New daily stresses low costs

Advertising rates 75% below News and Free Press

The forthcoming rollout of the Detroit Daily Press — believed to be the first daily launched in a major U.S. city since the now-defunct New York Sun in 2002 — is being greeted with curiosity and skepticism in the newspaper industry.

The seven-day home-delivered broadsheet paper is a venture by veteran publishing brothers Mark and Gary Stern. They're targeting people disgruntled by The Detroit News' and Detroit Free Press' trimming home delivery to three days a week while raising prices, and plan to keep costs low by contracting printing, renting the old Daily Tribune office in Royal Oak and avoiding costly labor deals.

Not having union contracts is “more than a leg up,” Mark Stern said. “It's a whole body up.”

The Sterns also plan to offer lower newsstand prices (50 cents daily and $1 Sunday) and advertising rates that are 75 percent cheaper than their metro Detroit newspaper competitors. It hits newsstands in Wayne, Oakland and Macomb counties Nov. 23, and home delivery begins Nov. 30.

“Given what we've seen in that market, the Detroit Daily Press' success will depend on how effective it will be in trying to sell home delivery to print readers who might feel the Detroit Media Partnership has left them behind by cutting back on publishing days, and also how aggressively it prices its advertising,” wrote Shawn Moynihan, managing editor of New York-based newspaper trade magazine Editor & Publisher, in an e-mail to Crain's. “Impossible? Not if the Sterns can keep their overhead down and put out a great product that readers can latch onto.”

The Detroit Newspaper Partnership is the joint business operation of The News and Free Press.

“We already compete with at least 40 daily newspapers in the state, weeklies, shoppers, radio, TV, magazines, the Internet, direct mail, cable, etc.,” said Rich Harshbarger, the partnership's vice president of consumer marketing. “No other local media option has the reach we do. Every week, 1.9 million people — or half of all adults in our market — read our print and online products.”

The Press has the interest of the local public-relations industry, which sees it as another outlet for marketing.

“I did just become a subscriber this week and truly am excited about the possibility of another editorial and advertising channel for my clients,” said Jason Brown, owner of Oak Park-based PublicCity PR. “I think they really need to position themselves as the paper that will focus on the positive local, community news, as that is an area that is currently underserviced in this market with the downsizing of the Eccentric papers and the News and Free Press discontinuing their community news inserts.”

Declines in print advertising stemming from reduced marketing budgets amid the recession, plus a general move from print to online news, has fueled massive revenue downturns at newspapers.

Detroit's metro dailies are losing money and announced late last year that they were trimming home delivery and bolstering online offerings in a bid to cut costs and meet changing consumer demand.

“We're fighting an economy that is dreadful, and Detroit's is worse than dreadful,” said William Dean Singleton, vice chairman and CEO of Denver-based MediaNews Group Inc., which owns The News.

The junior partner in the Joint Operating Agreement with the Gannett Co. Inc.-owned Free Press, The News would appear to be squarely in the Press' sights. The fledgling newspaper has said its target audience is older readers who prefer home delivery — long a demographic of The News' traditional readership base.

Detroit News Editor Jon Wolman told Crain's he welcomes additional competition.

“The News has had competition for every day of 136 years, and yes, we'll certainly want to add this new paper to our watch list,” he said by e-mail. “We'll meet the challenge with an inventive staff which enjoys the rivalry of Detroit journalism.”

Nationally, average daily newspaper circulation dropped 10.6 percent in the April-September period from the same six-month span in 2008 — a worse drop than the 7.1 percent decline seen from October 2008 to March 2009. Sunday U.S. newspaper circulation also fell, down 7.5 percent compared to the same period a year ago.

Those declines were sharp in Detroit: Free Press daily circulation fell 9.6 percent during the week and 7.5 percent on Sunday. The News' decline was 5.9 percent.

“It's not a very welcoming climate. It's not easy selling local ads these days, especially into a local publication, a local print publication besides,” said Peter Zollman, founder of Florida-based Classified Intelligence, a consulting/analysis firm focused on newspaper advertising. “The news industry is still very profitable, but still very tough in urban markets and major cities.”

Not having corporate debt, organized labor contracts and legacy costs work in the Press' favor, Zollman said, as will being able to set its own advertising prices. But it has to keep people coming back.

“Once the novelty factor wears off in a few weeks, they've got to keep people buying the paper,” he said.