The Sun and other newspapers are caught up in two revolutions that threaten their future.
The first is a revolution in the way people get and digest their news. The challenge is to evolve so as to appeal to younger people with busy lives and shorter attention spans without losing the deeper perspectives readers expect.
The second is a revolution in the way Americans shop – for everything from clothing and computers to cars and even jobs. The challenge to papers is to remain a vital resource for retailers looking for customers. If they don’t, newspapers won’t earn the money they need to cover the news.
Front-page stories in The Sun last week spotlighted that challenge.
The 61-store Hecht’s department store chain – the region’s dominant mall anchor – is likely be consolidated into a collection of Macy’s or Bloomingdale’s stores, operated by Federated Department Stores, which purchased Hecht’s owner May Department Stores for $11 billion.
The Sun’s stories emphasized the larger economic shifts and dangers – traditional department stores such as Hecht’s are being squeezed by upscale retailers who cater to the more affluent and box stores that offer great prices. There are more than 1,600 Hecht’s jobs at risk in the Baltimore area, as Federated decides what to do with the Hecht’s mall anchors in this region.
But, for The Sun the danger is more directly visible.
Hecht’s is the newspaper’s largest retail advertiser, as anyone who reads the paper’s first section can attest. That section – which is considered premium space by advertisers – is some days dominated by full-page and three-quarter-page Hecht’s ads.
Those ads produce significant revenue for The Sun. That income has already been shrinking because of the retailing revolution.
“Even before this merger, Hecht’s was moving to reduce their marketing costs and diversify their advertising efforts with preprints,” said Lenora Howze, The Sun’s vice president for advertising. Federated (Macy’s) had preceded Hecht’s with similar advertising spending reductions with the newspaper.
The bottom line is that this merger could have significant effect on The Sun’s revenue outlook, which could affect the resources available for the newsroom. More than ever, the ebb and flow of advertising revenue and other financial issues can have a direct impact on spending for news coverage.
“Every newspaper in the country that has a May or Federated store within their market could potentially be affected by one of the brands – and their advertising dollars – going away,” Howze said.
Marty Padden, The Sun’s director of retail advertising, said he does not expect to see any effects from the merger this year. “But in 2006, there will most likely be a reduction in advertising spending from Hecht’s,” he said.
Federated’s newspaper advertising strategy in this market will be important to the paper as it deals with the shifting ways people shop – for houses, cars, jobs, clothing, electronics, household appliances and home improvement material.
The Internet has become an increasingly important venue for such shoppers, and The Sun and other newspapers are trying to develop their news Web sites to serve these shoppers.
“There has been an exponential growth in advertising revenue at baltimoresun.com,” said Mireille Grangenois, The Sun’s vice president for marketing and interactive media.
“We have seen a significant growth in retail advertising online over the years,” she said.
But national surveys indicate that online advertising still constitutes only a tiny fraction of newspaper ad revenues.
“It is too early to tell what Federated’s overall plans are for this region, but I expect they’ll have a somewhat different approach,” Grangenois said. Padden thinks Federated’s business model will continue to emphasize print newspapers and television but agrees change is inevitable.
The potential effect on The Sun’s advertising revenue is not as important as the job security of hundreds of workers or the quality of shopping for consumers.
“Not having Hecht’s be the big player in this market is hard to imagine,” said one reader “But the world is really changing fast. I wonder how a lot of the folks at Hecht’s are feeling about this.”
It’s The Sun’s job as a newspaper to answer questions such as that.
But, finding new ways to meet the changing needs of readers and advertisers while meeting demands for profits from Wall Street investors appears certain to force significant evolution in newspapers in coming years.
If we are smart and lucky, newspapers will continue to play a central role in American life.
“In the short term, the volume of eyeballs will still be heavily tilted toward the printed newspaper,” said Grangenois. “But in the long term, the growth of online use will mean more eyeballs on the Web site. We need to be prepared to make this transition work for everyone.”
