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Metro Information Division | Community Newspapers Division | Broadcast Division
“How are things at the office?” friends ask me. “The paper came out today,” I say. Everyone laughs. Isn’t it amazing how much we take that for granted? “The paper came out today.” It’s because we’re always there. We can’t imagine not getting our papers out every day. Of course, it isn’t that simple. It takes a finely tuned effort to make it happen, and everyone in our company knows it. In Freedom Metro Information, we demonstrated that again and again in 2004, beginning with our outstanding journalism and ending with our spectacular financial performance. Here are some of the financial highlights. First, it was once again a record year for revenues and profitability—operating cash flow—in Freedom Metro. We neared the magic century mark in profits ending with an increase of 18 percent over 2003, continuing the blistering pace since Metro was created in mid-2001. Our revenue growth outpaced peer companies, especially in Orange County. Total revenue for Metro was up 6 percent over 2003. Almost all of that was in advertising revenue; however, Metro also had gains in circulation revenue as well as commercial printing. All this happens because our people are always there. Our customers know they can count on us. I recall a meeting we
had with the executives of Macy’s in San Francisco last fall.
Normally our sales executives would meet with three or four Macy’s
folks and talk about their business and how we could serve them
better. On this occasion, though, we were presenting the latest
results of Orange County’s consumer attitudes studies for
Orange County and the East Valley in Mesa, Ariz. — something
we have done for 20-plus years in Orange County. Macy’s knows
how valuable this study is so they brought in most of their executives,
including the CEO, to hear this important information. They count
on us to give them unvarnished results, trusting us to know the
market better than anyone else. They know we’re always there
for them. “Isn’t it
amazing how much we take that for granted? ‘The
paper came out today.’ It’s because we’re always
there.” We’re there for other customers, too. We deliver newspapers for The New York Times, the Wall Street Journal and USA Today, just to note a few. Our delivery service ranks among the best nationally for those newspapers. And we make a little profit in the process. All of this money sustains the way we serve information to customers. Or is it the journalism that allows us to sell advertising? Whichever comes first, we know that local information is at the core of our business. In all three Metro markets, our four daily newspapers are competing with larger, metropolitan newspapers. What distinguishes us from them, of course, is the strength of local information. Our readers — our users, if that’s what we should call those who consume our products through the Internet — know that we’ll give them information they can get nowhere else. Our journalists continued in 2004 to learn from and apply the results of the Newspaper Readership Institute survey. Our newspapers continue to win prizes judged by other journalists: Both The Gazette in Colorado Springs and the East Valley Tribune were named the best newspapers in their states. But vastly more important, our newspapers and magazines, along with our websites, win the hearts and minds of readers. A great example of this monumental service to our communities is The Orange County Register’s series on Mexican candy tainted with lead. The series was a finalist for a Pulitzer Prize. Part of the package was a poster, in English and Spanish, that illustrated the candies in question. We offered it as a reprint to schools, thinking they might post it in classrooms. The response was overwhelming, including requests from the Los Angeles Unified School District and health agencies in more than dozen states. At the end of the day, we distributed more than 1 million copies of the poster. Of course, our community service manifested itself in other ways, too. In all three Metro markets, our editorial pages are the catalysts for community conversation. Yes, it was a presidential election year, but we received a remarkable number of letters to the editor, many of them via e-mail. We established editorial agendas and made certain our voice was stronger than ever in calling for personal liberty. Finally, we continued to support not-for-profit agencies that serve human needs in our communities through financial and in-kind support. There, too, our communities know we’re always there.
