From AJR,   April/May 2005

Yet Another Contender   

Washington’s new Examiner enters a crowded field, but the free daily has a very different business model.

By John Morton
John Morton (mortoninc@msn.com), a former newspaper reporter, is president of a consulting firm that analyzes newspapers and other media properties.     

If I were determined to create a new daily newspaper, the last place I would choose to do it is Washington, D.C.

First there is the Washington Post, which sells its newspapers to a higher percentage of households in its immediate market than any other big-city daily in the nation. Of less consequence because of its relatively small size, but still important, is the Washington Times. Then there is the free commuter daily, Express, published by the Post. Add to all of this a plethora of free suburban weeklies, alternative papers, neighborhood publications, Capitol Hill newspapers and assorted bloggers.

Yet it is in Washington's maelstrom of numerous and generally highly competent journalistic efforts that a company called Clarity Media Group chose to launch a new daily in February called the Examiner.

Now, before going further, let me say that if I did have the wherewithal and the desire to start a daily in Washington, I would choose precisely the business model being followed by the Examiner. It is not a proven model for financial success, but neither has it proven to be a failure.

According to an old newspaper business axiom, it is not possible to establish a financially successful daily newspaper in a market that already has one. Many attempts have been made in cities large and small, and all eventually wound up failing.

Many factors contributed to this, but the fatal one is that the new dailies were never able to garner enough circulation in comparison with their rivals to set advertising rates high enough so that ad revenue together with circulation revenue covered operating costs. The new dailies' circulation did not grow sufficiently mainly because reading habits are extremely difficult to change. Moreover, few are the newspaper buffs like me who would eagerly subscribe to more than one paper.

The key words in the preceding paragraph, when looking at the Examiner's prospects, are "circulation revenue," for the Examiner has none. The Examiner is delivered free to more than 200,000 generally high-income households in the District of Columbia and its surrounding suburbs; an additional 50,000 or so copies are available in newspaper racks. (About 600,000 of the Post's 700,000 weekday circulation and 800,000 of its million Sunday subscribers are within the Washington area.)

To my knowledge, this is the first major attempt to establish a free, controlled-circulation daily in a large city in competition with established paid-circulation dailies.

The attraction of this strategy is obvious. Unlike other free papers, which must convince advertisers that copies picked up from newspaper racks wind up in the hands of people the advertisers want to reach, the Examiner can point to actual delivery to a sizable collection of desirable highincome households.

Even if the advertising cost to reach each of these households might be higher at the Examiner than at, say, the Washington Post, the Examiner will be a much more efficient buy because advertisers are not paying to reach all those Post subscribers who have lower incomes and are less attractive to advertisers.

So enough about business strategy. What kind of newspaper has the Examiner turned out to be? Its 64 tabloid pages are logically and attractively laid out, with heavy emphasis on local in the early pages (although it is a little startling to see stories about a Washington Wizards game and an overabundance of deer in Rock Creek Park attributed to the Associated Press), followed by federal government news, national, world, opinions (mostly conservative), lots of feedback from readers (sometimes followed by editors' comments), business, fine arts, sports and a changing lineup of other categories.

The Examiner's articles tend to be brief but not unduly truncated on major stories. The front page basically is a collection of attractive flags for stories within. In all, the Examiner delivers on its promise to be an easy-to-read, convenient alternative for those who are weary of the heavy lifting required by full-size broadsheet papers. Whether these attributes will draw away many readers from the Washington Post remains to be seen, but any new newspaper is bound to have some effect.

Clarity Media is a holding company controlled by the Denver billionaire Philip F. Anschutz, who made his fortune as a founder of Qwest Communications, so a lack of capital — which helped sink earlier newspaper startups--probably won't be a problem for the Examiner. Anschutz earlier had acquired the ailing San Francisco Examiner, which is now a free tabloid newspaper similar to Washington's Examiner and apparently is a model for the D.C. effort.

And Anschutz's Clarity Media has acquired trademarks for the Examiner name in 63 markets, suggesting ambitions to publish other free dailies against established newspapers. It may be that Clarity figures if the Examiner business model works in Washington, D.C., with all its competitive challenges, it will work anywhere.

Addendum: My last column, about the likely fate of Pulitzer Inc., mentioned several prospective acquirers but not the one that actually won the bidding, Lee Enterprises. So much for my prescience.