Journalists at the Kansas City Star are
closely monitoring the introduction of free newspapers in larger markets such as Baltimore
by billionaire Philip Anschutz and his Denver-based Clarity Media Group (story below).
The Anschutz Entertainment Group (AEG) is responsible for the new Sprint Arena in downtown
Kansas City.
Clarity has already launched tabloids similar
to Baltimore's in San Francisco and Washington. They feature shorter stories, much
lower advertising rates, and target only affluent demographics.
Clarity has trademarked the Examiner name in
more than 60 cities---including Kansas City....
**********
Wall
Street Journal (4/5/06)
Do New Free Dailies Mean Sun Is Setting
For Paid Newspapers?
By JOSEPH T. HALLINAN
April 5, 2006; Page B1
BALTIMORE -- When the Baltimore Examiner, America's newest daily newspaper, hits 250,000
stoops and driveways here today, it will boast a bigger circulation than the 169-year-old
Baltimore Sun.
Of course, no one is sure what that quarter-million papers will really mean to advertisers
because they will be delivered unsolicited and at no charge.
But as newspapers struggle to woo advertisers and keep readers in the Internet age, the
Examiner stands out as arguably the boldest experiment yet in America's deepening flirtation
with free daily newspapers.
"Can a mature subscription-based daily paper -- even one as respected as the Sun -- be
vulnerable to an upstart that's giving news away?" says Thomas Kunkel, dean of the Philip
Merrill College of Journalism at the University of Maryland. "It really and truly is a very
interesting and open question."
Free commuter papers -- some started by established publishers such as Tribune Co. and
Washington Post Co. -- have spread to Boston, Chicago, New York and Washington. And the
Examiner's Denver-based parent, privately held Clarity Media Group, has launched breezy,
tabloids similar to Baltimore's in San Francisco and Washington.
The new paper is a concern for the venerable but weakened Sun and its parent, Chicago-based
Tribune. Six years ago, Tribune acquired the Sun as part of its merger with Times Mirror.
Ever since, Tribune has struggled to improve the profitability of the Times Mirror papers.
The Sun, which charges $2.50 a week and up for home delivery, lost 20,000 readers last year,
or nearly 8% of the previous year's total, and now sells 247,193 copies a day.
"We certainly take them very seriously," says Sun Publisher Denise E. Palmer. The Sun, which
has won 15 Pulitzer Prizes in its history, launched a redesign in September that makes the
broadsheet a speedier read, and has recently beefed up its local coverage, especially in key
suburban markets like Howard and Anne Arundel counties. "We're going to have vastly, vastly
more news in those counties than the Examiner has," Editor Tim Franklin says.
The Examiner is the brainchild of billionaire Philip Anschutz, co-founder of Qwest
Communications International Inc., a once-highflying telecom company that stumbled badly
during the tech slump. Amid growing skepticism about newspapers' prospects, Mr. Anschutz,
who declined to be interviewed, has become more involved in publishing. Two years ago he
bought the 141-year-old San Francisco Examiner for $20 million. Then he bought a small group
of suburban papers near Washington and effectively rebranded them as the Washington
Examiner. Clarity has trademarked the Examiner name in more than 60 cities.
Unlike its sister papers, though, Baltimore's will be built from scratch. The Examiner -- or
the X, as it is known -- aims to be a slimmed-down, but full-fledged metro daily, complete
with a copydesk, photographers, editors and reporters. Though there have been alternative
weekly papers stacked in coffee shops and bookstores for decades, and free dailies handed
out to commuters in recent years, this new subscriber-less paper will offer daily news
targeted to the suburbs and the tonier parts of the city.
"What I think is interesting about this economic model is its concession that newspapers are
really about the advertising stream anyway," Mr. Kunkel says. The little-known secret of
most papers, he says, is that income generated by selling the paper barely covers the costs
of attracting and keeping readers. "So what the freebies are saying is 'Heck, let's stop the
charade.' "
Clarity Chief Executive Ryan McKibben says that the Washington Examiner delivers about
260,000 copies each weekday and the San Francisco paper about 161,000. So far, though, they
do not appear to have damaged the competition. In a detailed report issued Friday on
circulation trends in the newspaper industry, Prudential Equity Group analyst Steven N.
Barlow said, "It is not apparent that the Washington Examiner...has had any impact on
circulation at the Washington Post."
Clarity looks to be in for the long haul in Baltimore. It has signed a 10-year lease for a
roughly 15,000-square-foot office overlooking the city's Inner Harbor. "This seemed like
ground zero for Baltimore," says Mr. McKibben, a former Denver Post publisher.
The paper is a bare-bones effort. The printing of the paper as well as its distribution are
being farmed out to private contractors. The staff, too, will be sparse. Examiner Publisher
Michael Phelps, who is a former vice president of Lee Enterprises Inc. and publisher of the
Quad-City (Iowa) Times, declines to say exactly how many reporters the Examiner will hire,
but the newsroom has only 20 computers.
Journalistically, there's little comparison between the two papers. The Sun's staff of 340
journalists is roughly 15 times as large as and far more experienced than the Examiner's,
many of whom are recent college graduates that Mr. Phelps simply calls "the kids." The top
editor is Frank Keegan, formerly editor of the Connecticut Post. Examiner stories will be
short, Mr. Phelps says -- 300 words or so -- and the paper is designed to be read in under
20 minutes.
Unlike the Sun, the Examiner is essentially a niche publication. It will be delivered only
to neighborhoods where the median household income is $73,000 or more. This eliminates most
of the homes in Baltimore County, where median household income in 2003, according to U.S.
Census estimates, was just above $50,000.
The Examiner's ads are relatively cheap, about $2,900 for a full page, compared with perhaps
$17,000 for the Sun, though actual prices can vary considerably. The Examiner is betting
that the combination of low ad rates and a targeted, affluent audience will make the
Examiner a valuable proposition to advertisers.
The Sun has been without a competitor since the Baltimore News American closed in 1986.
Since then, the Sun has developed a reputation among some advertisers for being inflexible
on price, says Andy Malis, president of MGH Inc., an advertising and public relations agency
in Owings Mills, Md. That may create some opportunities, but after reading the Examiner's
sister paper in Washington, he says, coverage in the Baltimore version will probably be
equally thin and heavily reliant on wire-service stories. "I find it hard to believe that a
lot of people are going to cancel their Sun subscription for this," he says.
Many advertisers have traditionally shied away from "throwaway" publications, believing that
they aren't really read.
Clarity is banking on a shift in reading habits. As more people, especially younger ones,
get their news free from the Internet, they are less inclined to equate free news with
"cheap" or "insufficient," says Mr. Kunkel, the Maryland dean. "The audience cares not a
whit whether they're paying for it or not," he says. "They read it if it's good and don't if
it's not." And if readers truly begin caring less if their news is free or not, that may
also break down the traditional resistance of advertisers to free publications.