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Paying For Honolulu News

Follow the money, the technology and the readers to try to predict the future of the news business

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Hawaii’s rapidly changing news media are facing two challenges at the same time:

1. How to gather and deliver news when, where and how people want it; and

2. How to pay for all that.

The old ways of delivering news to readers and viewers are not as popular as they used to be, and the new ways don’t pay nearly as much as the old ones did.

 

 That revolutionary imbalance has created a host of changes in the local news media:

• A year after the state’s two biggest daily newspapers died to give it birth, the Honolulu Star-Advertiser says it is profitable, plans to charge for its website this year and has more circulation than either of its predecessors at their demise.

Higher Star-Advertiser advertising rates drove some customers to look for alternatives. “When you go from having several newspapers and end up with one, a small business like myself is going to look around,” says Rochelle Lee Gregson, CEO of the Honolulu Board of Realtors. “I scrambled for about six months looking at business options.” But the board is back with the daily.

Civil Beat, the year-old online news site subsidized by billionaire Pierre Omidyar, includes some powerful and influential people in its audience of paid subscribers. It would not disclose its finances, but it appears to be a long way from financial self-sustainability.

Malia Zimmerman’s nine-year-old website, Hawaii Reporter, has added reporting staff and gained financing from ads, subscribers and Mainland interest groups. Matt Levi, a veteran Hawaii private investigator and former TV reporter, has launched a four-times-a-year investigative report to run on Hawaii Reporter and KGMB.

Hawaii Public Radio has used new or more-powerful transmitters to expand its signals into more communities across Hawaii. That has helped increase fundraising and some of that money has been spent on added local reporting, including a daily public affairs program called “The Conversation.”

• Local news blogs and websites run by volunteers and innovators have won many readers, though little revenue. They include Ian Lind’s ILind.net, the Hawaii Independent, Hawaii Free Press, Pacific Network and Disappeared News.

Does all of that add up to better-informed Hawaii citizens?

State Rep. Tom Brower, a 1989 UH journalism graduate and former radio newsman and talk-show host, says some changes have created new and better options.

“In some ways, there is more meaningful news out there if you know where to look for it,” says Brower, who reads the Star-Advertiser every day, channel surfs TV news and drops in on several websites.

“There are stories you won’t get on mainstream television and certainly not on commercial radio,” Brower says. “So I wouldn’t say it is all doom and gloom. It’s out there if you look for it.”

However, Chris Conybeare, president of Media Council Hawaii, an independent and nonprofit media watchdog, says the consolidations in the traditional media have been bad for news consumers in Hawaii, even if they have boosted company profits.

“The morning paper has become pathetic,” Conybeare says. “And I call TV ‘Hawaii Snooze Now.’ It doesn’t even cover the Legislature regularly. The ominous thing is this new relationship between the Star-Advertiser and Hawaii News Now. You have one major print outlet controlling the market and one television entity controlling the market. Can that be good?”

Star-Advertiser publisher Francis isn’t buying any of that: “There are only X number of things to cover in the community,” he says. “Even when we had two newspapers, 90 percent of the items being covered were in both papers. We have professional journalists and they’re going to do the best job they can.”

     The Star-Advertiser’s website is an opportunity for revenue
     growth, says publisher Dennis Francis, “but it will not be a
     substantial part of our revenue.” The print edition is the
     revenue “gorilla,” he says.
     Photo: Rae Huo

Some of the Star-Advertiser’s critics are former newspaper advertisers. Some business owners say that the Star-Advertiser failed to honor contracts already in place at both its predecessors that had months left to run. Others say that new ad rates jumped dramatically – sometimes doubling or tripling.

One businessman, who declined to be identified for this story because of potential impact on future dealings with the Star-Advertiser, says the behavior of the new daily was bad business practice, and adds that he’ll only advertise now when there’s a special discount.

“They’re cutting their own throats,” he says. “You don’t take over a business and then don’t honor contracts.”

Joyce Nakamura, president of the Honolulu Board of Realtors, says, “When they first took over, the rates were high. We talked to them and they dropped the rates back down to what they were. I don’t know if it’s exactly the same, but it’s comparable.”

Francis says companies that bought space in the former Honolulu Advertiser should not see much difference in ad rates. Those who advertised in the Star-Bulletin may have higher rates because that paper had only 40,000 daily subscribers, while the Star-Advertiser has 124,000.

The Star-Advertiser has the biggest newsroom in Hawaii by far, with about 115 reporters, editors, photographers and designers. Its owner also runs Midweek, the free weekly newspaper mailed to most households on Oahu and the second-biggest print medium in Hawaii. The duo has a lot of clout with local advertisers.

