Weekly community-based papers have been feasting on the leavings and taking market share from the large dailies. From 1965 to 1992, a period during which the U.S. population nearly doubled, daily-newspaper readership stayed flat at about 60 million, according to the National Newspaper Association of America. In the same period, readership of weekly papers rose from about 30 million to 50 million. While that rise does reflect demographic changes, Morse believes it also makes a strong case that news, like politics, is ultimately local. No matter how wired the global village is, people will always care most about the immediate reality that surrounds -- and affects -- them. Morse knew how to capitalize on that phenomenon. His first step was to narrow the editorial focus of Courier's papers. He understood the concerns of a hungry and interested readership down in the murky depths of his market.
If he built circulation, the advertisers would come.
* * *
The Advertiser:
Make the Retailer's Door Open
In his impressionable youth at the Los Angeles Times, Morse recalled, the paper's bread and butter were large retailers who could afford expensive display ads. Yet he'd noted as he went up against many community newspapers that there were scores of accounts the Times could never touch. They were the small retailers with small ad budgets. In contrast to the big advertisers, who were often selling an "image," the small retailers had a pressing agenda. "The name of the game in retail is cash flow," says Morse. "The small retailer can't afford to tie up a lot of money in advertising. You want to be able to make the retailer's door open and close for the least amount of money."
Morse says the price of an ad is paramount to the typical small retailer. Most small retailers would rather opt for a $300 ad in a 10,000-copy issue of the Courier than pony up $1,000 for an ad in the Portland Press Herald with its circulation of 95,000, for the simple reason that they can easily lay their hands on $300. Scratching together $1,000 is another matter.
Bill Elfers, chairman of Community Newspaper Co., a group of 64 local weeklies in the Boston area, says that in a world of increasingly specialized media choices, the advertiser "doesn't want to be paying for readers who are not in his market." In that sense, says Elfers, many local advertisers see large metro dailies as "broadcast" media and therefore not cost-effective. Elfers notes that most people shop close to home, and only such large purchases as cars and appliances will take them any distance. So it doesn't pay for a local advertiser to buy broad coverage if he or she is selling a low-ticket item. Elfers observes that Community Newspaper has, in the aggregate, more advertising accounts than the Boston Globe, the dominant paper in the Boston area, even though the Globe's total circulation is more than double that of all Elfers's papers.
Furthermore, Morse points out, given sufficient economies of scale, producing a weekly paper can cost as little as one-seventh of the cost of a daily. That lower overhead lets the publisher keep ad rates down, retain local advertisers, and sustain life at the bottom of the pond.
* * *
The Process:
Reengineer the Company
"Wanna Coke?" It's midmorning, and Morse is fishing through his pocket for change in front of the vending machine in Courier's basement. "We negotiated even this." He taps the price sign on the machine, which reads 50¢ -- down from 70¢. "I told the vending-machine company, 'Look, if you charge only 35¢ in Wal-Mart, you can't charge us 70¢."
A can of Diet Coke comes barreling out of the machine. Morse grabs it and heads down the hall, slipping into a stream-of-consciousness account of the costs he has cut in every corner of the building. "Inflation was really low last year, right? We went back to all our suppliers and said, 'No price increases, otherwise we'll shop around.' We haven't raised our rates to our advertisers." He tests a nearby door. Locked. Good. Locking the office supply room and giving one person the key has cut that cost in half. Welcome to the tighter, brighter Courier Publications, where each of the six department heads is responsible for a line on the profit-and-loss statement, and bonuses for the whole company are tied to operating-profit targets; where the chief financial officer buys supplies at discount clubs; where Morse routinely rides delivery trucks to get his nose as close to the market as he can.
When Morse arrived, almost three years ago, Courier wasn't quite so lively. In a perverse sense, though, the tide was running in his favor because things were so bad. The board of directors saw the company's predicament and gave him room to maneuver. "There were changes that needed to be made," allows Richard Warren, Courier's majority owner.
Morse told the board he needed to modernize. He had to add technology, cut costs, and grow revenues. Fortune intervened. Maine Antique Digest, the company's major printing account and the bad-news item on Morse's first day, returned after just one month because the Connecticut printer to which it had strayed could not deliver on its promises. Morse also had considerable leeway as he introduced technological changes. Courier was so far behind the times that his innovations were not constrained by earlier, potentially incompatible equipment purchases. Best of all, another struggling newspaper company in the neighboring town of Belfast came up for sale.
Morse had had his eye on that property. A friend had been negotiating its purchase. "We'd talked about doing something together if he bought it," says Morse. "But he couldn't see how he could make it work." Morse could. "I'd followed this story for a year, and I understood the numbers." Morse allows that those numbers, produced by a creaky family business run benevolently by its owner, Emmy Saltonstall Lewis, were red and convoluted. Still, he was confident the acquisition would promote operating synergies that would jump-start Courier's return to profitability. The board -- notably Rick Warren, the publisher of the Bangor Daily News and son of Richard Warren -- was very supportive. "Rick saw what I was talking about right away," says Morse.
