By Don Seiffert – Managing Editor, Boston Business Journal
Dec 1, 2017
The Boston Globe paid a hefty price this summer in terms of subscribers for its disastrous and well-documented transition from printing its newspaper in Boston to its new facility in Taunton.
The Globe’s Sunday print circulation numbers were down 9.4 percent year-over-year — a total of 22,621 readers — for the three-month period from July to September this year, according to figures the newspaper recently filed with the Alliance for Audited Media.
Its weekday circulation during that period was even worse, falling 9.8 percent year-over-year.
That’s a significantly faster rate of decline than either of the previous two quarters this year. The year-over-year drop in the first three months of the year was 5.2 percent for Sunday subscribers and 3.2 percent for Monday-through-Friday subscribers.
“These are pretty significant drops in print circulation,” said Dan Kennedy, associate professor of journalism at Northeastern University, via email after the Business Journal shared the most recent circulation numbers with him. He said that as of last winter, it appeared that the Globe had overcome the delivery problems it saw the previous winter, when it switched to a new delivery vendor. But, Kennedy said, the new problems this past summer — where equipment malfunctions at the new facilities led to frequent late or missing deliveries from mid-June for the next several months — “may have convinced some of their customers that it was time to walk away.”
The idea to open the Taunton facility in the first place was predicated on the opportunity it was expected to create to make more money by printing papers for other companies, such as the Boston Herald and The New York Times. But the damage Globe Media did to itself by its careless transition may have negated those presumed benefits by accelerating the decline of its most valuable asset: its print subscribers.
The Boston Globe did not respond to requests for comment.
The Globe’s total circulation — which includes online subscribers — continues to increase, and one newspaper executive contacted for this story said “they’re doing an impressive job of driving digital subscriptions.” Online subscriptions during the third quarter grew by more than 21,000 from the same period a year earlier, and now is at 103,019, according to AAM data. Earlier this year, the company benefitted from the “Trump Bump” seen at many larger, national media companies such as the New York Times and The Washington Post.
But digital growth has leveled off in recent months. From June to September of this year, the Globe added fewer than 500 new subscribers. The fact that the Globe double-counts many print subscribers who also get a free digital subscription makes it impossible to know exactly what those numbers mean.
More importantly, digital subscriptions simply don’t bring in as much revenue as print subscribers. A full-price print subscription costs around $800 a year, more than double the $360 annual cost of a digital one. Likewise, advertising revenue from online subscriptions is also significantly less than from the printed paper. The local industry executive estimated that digital subscriptions are likely responsible for just a quarter of the paper’s revenue, with print and third-party printing making up the majority of revenue.
--MORE--"
RELATED:
"Boston Globe still not forthcoming about its printing woes
By Don Seiffert Managing Editor, Boston Business Journal
Sep 20, 2017
After calls from readers and members of the media for The Boston Globe to explain what's going wrong at its new Taunton printing facility — problems that have caused frequent skipped or late deliveries of its own as well as other newspapers for the past three months — the Globe finally acquiesced.
Sort of.
An article written this past weekend by a Globe staffer walked a fine line between journalism and the Globe’s own PR spin. It detailed the complexity of giant daily print machines, and confirmed the recent firing of top executives ( first reported by the Business Journal) were indeed related to the print problems. It ultimately left the impression that the problems will be fixed in upcoming weeks or months.
But it also glossed over — or ignored entirely — a number of factors that have led to the crisis that's threatening not only the future of the region's biggest daily, but the that of most other dailies in the region. Globe officials, who have declined to respond to media outlets other their own regarding the business crisis, didn't answer questions for this article. But current and former local print industry professionals who spoke to the Business Journal on the condition of anonymity in recent days pointed to several questions that remain unanswered.
Why is the Globe running fewer print lines than originally planned?
The Globe story confirmed that four print lines are now in operation at the plant. That's down from the five described a year ago in a Business Journal interview with then-CEO Mike Sheehan. Industry experts confirm that the 20 percent reduction in planned print capacity at the plant may indeed be compounding whatever technical difficulties are also there.
Why did the facility run out of regular newsprint a few weeks ago?
Multiple sources confirmed to the Business Journal that the plant literally didn't have enough regular newsprint to finish a press run for the Sunday paper within the past few weeks, and a higher-quality paper had to be used to finish the run. Globe management was asked specifically about the incident and didn't respond. Newsprint is typically ordered weeks in advance, and such an oversight was described as "bizarre" and "incredible" by others in the industry.
Why did the Globe install new software on the 25-year-old printers in the first place?
The Goss Urbanite brand presses, all formerly owned by Gannett and used in its former Norwood plant, were outfitted with custom software by German computer firm EAE. The intention was to make them more efficient and improve quality. But industry experts question that decision, since the software appears to have caused a host of issues that can’t be fixed on-the-spot by pressmen — only by software engineers on the other side of the world. For an industry that’s expected to be dead in not too many years, the benefits of technological upgrades may simply not be worth the costs. “I don’t think they gave this thing enough time, money or resources,” said one publishing executive. “They expected to just be able to plug it in and it would work.”
Finally, why make a $72 million investment in an industry that's in decline?
