DIVISION REPORT
Table of Contents
Stories of Success Across Freedom
Letter from the President
Freedom Orange County Information Division Report
Freedom Broadcasting Division Report
Freedom Magazines Division Report
Board of Directors
Operating & Corporate Executives
Freedom's Family of Information & Entertainment Providers
If 2000 was cast as our year of greatest growth in the Community Newspaper Division, then 2001 was the year of our greatest challenge.
Fresh off a year capped with record financial performance and the greatest single set of acquisitions in the company's history, our newspapers were hit hard by a stormy economy.
While many companies would be content to hunker down and wait for the storm to pass, we chose to redouble our efforts in building on our core competencies. Doing so, we believe, would not only allow us to better weather the storm but also strategically position us for even better performance when conditions improved.
The effort involved six major initiatives:
• Develop new products and services outside our core businesses.
• Improve our journalism.
• Improve the involvement of our papers in the communities they serve.
• Develop better customer service.
• Find ways to better develop and serve our associates.
• Build our interactive businesses.
Separate task forces worked diligently throughout the year on these goals and the results were impressive.
Under the direction of Ed Moss, the New Business Initiatives group helped papers identify, plan and launch 130 new products and services that brought in more than $3.6 million in new, non-traditional advertising revenue.
The Journalism Quality Task Force, headed by Jacksonville, Ill., Courier-Journal Editor Ted Roth, developed a host of recommendations, including improved evaluations and training opportunities to help our newsrooms improve the news and entertainment they provide their readers.
The Community Service Task Force developed "best-practice tool kits" to help papers become more involved and effective in the stewardship of their communities.
The Customer Service Initiative, led by Regional Vice President Karen Hanes and The Shelby Star Publisher Jennie Lambert, developed "customer service champions" at each of our papers to implement systematic training of all associates.
Freedom Interactive Newspapers (FIN) beat its budget in its inaugural year and successfully launched Internet portal sites in Florida, the Texas Rio Grande Valley and Arizona.
To be sure, we focused in 2001 on dealing with financial adversity. We cut costs and redoubled efforts to find new revenue sources. While doing so, we kept our focus on better serving our customers, our communities and our associates. As a result, we finished the year stronger than most of our peer newspapers, which spent 2001 reacting to the adverse conditions. Our endeavors not only helped address the present, they also helped set the stage for a stronger future.
2001 Financial Review
The Community Newspaper Division ended 2001 with operating cash flow 12 percent below 2000 on a pro forma basis. In the summer of 2001, our papers in Colorado Springs and the Phoenix area joined The Orange County Register to become the new Metro Division. Excluding Colorado Springs and Phoenix, the cash flow of our Community papers was 5 percent below 2000, 8 percent below budget.
The nationwide recession inflicted heavy losses in advertising lineage among Freedom's papers, especially in Colorado Springs and the Phoenix group. Our papers fought hard throughout the year to counter the revenue slide, cutting expenses, implementing hiring freezes and, in some cases, even conducting targeted layoffs. This still was not enough to completely stop the hemorrhaging caused by advertising revenue.
Total ROP advertising inches for the year declined 3 percent from 2000, to 17.4 million inches; insert volume declined 2 percent.
Despite the nationwide recession, several of our papers beat their cash flow plans for the year. McAllen and Yuma both beat their budgets, as did The Destin Log and The Walton Sun, both in the Florida Panhandle.
Our Florida papers finished 2001 flat over 2000, and the Texas Rio Grande Valley papers were up 1 percent over 2000.
Papers in North Carolina, Ohio and Illinois—heavy industrial areas—were hit particularly hard due to plant closings.
Daily circulation of the division rose slightly from 716,445 to 720,012 with Colorado Springs and Phoenix.
Other 2001 Highlights:
In addition to strategic directions work, the division had many other accomplishments in 2001.
In late 2001, the division named Dawn Paduganan its director of sales and marketing development. In her new role, Paduganan has developed a formal program that provides extensive training to all our newspaper advertising sales representatives. This program also enables advertising managers to track and improve sales reps' performance. The training program, which includes research and presentation software, was officially introduced earlier this year. So far the results are extremely encouraging.
After some delays, The Gaston Gazette began printing The New York Times regional edition. As part of this arrangement, the Gazette moved into a new state-of-the-art headquarters and printing facility that will afford that operation more printing capacity for its own editions and enable it to compete for other commercial print jobs.
We completed the sale of the Delta Democrat Times in Greenville, Miss. The Greenville paper was not strategic to Freedom, and proceeds from the sale were used to pay down the debt from the major acquisitions in 2000. The sale, to Emmerich Dailies Inc. of Jackson, Miss., meant that the paper and its associates would benefit from greater synergies that a family-owned, regional publishing company could provide.
The Community Division's papers all participated in the Inland Press Association's Newspaper Cost & Revenue Study. The study indicated our community papers tend to be more profitable and efficiently operated than their peers. We plan to participate in the Inland survey program again in 2002 to find further opportunities for improvement.
The Shelby Star won the division's inaugural community service award, which honors Freedom papers that play positive leadership roles in their communities. The Gazette in Colorado Springs was runner-up for the 2001 honor, which we will continue in 2002.
The community papers continued to produce award-winning work, garnering hundreds of honors from press associations and other peer organizations throughout the country.
—Jon Segal, President,
Freedom Community Newspaper Division