But daily newspapers have suffered more than any medium in America from the changing habits of news consumers. In its State of the News Media 2011 report, the Pew Research Center reports that, in the past four years, newspaper advertising revenue nationwide has slipped 48 percent. Whereas TV advertising revenue rebounded after the recession ended, newspaper revenue continued to fall, albeit at a slower rate.

     Editor John Temple stands in the Kaimuki newsroom of Civil
     Beat, which he says is “committed to serious public affairs,
     traditional journalism to serve the public.”
     Photo: Rae Huo

Meanwhile, circulation revenue nationally dropped 10 percent from 2003 to 2009, although there was only a marginal drop last year.

Rick Edmonds, who analyzes business media for the Poynter Institute, a Florida resource center on the media, acknowledges the problems in the newspaper business but says most dailies are still making money.

He also notes that newspaper consolidations are a national trend. “If they don’t do that, they can fail,” he says.

Black Press, the Canadian company that owns the Star-Advertiser and Midweek, is making money overall with its 150 newspapers, most of them small community papers in Canada. That’s according to the annual report by Torstar, a billion-dollar Canadian media company that holds a 19.35 percent share in David Black’s operations.

Torstar is worth watching, because, when David Black retires (he’s 64), Torstar could acquire control of his newspapers.

The Torstar report noted that its share of Black Press’ net income in 2010 was $3.2 million, compared with $2.5 million in 2009. There was no breakdown of Black’s Canadian income vs. its American income. However, Francis says Black is turning a profit in Hawaii and most of that money comes from the daily newspaper.

“The Star-Advertiser is the gorilla,” he says. “Certainly the Star- Advertiser is the vast bulk of what we do (in advertising revenue).” The Star-Advertiser’s website is included in part of those revenues, but plays a small role, he says.

Francis says his operation has been watching the various experiments nationally as news organizations seek more profits from their websites. The Star-Advertiser intends to charge website users starting this year, although managers have yet to determine exactly how that will be done and what will be charged, Francis says.

“That’s certainly a big challenge, because no one’s figured it out yet. Most newspapers in the next two years, I think, will be going down that road. They’re all approaching it somewhat differently.

“It’s still an area with opportunity to grow,” Francis continues, “but it will not be a substantial part of our revenue. I’m not going to be crazy and think it will someday replace a Macy’s or a Longs or a Sears when it comes to advertising.”

Alexandra Kirley, Windward Mall’s marketing manager, says that in the 10 months she’s been in Hawaii, the 120-store shopping center has strengthened its relationship with the Star-Advertiser.

“In the last couple of months, they’ve sponsored a couple of events here, the Festival of Giving in November. ... a ‘To Japan with Aloha’ event, and the grand opening event for our Cubby Caboose Mini Express train,” Kirley says.

“When we send out our press releases with our special events, we see every one of them getting into (Midweek). I believe they are covering the stories in the Star-Advertiser as well.”

Some advertisers that had left the local newspaper market are returning, says Francis. Regal Theaters, which has three cineplexes on Oahu, is returning as a Star-Advertiser client, although at a more modest level than in the two former dailies.

“The rate they’re paying is the same as when they left,” says Francis. “… I don’t think they’re doing it as a donation. I get the feeling they’re getting results.”

In fact, says the 52-year-old Francis, it is those good results for its advertisers that will keep Star-Advertiser alive long after he’s gone.

 

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

Old to new | New to old
Jun 8, 2011 06:45 pm
 Posted by  NancyLauer

As someone who has published http://www.allhawaiinews.com, curating the state's news every weekday for more than 2 1/2 years, I would have to say that there is more hard news out there, not less, especially state-level news.

I attribute that to Civil Beat and the evolution of Hawaii Reporter into a more solid news source. TV news sites remain a disappointment, primarily following the "if it bleeds, it leads," mantra.

It should get interesting once more paywalls are erected.

:)
N

Jun 13, 2011 03:16 am
 Posted by  Hawaii Reader

It's interesting that Malia Zimmerman, who prides herself on factual journalism, is now the "founder" of Hawaii Reporter and not the "co-founder." It's also very interesting that she states that she started Hawaii Reporter using her own money. Sounds like revisionist reporting!

Dec 24, 2011 04:08 pm
 Posted by  kevlar

I don't believe the Star Advertiser's model of charging for online access will be sustainable. The SA is not the New York Times, and with their reporting biases and editorial slop, they should be happy anyone is even visiting their site for free. I think their failure to figure out a model will ultimately create a market for others who can create quality content and not have to charge for it.

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