she says, maybe only half joking.

A newspaper is a reflection of its market, and Southwest Florida isn't experiencing the economic conditions that have hit papers in places like the Rust Belt, Hudler says. "Some of the more mature metropolitan markets don't have retail and population growth," she says. "They may have population losses."

In fact, it's the opposite in our region.

"We are sitting in one of the highest growth markets in the country," says Naples Daily News president and publisher John Fish, who arrived at the E.W. Scripps Co. paper last year from the Morris Communications Co.-owned daily in Topeka, Kan. "It affords us opportunities most newspapers in the country would love to have."

According to the Newspaper Association of America, advertising revenues-the primary source of revenue for newspapers-grew by 4 percent in 2004. Although modest, that's much higher than the previous three years, when revenue dropped from 5.1 percent growth in 2000 to -.9 percent in 2001 and -.5 percent in 2002 before it went positive in 2003 with 1.9 percent growth.

Their publishers decline to provide specifics, but they do say that both The News-Press, owned by Gannett Co., and the Naples Daily News have outstripped the industry. Fish says his paper's ad revenue and growth is comparable to industry standards for this past year, and probably was more positive than the negatives seen in the industry in the previous couple of years.

Says Hudler: "We did better. We beat industry standards significantly, and it's because of the growth of the market."

Gannett overall jumped ahead of other newspaper companies in ad revenue growth with 7 percent nationally, says Rick Edmonds, a researcher and writer who works with the Poynter Institute, a journalism education organization in St. Petersburg.

"A number of us have been working hard to demonstrate that investing in editorial quality helps build circulation, and that, in turn, helps build advertising volume and support price increases, which I still think is true," he says. "But I think that Gannett does demonstrate that when you have a lot of know-how in marketing and operations, as they do.that may be the exceptional case."

Gannett decided to keep prices relatively high, even at the expense of circulation, and it didn't "go over the top in spending" to get subscribers. "That's looking like a pretty smart decision right now, because probably you're swimming against the tide in many places to try to keep the numbers up or growing. It depends, too, on the market," he adds. "It's an interesting case in Fort Myers, which is a strong and growing market."

Among Gannett's 98 papers, The News-Press ranks among the top 30 in size and profit, and the top 10 in year-over-year growth in revenue and

profit, says Hudler. Among E.W. Scripps's 19 daily papers, the Daily News ranks sixth in Sunday circulation during the winter season and seventh annually.

"One thing that makes this market so unique is how seasonal circulation is," says Fish. "I don't think there's another market like it in the country that you're going to see the fluctuation of circulation."

Sunday Daily News circulation can be as low as the 50,000s in the summertime, but shoots up to 110,000 in the winter, he says. Similarly, The News-Press adds some 40,000 subscribers during season, says Hudler.

March 2004 reports by the Audit Bureau of Circulations (ABC), an independent service that tracks media distribution and readership, show total average paid circulation for the Daily News as 56,932 for Monday-Saturday (daily) and 68,956 Sunday, reflecting gains from the previous year of 1.2 percent daily and about 1 percent Sunday. The most recent unaudited figures averaged over the past 11 months show the Daily News with Sunday circulation at 69,600 and daily at 57,600.

For The News-Press, circulation was 90,100 daily and 108,686 Sunday. Its figures reflect a loss of 1.3 percent daily and .2 percent Sundays-a typical temporary response to a rate hike, says Hudler, adding that it subsequently rose by .2 percent and .8 percent, respectively, through September. Current unaudited numbers indicate an annual increase to 90,500 in daily circulation and 108,800 on Sundays.

ABC audits for the past year were not available at press time.

The News-Press employs 550 full time and 699 total. The Naples Daily News has 354 full-time and another 13 part-time employees.

Marking Territory

Until 1995, The News-Press served a five-county area. That changed when the cost of newsprint-the paper it's printed on-skyrocketed, shaking the industry. The News-Press joined other newspapers in reevaluating its strategy, says Hudler.

Advertisers measure a medium by how well it covers a market, so News-Press leaders narrowed the market to Lee County, deciding it was better to reach a higher percentage of households in a smaller area and keep up with the high-growth Cape Coral and South Lee areas. It now reaches 42 percent of households with the daily paper and 51 percent on Sundays.

It also reaches into southern Charlotte County-territory of the Charlotte Sun-Herald of the Suncoast Media Group and the Charlotte Herald-Tribune of the New York Times Regional Newspaper Group. But its primary territory is Lee County, separate from that of the Daily News, which has focused principally on Collier County.

Notable exceptions are Bonita Springs and Estero, where the Bonita edition of The News-Press, and the Bonita Banner and Bonita Daily News, which are Naples Daily News publications, can be found side-by-side in supermarkets as the companies compete fiercely for the burgeoning market.

Fish says that according to recent ABC audit figures, for the first time, the Daily News' circulation in Bonita Springs has surpassed The News-Press. "That is where our highest circulation growth and population growth are," he says.

Marco Island is another competitive market, he adds. Scripps already has two papers there, and is launching another that will focus on the territory just off-island, along S.R. 951.

The Challengers

Newspapers have plenty of other competition. As Fish says, "Anyone taking advertising dollars out of this market is a competitor."

Yellow Pages, television and radio are some of the biggest competitors, depending on the advertising segment. For example, Hudler says her paper's primary rival is broadcast for automotive advertising, but direct mail for fast-food marketing.

As a revenue source, advertising-display ads, classified ads, preprints (flyers and other marketing materials printed by the advertiser and inserted into the paper for distribution) and online ads-far outweighs subscriptions and single-copy sales. "Over 80 percent of our revenue comes from advertising of some sort," says Hudler.

The real estate industry is a major source of advertising revenue, and both papers have several sections dedicated specifically to this market. "One of the things that makes us-and Naples, too-strong is we are looked at as the authority source," she adds. "We try to be the place where you read about the land transactions and what might happen. Land use is a key topic for us."

Large traditional retailers-such as grocery and national department stores-account for one of the biggest chunks of advertising revenue nationwide, but many newspapers have suffered as retailers trim expenses. Again, Southwest Florida's growth has shielded it because those companies are still making money here, says Hudler. "They will cut us less, if they cut us at all."

Carving Niches

The battle for advertising dollars is getting crowded, with an explosion of local and regional magazines in the past two years. "I would say, last year, we probably had a new publication come into this market every two weeks, if not every week," says Hudler. "That's just a sign of a growth market."

The growing stacks of magazines and niche publications include more than a few from the two papers-a reflection of a national trend as newspapers diversify their products to vie for ad revenue, says Edmonds. "For several years now there's been a healthy growth rate in online revenues and revenues from so-called niche publications."

Some work geographically. Community weeklies, such as those in Cape Coral or Bonita Springs, give those readers news about their town and neighborhood and provide focused vehicles for advertisers. Some are distributed free to all households, others are weekly or biweekly papers.

"Cape Coral wants its own news, Estero wants its own news, so it's nice we have a collection of advertisers that wants to reach just Estero that we can match with the news," says Hudler.

Other niche publications target particular demographics. The News-Press bought Parent & Child, for example, and has started Grandeur, a high-end magazine distributed to upper-income neighborhoods. It also launched a Spanish-language weekly mailed to households that have indicated they want it.

The story is the same for the Daily News, which has papers in Bonita Springs and Marco Island and advertising-driven publications containing only ads and canned articles. Locally produced specialty magazines include a new automotive product going to south Lee County; a new health magazine; Destination Naples, an annual publication; the start-up Coastal Elegance targeting high-income readers; and HGTV Magazine. (Scripps owns the Home and Garden Network.)