Clark Gilbert, “Dual Transformation” and the Deseret News National

Clark Gilbert,
“Dual Transformation”
and the Deseret News
National Edition
The Utah Newspaper Project
No one has yet tagged Clark Gilbert as “the oracle of Salt Lake,” but
to some in local media, the nickname might be coming .
Netnewscheck.com
Clark Gilbert has become a media superhero of sorts . . .
http://blog.adxsearch.com
In this case, Deseret News is building on an existing print product. In
2011, it launched a weekly national print edition, and its success —
with subscribers in all 50 states — hastened the launch of the
standalone national website.
Niemanlab.com
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Introduction: Clark Gilbert, president and CEO of Deseret Digital
Media Group, says he never intended to run a newspaper. After all,
Gilbert’s background was in academia, not legacy media operations. But
he applied his Harvard-brand “innovative disruption” business
philosophy to the Salt Lake newspaper owned by the LDS Church, and
within months Gilbert began showing startling results.
His “dual transformation” strategy led to dramatic circulation
gains for the Deseret News’ print product. A chorus of accolades grew
along with the News readership.
“Clark is a true innovator, and we are lucky to have him in our
industry," Steve Hills, president and general manager of The
Washington Post, was quoted as saying in the Deseret News. "On the
business side of the Post, we watch what he has done with great
interest." The occasion for Hills’ praise was last September’s naming of
Gilbert as Innovator of the Year by the Local Media Association, a
national trade group for community newspapers.
At that same time last year, Gilbert was finalizing secret
negotiations on amendments to the Joint Operating Agreement with the
New York owner of his newspaper competition, The Salt Lake Tribune.
In a lawsuit filed in U.S. District Court last June, Utah Newspaper Group
argues the new JOA violates antitrust law. That agreement, which cuts
Tribune revenue in half and cedes control of the newspapers’ business
operation to Gilbert, “fits” the News’ strategy of “dual transformation,”
Gilbert has stated.
“The 2013 Amendment fits Deseret News Publishing's interest in
pursuing a dual transformation strategy that includes migrating to
digital media while simultaneously maintaining and expanding its
traditional print capabilities, including a national edition of the Deseret
News,” Gilbert stated in a sworn declaration filed in the federal court
antitrust litigation. “It should not be undone at the instance of outside
third parties, regardless of their motive or intention, who do not
understand the financial and managerial challenges of print and digital
publishing in today's Salt Lake City environment.”
With Gilbert’s “dual transformation” strategy thus at issue in the
legal challenge, Utah Newspaper Project undertook an analysis of recent
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developments at the Deseret News. In a December 2012 Harvard
Business Review article, Gilbert and his coauthors described how the
Deseret News exemplified a successful “dual transformation” under
which business leaders adapt the core business to the realities of a
disrupted marketplace while simultaneously developing new growth
strategies. In the case of the Deseret News — and every other printed
newspaper in the country — those new strategies would, of course,
include a digital focus. But the challenged JOA nearly exclusively
addresses the printed papers’ operations; therefore, this analysis deals
only with that half of the “dual transformation” — the adaptation of the
Deseret News’ core printed product.
At a time when other print newspapers were barely holding their
own or seeing stark declines, Gilbert led the Deseret News to growth of
84 percent in its Sunday print circulation from 2010 to 2012, when it hit
a high of 127,050 nationwide. (In Utah, however, the Tribune
maintained its dominance — both in local news gathering and in
"Designated Market Area," the core circulation area. In Salt Lake, Tooele,
Wasatch and Summit and southern Davis counties, the Sunday Tribune
accounted for 66 percent of the two newspapers' subscribers in 2012.
The bad news for Utah’s largest newspaper: Tribune circulation since
1999 has fallen 47 percent to 73,000, while the News circulation fell 26
percent to 37,500 in the local market area.)
Gilbert’s astonishing Sunday circulation success warrants indepth study, coming as it does in the midst of such dire times in the
newspaper industry. The growth took place in the Deseret News
National Edition, which Gilbert launched in August of 2011 as a nondenominational, values-based publication. But a closer look reveals that
the Deseret News repurposed its section called the Mormon Times that
was sent to subscribers of the [LDS] Church News, and those readers
were added to the newspaper’s circulation tally.
