Thoughts on an 'Octopus' Strategy for Newspapers

It's not news that "if you take out classified ad profits from newspapers, you take out the profit." Those were the words today of Michael Price, Senior Managing Director at private equity firm Evercore Partners, at the Convergence 2.0 conference in New York put on by deal-watching publication The Deal. But he didn't leave it there, and instead talked about what to do – at least for one anomalous newspaper with an audience most publishers would kill for.

Price went on to talk about what his firm would do if they'd bought the Wall Street Journal: "go deep on the Internet" for their passionate, C-level (meaning top executive) audience, giving everything they could want about any of various subjects they're interested in, be it credit markets, insurance, or whatever. He called it an "octopus" strategy. Unfortunately, Price said, newspapers haven't figured out how to "monetize" their good content. Leo Hindery of InterMedia Partners in a keynote Q&A said the New York Times should follow a similar strategy, out-Googling Google by, for example, giving someone searching for news on Alan Greenspan everything they could possibly imagine. Instead, he said, they're putting their newspaper content online, but in a much more fragile ad banner market.

Jeffrey Sine of UBS Securities said that while the Journal is held up as a huge success for subscriptions on the Internet, it "really is not that successful in the larger sense," which I take to mean $70 million (1 million people paying $70 per year) isn't tons of money in this realm. He added on Price's remarks saying the Journal needed to "upsell" folks on their "tiered" interest levels by selling them more on the value chain. Sine said his firm had sold Marketwatch to Dow Jones a few years back (for nearly $500 million, if you remember), which I guess gave him Street cred.

Later, Price said that that Dow Jones and Reuters have been "crushed" by Bloomberg. Another panelist – Dennis Miller of Spark Capital -- pointed out how CNN ended its 27-year relationship with Reuters, probably because Reuters was directly competing by running its material directly, with its own ads. Hindery said the folks at Bloomberg "are not unapprehensive" about the lack of a print partner.

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