Saturday is a lost day for the newspaper industry.
It’s usually the day with the fewest number of subscribers. And with a shelf life of only a few hours before the early editions of the advertising-packed Sunday editions hit the streets, Saturday papers have barely any time to make a splash with readers.
But The Wall Street Journal is betting that the first day of the weekend is much more than a throwaway day.
In announcing that it is planning a Saturday weekend edition beginning in September 2005, the paper is not only embarking on one its most ambitious launches but thumping conventional wisdom about peoples’ reading habits.
The move also continues the paper’s closely watched drive to broaden beyond financial news and expand its sluggish advertising base into territories held by other newspapers such as large metropolitan dailies, and even lifestyle magazines like Real Simple.
But media executives and observers are so far unsure of just how much of a threat the Journal’s new weekend strategy poses to the traditional Holy Grail of large Sunday metro newspapers.
While some media buyers and even executives at the Journal say the national scope and mostly well-heeled audience of the Journal differs dramatically from traditional newspapers’ broad demographics, others say any new news product is a threat.
“Anytime the Journal or USA Today makes a move into the weekend it has an impact on daily newspapers because of national advertising,” said Richard Honack, chief marketing officer at Northwestern University’s Kellogg School of Management. “The Journal’s database is top of the pyramid, and national advertisers love that. The high-end advertiser could be another segment of the Sunday newspaper that spends some of their money elsewhere.”
The Journal’s move is not without risks.
Some media executives contend that the Journal and other newspapers expanding into lighter fare of lifestyle journalism risk losing their core competence: delivering hard financial news.
“What they have to do is stay true to who they are. People still turn to newspapers for news,” said Brenda White, media director at Chicago-based media buying giant Starcom USA.
But executives in the industry say that newspapers like the Journal have little choice to change as readership and advertising patterns have been dramatically altered.
The Journal has been under intense pressure to obtain new sources of advertising to offset nearly four years of declining revenues from technology advertising. More than most newspapers, the Journal was hard hit by the collapse of many Internet and telecommunications companies.
U.S. advertising revenues peaked in 2000 at $1.072 billion, bottomed at $570.4 million in 2003, and are tracking toward $650 million for 2004, said Morgan Stanley media analyst Douglas Arthur.
“The severity and consistency of the drop at the Journal is starting to suggest that this is no longer cyclical, it’s secular,” Arthur said. “In other words, this might not come back, and the Journal has to develop new sources of advertising.”
It is following in the footsteps of lifestyle magazines like Real Simple, Martha Stewart Living, and Oprah Winfrey’s O magazine, which exploded onto the scene a few years ago and grabbed a significant number of readers and advertisers.
“I think newspapers are just now kind of catching on to the trend,” said Starcom’s White. “In this down print [advertising] marketplace, newspapers are looking for other avenues to gain revenue and other readers.”
Sammy Papert, chairman of Belden Associates, a newspaper consultancy based in Dallas, explains that while a substantial segment of readers remains interested in so-called hard news, readership in general has fragmented, forcing newspapers to create new sections and even separate editions to attract specific audiences.
In the past two years, many newspapers have launched separate dailies aimed at younger readers and Spanish-language dailies.
“Newspaper circulation has declined not because of bad circulation managers but bad content,” Papert said. “Sure this creates more competition, but what it really says is that newspapers like the Journal are extending their line, creating new products to reach readers and advertisers.”
But pressure on the Journal to continue to broaden has been building. Earlier this month Dow Jones revised its guidance downward for the third quarter. It cited softer-than-expected September advertising bookings at the Journal related to categories such as technology, travel and general business-to-business.
Karen Elliot House, publisher of the Journal, says the Weekend Edition is an effort to leverage the newspaper’s “very affluent” readership to expand advertising beyond business-to-business products and services.
The Saturday edition will include a section called “Pursuits,” dedicated to lifestyle and leisure news and advertising.
Ironically, the Journal’s drop in advertising revenue has coincided with a rise in its circulation. Due in part to the success of its Web site, the paper’s circulation is 2.1 million, including about 300,000 online subscribers.
With that kind of reach, the Journal’s Weekend Edition could pose new problems for large metropolitan dailies that have long enjoyed robust revenues from Sunday editions packed with advertisements for lifestyle and home decor products, and services for travel, sports and entertainment, especially those geared at higher-income consumers.
Like most start-ups, Weekend Edition is likely to operate in the red for the first couple of years. Merrill Lynch & Co. estimates that in its first year, Weekend Edition will cost about $50 million to produce and generate roughly $39 million in advertising revenue. To publish it, the Journal is planning to add 150 employees.
Publisher Jay Smith of Cox Newspapers, owner of the Atlanta Journal-Constitution, insists he is not worried about the Journal taking away national advertisers accustomed to appearing in large metropolitan dailies.
“The Journal has a large readership nationwide but comparatively small in each market,” Smith said. “If they did have success with certain national advertisers, I would expect they would pose more of a threat to high-end magazines than a large metro daily.”
Some media buyers concur. Scott Harding, chief executive of Naperville-based Newspaper Services of America, one of the country’s largest newspaper media buyers, argues that the Journal is more likely to pursue large national advertisers for its Weekend Edition than retailers that have traditionally preferred the reach of a local paper.
“The reality is that the reach [of the new Weekend Journal] in the local market isn’t going to give a traditional retailer enough penetration in a given area to drive their store traffic.”
But national newspapers–the Journal and USA Today–have increasingly crept into the advertising territory of big metros over the past few years.
And national newspaper advertising, though far less than what’s spent in local newspapers, continues to grow at a faster pace than local newspaper advertising. In the first half of 2004, national newspaper advertising grew 10.8 percent compared with local newspaper advertising, which grew at a 7.5 percent clip, according to figures from TNS Media Intelligence/CMR.
That has some daily newspaper executives keeping a close eye on the Journal’s new product.
“We consider all media to be competitors and will certainly keep an eye on the new Wall Street Journal product,” said David Murphy, president of Tribune Co.’s Tribune Media Net, the national advertising arm of the company.
“This also drives home the continuous need to find ways to create new, efficient and multimarket advertising vehicles for our national customers.”
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Saturday vs. Sunday
The Wall Street Journal plans to publish a Saturday edition beginning in September 2005. The edition will compete with Sunday papers of metropolitan dailies such as The New York Times.
10 LARGEST NEWSPAPERS
By Sunday circulation except for USA Today, Wall Street Journal
1. USA Today 2,635,412 (Mon.-Fri.)
2. The Wall Street Journal 2,101,017 (Mon.-Fri.)
3. The New York Times 1,677,003
4. Los Angeles Times 1,392,672
5. The Washington Post 1,025,579
6. Chicago Tribune 1,002,398
7. New York Daily News 802,103
8. Denver Post/Rocky Mountain News *783,274
9. Philadelphia Inquirer 769,257
10. The Dallas Morning News 755,912
AD SPENDING IN NEWSPAPERS
2002: $23.85 billion
2003: $26.24 billion
*Joint operation agreement
Sources: Audit Bureau of Circulations, GolinHarris
Chicago Tribune