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Clark Gilbert’s Vision: After he was named president and CEO of the
Deseret News in May of 2010, Gilbert quickly embarked on a “radical reinvention” of
Utah’s oldest daily newspaper. That August he laid off 43 percent of the staff in a
single day. At the same time, he announced he was changing the paper from the
general news orientation it had for much of its history to a values orientation that
emphasized six categories of news:
1. The Family
2. Financial Responsibility
3. Excellence in Education
4. Care for the Needy
5. Values in the Media
6. Faith in the Community
The Newspaper’s mission statement was to become “Trusted Voices of Light
and Knowledge reaching hundreds of millions of people worldwide.” One of the
ways he hoped to accomplish that ambitious goal was through a National Edition of
the Deseret News, which is owned by The Church of Jesus Christ of Latter-day
Saints.
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A Grand Ambition: Within a year and a half of when he took over the
Deseret News it appeared that Gilbert’s leadership was having a marked impact. Its
Publisher’s Statement on circulation for the six months ending Sept. 30, 2011,
showed a gain of about 14,500 over the previous six months (not counting digital
editions).
While much newspaper print circulation nationally was stagnant or falling,
the Deseret News’ numbers had begun to skyrocket, according to the Alliance for
Audited Media. It reported Sunday edition print circulation of 75,851 for the year
ending Sept. 30, 2011, and 127,050 for the year ending Sept. 30, 2012, a 67 percent
increase.
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How Did He Do It? All of that growth is tied to the paper’s new Sunday
National Edition, which emphasizes the six principal areas of Deseret News
coverage but also is meant to appeal to a wider audience than just members of the
Mormon Church. A consumer segmentation survey done prior to the launch of the
new edition found the target audience consisted of the 56 percent of Americans who
are “like-minded believers,” express “high interest in consuming rigorous, relevant
news and commentary from ‘trusted’ organizations that share their values,”
according to a Pew Center report on Gilbert’s efforts at the News.
“We want to own faith and the family the way the Washington Post owns
politics,” Gilbert said in the Center report. The journalism “can’t be denominational.
But it’s asking questions that people of faith and people who are family oriented
would ask.”
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The first edition launched on Aug. 21, 2011.
8
The editor welcomed readers.
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Circulation Climbed: The Deseret News reported that print circulation
began to increase immediately after Aug. 21, 2011. This chart shows total Sunday
Deseret News circulation between the quarter that ended June 30, 2011, right
before the launch, and the one that ended Sept. 30, just 39 days after the first
National Edition.
From 2010 to 2012, Deseret News Sunday Circulation soared.
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Gilbert Was Hailed:
With an average Sunday circulation of 160,617, the Deseret News
isn’t among the Top 25 U.S. newspapers. But that circulation
represents a 102 percent increase over the previous year, and
unlike many newspapers that reported circulation gains last week,
the Salt Lake City paper’s numbers aren’t grotesquely juiced by
paid digital editions — average Sunday print circ nearly doubled,
from 69,059 in March 2011 to 129,314 this year. Average daily
circulation was up nearly 15 percent overall, though print declined
from 52,814 to 47,615.
How the Deseret News nearly doubled its print circulation, Poytner.org
Arguing with Success: While the National Edition might appear to be an
instant success among like-minded, religiously oriented people, there are two things
immediately evident from reading the paper and the numbers: 1. The National
Edition is very much a Mormon-oriented newspaper 2. Members of the church
comprise its audience almost entirely.
That wasn’t how it was supposed to be.
“The national edition is deliberately targeting values across all faith practices
in the country,” Gilbert told Joseph Lichterman in an article last spring about the
launch of the National Edition website.
The Deseret News target audience for its national edition was the 56 percent
of Americans who are “Like-Minded Believers, who value faith, family, caring for
others, and share a concern for the decline in moral values.”
“This is a huge audience, but the second you go denominational, they
fragment,” Gilbert told Lichterman. “Mormons read Mormon content, Catholics read
Catholic content, Baptists read Baptist content.”
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Some Background: The National Edition is now among a number of
publications owned by The Church of Jesus Christ of Latter-day Saints, including, of
course, the Deseret News. Another is the Church News, which has been produced
and distributed by the Deseret News for decades. In Utah for many years only
subscribers to the Deseret News could receive the Church News, which proved a
successful strategy for bolstering newspaper subscriptions. But out of state, the
Church News was treated as a separate publication with individual subscriptions
possible.
Shift to 2008. In April, the Deseret News introduced a new section called the
Mormon Times.