Despite the hurricanes in Florida and the textile woes in the Carolinas, the Community Newspapers Division finished 2004 with record financial performance, growing revenues by 7 percent and exceeding the previous year’s profits —operating cash flow—by 5 percent. To be candid, the division’s success cannot be attributed to silver bullets, secret formulae or, daresay, even to divisional management brilliance. Rather, it was driven by the division’s continual improvement strategies and the drive of its 3,000 associates to do something better every day. Progress was made in 2004 on each of the division’s 6 Strategic Initiatives. They are:
Grow revenues Rather, to increase the bottom line, the division embraced the importance of growing the top line — its revenues — and implemented a number of successful revenue-enhancement programs. An Internet-based co-op program was implemented division-wide, with co-op “champions” named at every newspaper. By year-end, millions of dollars in new co-op revenue was logged. Led by the New Business Development Task Force, the division made a concerted effort to glean revenue from nontraditional sources such as trade shows, history books, tourist guides, professional directories and commercial printing. The new business development initiative was a huge success — 217 different products were launched in 2004, producing millions of dollars in revenues. To help the advertising sales managers get a better handle on the businesses in their communities that do not advertise in their newspapers, a GAP Analysis was done at each paper. By comparing a detailed list of all businesses in their markets with data from their own billing systems, lists were generated of businesses that do not advertise in the newspaper — in other words, lists of potential customers. The data on potential customers was mapped and sorted by business type to allow the sales managers to realign their territories and craft new products to serve underdeveloped categories. In addition to realigning territories, it became apparent that more salespeople were needed to “close the gap.” The year began with 178 outside salespeople in the division and ended with 228. At the same time, commission plans were adjusted to encourage new business development. In order to better manage the sales process, Marketing Vice President Dawn Paduganan and her staff did extensive field training and developed a spreadsheet to track the performance each month of every salesperson in the division. By tracking individual results, sales management was able to reward top performers and assist low performers. Top performers were inducted into the newly formed President’s Club and rewarded with a Caribbean cruise. Build readership During 2004, each community paper devised and implemented a comprehensive plan to build its readership based on its own market characteristics. To assist in the planning and implementation, the division’s circulation directors had a joint session with its editors to develop content and delivery strategies for increasing readership. A full-blown market study for each community paper is scheduled for early 2005. The market study will identify readership successes (and failures) and will help the papers plot their readership endeavors in 2005. Develop our associates During the year, 318 community managers attended a three-day workshop designed by the corporate Human Resources team. The workshop included extensive training on hiring, interviewing, supervision, performance management and employment law. When the 2003 attitude survey revealed that fewer than 40 percent of community associates received regular performance appraisals from their supervisors, improving the division’s appraisal process became a focus for 2004. And, by year-end, 94 percent of associates had received timely performance appraisals. “Being good community stewards is the ‘right
thing to do’ for many reasons. Few other local institutions
have our resources, reach, desire and corporate backing.” Building a strong bench has long been a goal for the division. Typically, there is little publisher turnover. However, that changed in 2004, when four community papers faced publisher openings. The strong bench paid dividends as highly qualified internal candidates were available to fill all four publisher openings. Become more customer focused Customer service resources were provided and a mystery caller
program was established to provide outside feedback on the level
of customer service provided by front-line associates. The 2004 Customer Focus Best Overall Award went to Panama City. Other winners were:
Increase our interactive capability Freedom’s Internet sites are often the most popular sites — as
measured by page views and unique visitor counts — of any
within their respective market areas. Collectively, these sites
have grown more than 20 percent during the past year to reach almost
200 million page views for 2004. A major divisional project in 2004 was to use our interactive capability to better support our printed products by allowing customers to enter their own classified ads online for publication in our newspapers. By year’s end, 15 community newspapers were able to offer online entry capability, accounting for millions of dollars in revenue. The remaining community newspapers will develop online entry capability in 2005. As the websites became more popular, they also became more profitable. In 2004, they showed a whopping 580 percent increase in profitability over the previous year. Be good community stewards Community service endeavors to develop and nurture relationships with readers and with advertisers. They complement the branding of our newspapers. Stewardship helps our communities grow and prosper by making them better places to live. And, as the communities benefit, so will our newspapers. Each Freedom community paper had at least one annual fund-raising event to help the poor in their communities. Those projects, consisting of a variety of Empty Stocking Funds, United Way campaigns, coat collections and food drives, raised more than $200,000. In addition, the division’s papers provided leadership, volunteers and monetary assistance to a myriad of community endeavors, including such things as literacy programs, arts councils, hospices, beautification projects, 4th of July celebrations, community festivals and public concerts. Another reason community stewardship is the “right thing to do” is that it is congruent with Freedom’s core values of libertarianism and volunteerism. It helps communities address their problems and provides assistance to the needy without government coercion. In other words, it provides a shining example in each of our communities of the papers “walking the talk.” To highlight and reinforce the importance of community stewardship, the division confers an award to the newspaper that is judged to have provided the best community stewardship. The most recent winner was the Jacksonville (N.C.) Daily News for taking a lead role through many stories and community events in helping its town deal with the personal and economic challenges stemming from the deployment of 25,000 locally-based Marines to Iraq.