First conceived two or three years ago, the idea to move the Globe’s press production from Dorchester to a new, bigger facility in Taunton was seen as a way to supplement the newspaper’s sales and subscription revenue through contracts to print other dailies like the New York Times and The Wall Street Journal. Acknowledging that printed newspapers are indeed on the decline, the business strategy was to be the last printer in the region, and take over nearly all of the remaining business. One person in the industry called that decision “insane” on its face, pointing out the margins in the print industry are low — about 10 percent on average — requiring unrealistically high volume to get a decent return on investment. The size of that investment was said to be $72 million in a tax incentive agreement with the city of Taunton earlier this year. And while there's no way of knowing how much print revenue the Globe now has, data from 2013 pegs the amount at about $43 million annually. At that rate with a 10 percent margin, it would take 17 years to recoup $72 million. And at least $5.6 million of that 2013 revenue is now gone, as Gatehouse Media took its printing in-house a couple years ago.
First conceived two or three years ago, the idea to move the Globe’s press production from Dorchester to a new, bigger facility in Taunton was seen as a way to supplement the newspaper’s sales and subscription revenue through contracts to print other dailies like the New York Times and The Wall Street Journal. Acknowledging that printed newspapers are indeed on the decline, the business strategy was to be the last printer in the region, and take over nearly all of the remaining business. One person in the industry called that decision “insane” on its face, pointing out the margins in the print industry are low — about 10 percent on average — requiring unrealistically high volume to get a decent return on investment. The size of that investment was said to be $72 million in a tax incentive agreement with the city of Taunton earlier this year. And while there's no way of knowing how much print revenue the Globe now has, data from 2013 pegs the amount at about $43 million annually. At that rate with a 10 percent margin, it would take 17 years to recoup $72 million. And at least $5.6 million of that 2013 revenue is now gone, as Gatehouse Media took its printing in-house a couple years ago.
There’s little doubt that if the problems aren’t fixed, they will hurt the Globe’s bottom line. While the Boston Herald (the Globe's biggest customer as of 2013) declined to say whether it's considering other printing options, its public comments are becoming more and more pointed.
That underscores perhaps the most pressing issue caused by the Globe’s print failures: If it’s not fixed, it will not only threaten the Globe's newsroom, which has already been whittled down considerably in recent years. It will also threaten the viability of the Herald and the regional business of most of the other daily newspapers that serve the region. And if local readers start canceling subscriptions to the New York Times or other national dailies, those papers will be less and less likely to cover the area.
That's what makes the Globe's problems more than simply an internal, company issue — and one that deserves far more honesty and accountability than the company has shown so far.
--MORE--"
Hey, as long as they pay good, right?
"As Boston Globe struggles, signs of labor unrest
By Don Seiffert Managing Editor, Boston Business Journal
Amid The Boston Globe’s efforts to overcome the embarrassing printing problems that have plagued it for the past three months are growing signs of employee anger aimed at top management.
An
anonymous flyer that’s reportedly been seen around the Globe’s offices
in recent weeks (a copy of which was sent to the Business Journal) calls
out Boston Globe Media owner John Henry by name and urges employees to stop him from “destroying” the daily newspaper and its workers.
“After a series of missteps since acquiring the Boston Globe, a desperate John Henry
is resorting to anti-worker tactics and now the company is facing a
federal labor charge,” the flyer states below a photo of Henry. It also
urges employees to call Globe CFO Vinay Mehra
— who just joined the company a few months ago and is arguably the top
executive at the company at the moment — to tell him that “the Globe
needs to treat their working families with respect.”
The flyer offers no details on the “tactics” or the “federal labor
charge.” The Boston-based union of the Globe’s delivery drivers, the
International Brotherhood of Teamsters Local 25, filed a complaint
against the company on Sept. 14 which is still pending. The complaint
alleges “refusal to bargain/bad faith bargaining, according to the
National Relations Labor Board website, but gives no further details.
Teamsters Local 25 President Sean O’Brien declined to comment on either the complaint or the flyer. Mehra and the Globe’s media contact, Jane Bowman, also did not respond to requests for comment.
The Sept. 14 labor complaint is one of two unresolved complaints through the NLRB, and one of 10 complaints recorded on the agency’s website since Henry bought the Globe in late 2013.
The Sept. 14 labor complaint is one of two unresolved complaints through the NLRB, and one of 10 complaints recorded on the agency’s website since Henry bought the Globe in late 2013.
The
recent signs of unrest come nearly two years after Henry launched STAT,
a healthcare focused publication — with a non-union staff — with
stories that have increasingly replaced those written by Globe staffers
in the paper. That move spurred leaders of the Globe’s primary union,
the Boston Newspaper Guild, to meet with executives to complain that STAT appears to violate a number of covenants within the union’s collective-bargaining agreement, according to sources.
While Mehra did not comment for this article, in the Globe's own story on its printing problems,
published Sept. 16, he suggested that a resistance to adapt to the new
printing machines on the part of the Globe’s senior pressman may be to
blame for the many problems at the Taunton plant. As Dan Kennedy, a
local blogger on the media, wrote regarding that story:
“I don’t think Mehra helped the situation by insulting the very
front-line people who’ve been stuck trying to fix a mess created by the
paper’s top executives.”
The Sept. 14 labor complaint by the Teamsters was just two days after the Business Journal had reported that the top executive at the Boston Globe, Chief Operating Officer Sean Keohan,
had suddenly left his job. The Globe later confirmed, in its own story
on its printing problems, that Keohan had been fired (along with another
top executive) due to problems at the new printing facility in Taunton
which the Globe has used since June 19. It's not known whether the labor
complaint is related to the firing or the print problems.
--MORE--"
