Tue 10/2/2012 4:56 PM
To: All IGM Employees; All Philly.com Employees
Subject: Company Report for All IMG Employees
Today is the six month anniversary of our new ownership, so it seemed like perfect timing for me to share with you some of the latest developments occurring in our company. I mentioned in my email last week that our company and industry continue to struggle in the current economic environment. In this report, I want to reaffirm that I am committed to fully addressing both the continuing and new challenges that we, and other newspapers, are encountering on a daily basis. We all need to recognize the very difficult decisions and limited choices that are presented to us under the current circumstances.
As you know, we continue in our labor negotiations for all of our contracts that expire on October 8th. We have been meeting with our unions and their leadership, candidly outlining for each of them our present financial situation and needs. I cannot discuss any individual negotiations, but all parties fully recognize these have been the most challenging of times in which we have ever entered our discussions. This has been a difficult period for everyone involved in the talks. However, what has been most evident to me as we continue our ongoing negotiations with the unions is that everyone at the table fully recognizes that changes are essential if our company is to survive. If we can improve our efficiency and reduce costs, we will then be operating our business in a manner that will provide a bright and profitable future.
Our financial performance is the most important and difficult challenge that we must collectively address at this time. The critical revenue that our company depends on from advertising continues to send very mixed financial signals, with August and September providing less than an acceptable number of print and digital advertisements than we had forecasted, particularly after some progress had been made in June and July. The combined result of these losses is that we missed our projections by over a million dollars in revenue and we are behind from the prior year in excess of 20% for the month of August. This has created a serious strain on cash and our ability to more firmly accelerate our growth plans on several levels. We see an industry with many newspapers responding to their own economic pressures by reducing the number of days in the week they will publish a print edition, with the Patriot-News in Harrisburg recently making that announcement. Journal Register Company, which operates a number of newspapers in our suburban market has filed for bankruptcy, indicating they have a net loss and their consideration of changing to a digital edition for several days of the week. In recognizing these most unfortunate events, we are not accepting their actions as a solution to the challenges impacting our industry. In fact, we see these developments in the industry as a “tipping point” for our necessity as a company to recognize the dramatic changes and the clear message that we must adapt if we are to emerge more successful, profitable and efficient from our current financial predicament.
On a more positive note, following a substantial research project commissioned by our new ownership, a conclusion was reached to guide us on a transformative and productive path in the improvement and further enhancement of our products. The research results provided extensive data and many important findings which supported the recognition and strength of our three “super brands” in the market: Inquirer, Daily News and Philly.com. The data reflects a clear indication that our customers have a very distinct approach and purpose for how they utilize each of our publications. Moreover, it pointed out many opportunities for real change, particularly if we are to fulfill the multiple needs of our readers, viewers and advertisers, while strategically attracting new audiences with our products. The data made clear the declining value of certain content and information, but also indicated where to increase value in what our publications are capable of providing the region. Based on this market information, we have a number of people in the company working on the improvement of our brands, which includes refining the most useful content that we provide our readers and enhancing our methods of delivery. The re-launch of Inquirer.com and Daily News.com are currently in development. We are also planning the redesign of Philly.com, making it more user-friendly and providing only information and content that our online readers have told us they want, and need, from the site. Philly.com must be the “go to” website for this market. For this to happen, it will have increased non-newspaper content and more of a social media presence. In addition, both newsrooms are developing plans for the newspapers that address issues raised in the research data. This will result, among other things, in a new look and additional content, while reducing content that our research indicates is no longer useful or in demand by the reader. If print media is to survive, we must keep our loyal readers, while reaching new and enthusiastic audiences.
In my recent announcements on the appointment of Mike Lorenca as our Chief Operating Officer and General Manager of Newspaper Operations and George Loesch, an experienced revenue and marketing executive, to serve as our Senior Vice President of Sales and Marketing, we are now best prepared to meet our most important business priorities and challenges. Their leadership will provide a maximum focus on revenue growth, cost containment and labor negotiations, further allowing me to lead the necessary changes to our brand and examine other opportunities for growth or partnership. Mike and George, in addition to the other members of the executive team, are dedicated to leading our company towards a successful future. We had some resignations in top management earlier this month with the editor of Philly.com and the Vice President of Information Technology departing the company.
You have seen our special announcement this past weekend that we will begin offering in January 2013 the replica edition of each newspaper free to our subscribers exclusively for their computer, smart phone or tablet. This premium benefit will allow us to also reach a wider audience with our content by providing an alternative, highly convenient form of delivery for prospective and current customers that have been requesting this access to complement their busy schedules. We are also progressing in the reduction of our presses to 44″ so that it will make us more competitive for commercial printing opportunities, thereby allowing us to maintain and grow that segment of our business.
We are still not profitable and we have a great deal of work to accomplish, but the road forward provides great promise. I remain confident the plans that I have described, and that we are preparing to implement, will lead to a growing and sustainable future. I cannot underscore enough that while there will be tremendous change, and lots of rethinking of cherished assumptions, our destination in reaching the other side of this journey will be great and well worth your hard work and willingness to adapt to new ideas.
Thank you for your continued commitment to our company and for your efforts to overcome so many of the demanding challenges that we are encountering at this time.
SOURCE: Jim Romenesko