On Jan. 15, 2009, the Mormon Times carried an announcement that out-ofstate subscribers to the Church News would “automatically” receive a weekly
edition of the Mormon Times, which up to then had just been a section of the
Deseret News that ran on Thursday.
No price increase was mentioned for Church News subscribers, though a
subscription to the Church News rose from $20 a year in 2008 to $30 in 2009.
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After it started giving the Mormon Times to out-of-state Church News
subscribers, the Deseret News did not claim the Mormon Times as additional
circulation. Overall, this is what the pre-National Edition circulation looks like while
the Mormon Times was circulated with the Church News.
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On Aug. 13, 2011, the last edition of the Saturday Mormon Times
accompanied the Church News to out-of-state subscribers.
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A week later, on Aug. 21, 2011, the new Sunday National Edition appeared.
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Circulation’s on the Rise: The News changed the masthead of the Mormon
Times, tweaked the design and added values coverage and new voices when it
became the Deseret News National Edition. The Mormon Times continued as a
section within the traditional Deseret News and also was included as part of the
National Edition. This time, unlike the Mormon Times, the Deseret News began to
count the National Edition as part of its circulation.
Circulation Serendipity: New rules by the Audit Bureau of Circulations on
how circulation is to be counted were in place when numbers were released for the
six months that ended March 31, 2011. The rules included a category for branded
editions, which carried a different name than the main publication and are labeled
with the word “edition.” The Deseret News appears able under these rules to count
the National Edition (not labeled as such for a long time) as circulation for the main
paper, though the label might be a misnomer.
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Strategic Marketing: While the target audience of the National Edition was
conceived of as the 56 percent of Americans who the Deseret News’ survey found
aligned with the its news values, Gilbert has been marketing the print edition to
members of the Mormon Church, while denying that’s the main audience.
Here’s an excerpt from a Gilbert interview with netnewscheck.com:
Q : But you do have the instrument of the church, which
could be used, for instance, as a marketing instrument. For
instance, you may have a point of distribution, viral or otherwise,
through the church.
A: But there’s no top down channel like that. It’s no different
than the Red Sox Nation and the diaspora that is Boston.com. They do
300 million page views a month. And you can’t say that’s not fair
because they have the Red Sox. The Washington Post has politics. People
who use affinities and interests to help socially market their content are
really smart. The Huffington Post does that really effectively where
Arianna Huffington engages purpose-driven contributors. I don’t
editorially align with them, but their content models are very innovative
because they access social and purpose-driven affinities that line up
with their brand.
Certainly we draw into that, but we don’t want to just reach
Mormons. The Mormon church just reaches Mormons. We’re a separate
company; we’re not the Mormon church.
(The National Edition webpages and its Facebook pages are much less
Mormon-oriented than the print edition. The webpage, for example, doesn’t include
references to the Church News or a Mormon Times section.)
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Who Is the Target Market? The News on its website markets the National
Edition to LDS members along with the Church News.
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More Transformation: And now subscribers to Ensign magazine, another
LDS publication, can get the same deal.
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A Younger Audience: And Gilbert has persuaded officials at Brigham Young
University, owned by the LDS Church, to provide the National Edition to students
free of charge.
And he has done the same thing at BYU-Idaho in Rexburg. The National
Edition circulates an estimated 5,897 copies (2012) in Zip Code area 83460, which
is where BYU-Idaho is located.
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]
“All Other” Subscribers: The Publisher’s Statement for the Deseret News for
the six months ending Sept. 30, 2011, or 39 days after the first issue of the National
Edition, says the Deseret News had increased its Sunday print circulation by 14,546
copies over the previous six months. The audited circulation report by the Alliance
for Audited Media for the year ending Sept. 30 shows all that growth came in a
geographical category called “All Other.”
The Alliance for Audited Media, formerly the Audit Bureau of Circulations,
divides the Salt Lake City newspaper market into three areas:
• The Designated Market Area: Salt Lake, Summit, Wasatch, Tooele and
south Davis counties
• Retail Trading Zone: Rich, No. Davis, Utah, Duchesne, Uintah, Carbon, Juab,
Sanpete, Millard, Sevier, Beaver, Piute, Iron, Daggett and Uinta (Wyo.) counties
• All Other: The 10 Utah counties not in the core circulation area and other
states where there are subscribers
From the Sept. 30, 2009, circulation report to that of Sept. 30, 2012, there
was an increase in the All Other category of about 63,000 copies on Sunday or a rise
of 1,294 percent. The All Other category includes mostly out-of-state copies. So, do
these reports show Gilbert was wildly successful at almost immediately selling
subscriptions to the Deseret News National Edition to like-minded, values-oriented
and faith-leaning people all over the country?
