Papers chop home delivery

Here comes the news we've been expecting and dreading for months: Two major metro papers are eliminating home delivery on all but Thursdays, Fridays and Sundays. The WSJ reports that the Detroit Free Press and Detroit News, which publish under a Joint Operating Agreement, will make the announcement next week. Word is that on Monday, Tuesday, Wednesday and Saturday, single copies of an abbreviated print edition will only be available on newsstands. Both papers will supposedly expand their digital editions.

The Free Press and News would be the first dailies in a major metropolitan market to curtail home delivery and drastically scale back the print edition. More newspapers are contemplating similar moves as the erosion of advertising and rising costs of print and delivery have brought publishers to their knees. In October, the Christian Science Monitor said it will stop printing a daily newspaper in April and move instead to an online version with a weekly print product.

[CUT]

Even by industry standards, the Detroit newspapers have been hit particularly hard due to the effects of the troubled auto industry on Michigan's economy. Weekday circulation has declined 15% at the Free Press and 22% at the News over the past five years, according to the Audit Bureau of Circulations. In October, Dave Hunke, publisher of the Free Press, said "It's time for us to look at some radical departures from our business model."

It should be pointed out that the Detroit News is owned by Dean Singleton's MediaNews Group, which also owns the Daily News, Daily Breeze and other Los Angeles Newspaper Group dailies (the Free Press is owned by Gannett). Also worth mentioning is that Moody's Investor Services downgraded the company's rating and said there was "a substantial risk" of default. Moody's said it calculates MediaNews Group's leverage ratio as more than 8 times debt to EBITDA (earnings before interest, taxes, depreciation and amortization). That's almost as bad as the situation at Tribune. A MediaNews spokesman says the two companies cannot be compared because the largest MediaNews debtholder is also its partner, Hearst Corp. (Tribune debt is mostly held by banks). Well, OK. But does anyone doubt that if the Detroit cutbacks prove beneficial to the bottom line, there will be similar moves across the MediaNews empire?


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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
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