Gannett and L.A. Times Go for BROKE! Will It Mean 'Bust'?

NEW YORK—Amidst a major, industry-wide slump in print and online advertising revenues, the Los Angeles Times and Gannett, the publisher of USA Today and 80 daily newspapers ranging from The Detroit Free Press to The Des Moines Register, plan to begin gating their content for non-print subscribers, with the exception of USA Today, behind paywalls. While the Los Angeles Times and the entire Gannett system are clearly hurting for revenues, they are delusional if they really think that they can price access to their content in the same manner as The Wall Street Journal and The New York Times. At The Complainer, we view this as the final death blow to America's local newspapers—and, for lower income Americans, a dramatic reduction in access to non-broadcast local and regional news.

The United States of America was founded on "freedom of the press." But, for most of our 236 years, the "press" hasn't been "free." Since the days of Ben Franklin and Thomas Paine, arguably the first titans of American media, our need for news has come with a price tag (or two). And, in the days prior to the Internet, the news of the day came through several main sources: the local newspaper, national and regional trade publications and journals, national and regional magazines, and later, radio, and television. Print media were sold at newsstands (or on the street) or delivered via US Mail by paid subscription, and further subsidized by advertising. The advent of radio and television disrupted the model by offering "free" news and information to listeners and viewers, whose access to current affairs was paid-for through constant exposure to advertising.

The advent of the Internet crushed the existing models for news dissemination, providing free news and information, with less overall advertising distraction than the broadcast media. For readers, especially those who reside outside of major, global cities, the results have been profound. Free content has driven readers online, forcing cutbacks, bankruptcies, mergers, and ultimately, closures at countless local newspapers. From hundreds of local papers to The Los Angeles Times, The Chicago Tribune, The Boston Globe, The Washington Post, and even The New York Times, the growth of online news has caused layoffs, early retirements, and countless permanent job losses.

To grow revenue, and attempt to retain the strength of their print subscriber base, The New York Times established a softer version of a paywall, offering non-subscribers free direct access to 20 articles per month—and up to 25 articles per day, if accessed through a search engine (such a gift to Google). Print subscribers receive total access to The Times, including archival searches reaching as far back as 1851. For Times, the experiment has proven relatively successful. Revenues have increased, print subscriptions have stabilized. But, like the Wall Street Journal and the Financial Times, their paywall has proven successful because they have affluent, global, subscriber bases, whose need for good, proprietary news and analysis often provides benefits beyond personal enjoyment. And, most important, The Times, The Wall Street Journal, and the Financial Times, are global opinion leaders and shapers; they, to a large extent, set the tone for news across multiple categories ranging from politics to international relations, to business, and even the arts.


We are willing to go out on a limb when we predict that overall traffic will fall significantly when Gannett—and the LA Times—introduce paywalls. Instead of charging readers (for what many believe is less-than-exceptional content), they should have looked at ways to improve advertising revenue by increasing traffic and engaging more out-of-region readers in their online communities.

The New York Times and The Wall Street Journal might be able to get away with digital subscriptions because they have become a truly global newspapers/news-sources of record, with strong, proprietary content driving traffic for global readerships. Few of Gannett’s papers (or, the LA Times) can come close to matching anything close to that level of content—or community. Expect to see growth for the NY Times and the WSJ.

We’ll be shorting Gannett.