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Who are the subscribers?
Because of these approaches, Gilbert said, the Deseret News’ national
Sunday edition is found throughout much of the United States,
especially in the eastern United States. Gilbert credited the
newspaper’s popularity to readers who are mainly part of faith- and
family-oriented audiences looking for media that fit their views.
Inma.org
Out-of-state LDS members, who are heavily concentrated in states
surrounding Utah, and who subscribe to the Church News, appear overwhelmingly
to be counted as the subscribers to the National Edition. This table contains
projections from the 2012 annual audited report showing Deseret News (most likely
almost all National Edition) circulation.
Arizona
California
Colorado
Florida
Georgia
Idaho
Illinois
Kansas
Missouri
Montana
Nebraska
Nevada
New Mexico
North Carolina
Ohio
Oklahoma
Oregon
Texas
Virginia
Washington
Wyoming
All other non-Utah
Total out of state
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5,886
8,439
1,737
191
105
14,867
128
164
292
357
133
2,022
458
173
115
95
1,913
1,482
295
3,508
985
14,813
58,158
Further, the Deseret News also is bundling its National Edition (and the
Church News) with local weekly newspapers in Utah, at no extra cost to subscribers
of the weeklies.
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What About Content? The publication itself is largely Mormon-centric. At
the very top above the masthead, it lets readers know the Church News is inside and
includes a small Church News photo to emphasize the point. Just below the mast is a
plug for the “Mormon Times” section. Articles carry Deseret News reporters’ bylines
and frequently are about or quote Utah residents.
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What’s the Bottom Line?
I’m a for-profit company. We had an initial investment from our
ownership, but I have quarterly targets. We have growth objectives.
We have profitability requirements. If you talked to my sales team or
my e-commerce team, they would tell you very much that they have
hard financial growth targets that are real and meaningful.
Clark Gilbert, Netnewscheck.com
The college campuses are believed to pay only a token fee to the Deseret
News for the National Edition and student readers pay nothing.
In the March 4, 2012, edition, the National Edition was marketed to
subscribers to the Idaho Falls Post Register for only $25 additional a year above the
Post Register subscription rate. It seemed like a good area to market the new
edition. According to the Association of Statisticians of American Religious Bodies,
Bonneville County — where Idaho Falls is located — had 59,311 members of the
LDS Church in 2010 among its population of 104,234, or 57 percent of the total.
Still, the Deseret News had only 1,546 paid circulation in the county in the
year ending Sept. 30, 2013, according to the Alliance for Audited Media. That would
be only a 3 percent penetration rate among LDS members, whether they subscribed
through the Post Register or National Edition/Church News.
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Here’s the Deal: The $30 a year Church News subscribers pay could help
offset some of the costs of producing the National Edition. Before the Mormon Times
was added to the Church News a subscription was $20 a year. The Mormon Times
was included at no cost but the subscription rate the next year went up to $30 a
year, where it remains today. Assuming the Church News is allocated the $20 like it
was back in 2008, then the Mormon Times and now National Edition would be left
with $10 a year per subscription that was added to the price in 2009. That’s about
19 cents for each of the 52 issues of the National Edition.
The Cut From Advertising: Attracting advertisers to the National Edition
has been difficult. (Clark Gilbert likely anticipated this, having written in his 2001
Harvard Ph.D. dissertation, “National advertisers historically accounted for less than
7 percent of total revenues for newspapers.”) The National Edition of Aug. 17, 2014,
nearly three years to the day from its launch, had only 19 percent advertising
lineage compared to total space (not counting a big house ad) -- quite low by current
industry standards. Of the total presumably paid ads, 68 percent of the combined
lineage was LDS-oriented and 26 percent was Utah-centric. Only two ads, or 6
percent, were for a product or service from other states, and those were located in
Idaho and Nevada. There were no national ads.
In the Dec. 15, 2013, National Edition, just two weeks before Christmas and
prime time for advertising revenues, advertisements took up only 20 percent of
total lineage (not counting house ads). Of total ad lineage except house ads, 81
percent was LDS-oriented. There were no ads from outside Utah and no strictly
national ads.
Financials: The National Edition is expensive to produce. The Aug. 17 issue
was 14 pages, all of them with full color, which is much more costly than black and
white only, and it was printed on high-grade, more expensive newsprint.