With the recapitalization process behind us, Freedom Broadcasting devoted its energies to ensuring that the momentum we built in 2003 continued and that our audiences and advertisers continued to get what they expected from our eight television stations. The result was our best year ever! Once again, the TV group faced several uncertainties: Would our political revenue projections come to fruition? And if it did, were we prepared to handle them? Would the extraordinary variations in our markets continue? Would the economy improve? Could CBS continue its ratings stronghold, and could we expect any improvement from ABC? And, most importantly, what “surprises” lay in store for us in 2004? Well, political spending came through and then some. We ended the year 26 percent over our political advertising budget. Political spending didn’t exactly fall where we projected: Providence had little to no political activity, and Albany experienced only marginal spending, as did Chattanooga. The bulk of the political ad spending fell in three battleground states where we have four TV stations: Michigan, Florida and Oregon. Beaumont also experienced moderate to heavy political spending. And our brilliant sales managers were poised to handle it all. Especially in Grand Rapids and West Palm Beach, whose sales executives handled almost 70 percent of the total political revenue for the entire group! Overall, the economy was less than robust, and national businesses continued to sputter, especially in our northeast markets, Albany and Providence. But we compensated for all that by concentrating on local, local, local. We sought out new business opportunities through our Broadcast Ventures effort and grass-roots sales initiatives. Plus, we focused on ensuring that the partnerships we already had in place continued to prosper, both on the audience and revenue fronts. 2004 also profited from new management in our group. Three new general managers were introduced to the group in Chattanooga (Mike Costa), Albany (Bob Furlong) and Providence (Roland Adeszko). And two Freedom Broadcasting veterans took over the reins in Grand Rapids (Tom Long) and Medford (Kingsley Kelley). Plus, we beefed up our sales staffs in several of our markets. Another area of concentration in 2004 was making sure we had sales training and development tools available where needed and news consultants on board at each station to ensure continued news ratings growth and audience satisfaction. CBS didn’t disappoint us, once again ending the year as the No. 1 viewed television network. And our five CBS stations took full advantage of that, commanding incredible rates over the course of the year, some precedent-setting. The going rate for a 30 second spot for CSI in West Palm Beach was $15,000! And ABC showed early signs of a comeback with its fall 2004 prime-time programming, which helped our three ABC stations set higher rates for the fall as well. “2004 was a banner
year in more ways than one ... We delivered on our commitment
to our audiences and advertisers.” 2004 was in no way a guaranteed success. Sure, we had a strong political year, but that only offset an overall soft economy. The third quarter was extremely sluggish overall; there was an automotive slump, and movie and retail businesses were weak. And just like the previous year, there were unexpected obstacles. The biggest were two hurricanes in West Palm Beach. Our NEWS12 associates had their hands full, juggling personal concerns with business concerns. During that crazy month of September, we aired 137 hours of continuous coverage, and our coverage was simulcast on 14 different radio stations. Talk about a tremendous service to the community. Our viewers were most appreciative, as is evidenced by the numerous awards and recognition we received. In between hurricanes, the TV group held a Strategic Planning meeting in West Palm Beach, where our general managers, general sales managers and news directors convened to explore opportunities for creating new operating efficiencies and revenue streams. Many of those ideas are now in the implementation stage, and we continue to work closely as a group to keep the “new idea funnel” full. One of the largest initiatives is the one-for-all traffic system that we have licensed for the station group. Soon, all eight TV stations will be using the same traffic system, which will enable us to manage inventory better, share best practices and improve our reporting systems. 2004 was a banner year in more ways than one. We hit our targets, operated prudently, improved our local products, took full advantage of what the networks gave us, weathered the storms and maintained our focus on ensuring slow but steady growth in our TV stations. And we delivered on our commitment to our audiences and advertisers. Both continued to get what they have come to expect from our TV stations, delivering the programming our audiences want and need and the advertiser vehicles to carry their advertising messages to the audiences they seek. Thanks to all Freedom Broadcasting associates for their dedication and hard work! |
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