Three years after its launch, the National Edition print product may be a
financial loser for its owners. It has failed to appeal to many outside the LDS faith. As
an advertising vehicle, it is also appears to lag, particularly if it is to be truly a
national edition.
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A Different Trajectory: Sunday print circulation in the All Other category
where the National Edition circulates was down 18 percent in early 2014 from its
2012 peak, putting Gilbert considerably below his target of 300,000 by 2015.
27
Still Transforming: Gilbert’s not done. In January, the Deseret News
announced that Utah residents no longer had to subscribe to the Deseret News to
get the Church News. Previous to this, and for decades, this arrangement was a
vehicle for boosting Deseret News circulation: If you wanted the Church News, you
had to subscribe.
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A Dramatic Departure: Now Utah residents can subscribe to the Church
News and get the National Edition for only $30 a year. It seems a dramatic move, but
for what? The lowest priced subscription to the Deseret News is $25.80 for 12
weeks or $103 a year for the Sunday paper. That means that the Deseret News loses
at least $73 for every customer who switches from the regular Sunday edition to the
Church News/National Edition.
Has Gilbert bet it all on the National Edition?
"We burned the boats," Gilbert said, adding that there wasn't
any way of going back to the old ways of doing business.
Newsandtech.com
Two Voices Threatened: In its legal challenge, Utah Newspaper Project
argues that Gilbert has endangered The Salt Lake Tribune with the new JOA that
“fits” with his dual transformation strategy. And that strategy could have a
damaging effect on yet another important local enterprise: Newspaper Agency
Corp., the two newspapers’ 60-year-old joint business operation. Under the new
JOA, Gilbert directs the affairs of NAC (also known as MediaOne of Utah, Utah
MediaOne Group and most recently Utah Media Group), and it likely is facing a
transformation of its own.
“Today the Deseret News is in a stronger position than it was before it was
disrupted,” Gilbert and his co-authors wrote in the December 2012 Harvard
Business Review. “Instead of remaining a local newspaper, Deseret is turning itself
into a national resource for its target audience. That’s its future, and that must be
the company’s dominant story.”
Back in Salt Lake City, the larger-circulation Tribune struggles to provide a
local resource for its “target audience,” despite seeing its revenues cut in half at the
stroke of a pen under the new JOA. The Tribune, like virtually every news medium
in the world, has been disrupted in the Internet revolution. The Tribune is as well
equipped as any other medium to adapt digitally. But the new JOA denies it
sufficient revenue to provide current newsgathering to its local audience, as well as
capital to finance its transition to the future business model that all media continue
to seek.
That double threat to the Tribune is a “dual transformation” that Utah
residents should disrupt.
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Timeline
2008
April 24 • Announcement of new Mormon Times weekly section to the Deseret
News
2009
Jan. 15 • Mormon Times is repackaged with the Church News for people in U.S. and
Canada who receive the Church News by mail
Sept. 10 • Deseret Management Corp. CEO Mark Willes announces formation of new
company, Deseret Digital Media, to manage the websites of local church-owned
media outlets and names Clark Gilbert of BYU-Idaho as president and CEO. Willes
also splits KSL TV and Radio off from Bonneville International in a company called
KSL Broadcasting.
2010
March 31 • Publisher’s Statement shows the Deseret News for the six months prior
to this date had a Sunday circulation 70,574 and daily of 58,582
May 20 • Gilbert named president and CEO of the Deseret News
August 31 • Gilbert reduces Deseret News staff by 43 percent and combines KSL and
Deseret News into one newsroom. He announces increased coverage of “relevant
issues audiences care about.”
2011
March 31 • Publisher’s Statement for previous six months show Deseret News
Sunday print circulation of 69,059 and daily of 52,814
Aug. 21 • Deseret News launches National Edition
Sept. 30 • Publisher’s Report puts Sunday print circulation at 83,605
2012
Sept. 30 • Deseret News National Edition circulation on Sunday to out of state
subscribers hits its peak at 68,808
2013
Sept. 30 • Deseret News National Edition circulation on Sunday to out of state
subscribers falls to 59,557.
2014
Jan. 30 • Utah residents can now subscribe to the Church News and get the National
Edition without subscribing to the regular Deseret News
March 31 • Deseret News National Edition circulation on Sunday to out of state
subscribers declines to 56,273 in the previous six months.
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