Media Fortune Fame & Folly

The end of USA Today?

Shareholders yesterday (Nov 14) approved the private equity-funded GateHouse Media’s $1.13bn acquisition of USA Today owner Gannett, to create the largest US newspaper publisher, second globally to News Corp. The combined company, to be called Gannett, will own more than 260 dailies, hundreds of weeklies, and the UK-based Newsquest regional publisher. It will also have an online news audience of more than 145m monthly uniques, almost matching CNN.

The company aims to cut back-office costs by some $300m but will not stop there. More significantly, it is expected to close the internationally-distributed USA Today. Despite pre-acquisition denials, Gannett is expected to stop printing the 37-year-old mid-market national daily which once had a circulation of more than 5m.

The strategy has been encouraged by the success of the existing 109 Gannett regional newspaper websites (which take national content from USA Today) in building 600k of paid digital subscriptions (5% of the company’s monthly uniques). And some 75% of USA Today advertising is now digital.

It is believed the paper will be phased-out gradually over the next 1-2 years. The “new” Gannett must squeeze costs in order to fund what it promises will be substantial digital expansion. That will mean using the company’s most powerful brand to boost new services.

Some indication of this likely strategy, under the existing ownership, was the 2019 decision to drop from the company’s 35 largest papers the self-standing USA Today edition whose roll-out six years ago had been claimed as a reinvestment in print. The supplement was said to be heavily loss-making. But that’s the story of the historic newspaper that changed the world – and Gannett – but seldom made a profit.

USA Today was launched in 1982. It was derided as “McPaper”, and “junk food journalism” for its short news “nuggets”, diagrams, pictures, graphs, lists, and colourful headlines. It was digital-style news decades before BuzzFeed and plenty of journalists didn’t like it. Legendary Washington Post editor-in-chief Ben Bradlee once sniped: “If USA Today is a good newspaper, then I’m in the wrong business.” 

The paper was the vision and mission of the brash showman of a media executive Al Neuharth who, as chairman of Gannett during 1973-89, turned the company into a communications giant whose revenue grew from $390m to $3.3bn.

What became America’s best-selling newspaper pioneered the use of colour, bite-sized reading, and infographics which were copied by newspapers everywhere seeking to compete with TV. USA Today became a fixture in American households, winning millions of readers and changing the appetite for news. It helped to push newspapers into full-colour printing. Much of the style and superior production of USA Today was adopted from Time and Newsweek magazines which the newspaper saw as its main competition.

While USA Today itself has had (much) longer periods of loss than profit, it helped the Gannett TV-radio-newspaper-outdoor media group deliver high-growth profit almost everywhere else.

In ways that will chime with the new owners of Gannett, Neuharth propelled profit margins by acquiring smallish newspapers that had no significant competition, and building a chain of small monopolies. Then he raised advertising rates and cut costs. Just like that.

But there has only been one flagship. Even while it decides how best to cut the loss-making paper, Gannett is always described as “the publisher of USA Today”. 

When Neuharth died six years ago, one of his former editors said: “Virtually no newspaper in the country, nor many around the world, has not been deeply affected by USA Today in terms of look, colour, graphics and brevity.” 

Like CNN founder Ted Turner two years earlier, Neuharth had seized the technology of the moment, (satellite transmission) to turn small local businesses into a global network with 37 printing plants across the US and five internationally. But, while CNN was a relatively speedy success, USA Today burned through $500m in its first six years and did not make a profit until 1993 – 11 years after launch and four years after its founder had retired. That maiden profit was just $13m on revenue of almost $400m and did not include the costs of large numbers of staffers seconded to USA Today from across the group. By then, it had accumulated losses of almost $1bn.

Readers had been quicker than advertisers to support the pioneering daily, and it took some time for the publisher to convince circulation auditors that its then novel free distribution of copies in hotels and on aircraft was legit.

But the USA Today’s time seems to have gone. Its paid circulation is now some 170k with 300k of nearly-free hotel distribution – a long way from the 2.3m paid circulation in 2007. The thin, printed editions now have little or no advertising.

USA Today had been a game changer for Gannett and for US media. Beyond even its unique status as a national daily distributed worldwide, it was a new type of newspaper in content, style and tone for an audience hardly appetized by traditional newspapers with a narrow view of “news”.

Neuharth’s whole approach to creating USA Today should remind media entrepreneurs everywhere that, even now, many more things may be possible in the digital search to “re-capture” the millions of people who would once have become hooked on daily newspapers and news magazines.

In the era of audience “echo chambers”, the enduring lessons of USA Today are that content matters but so does style and tone. Could the people who were once captivated by the politically middle-of-the-road, ‘one nation’ newspaper be won over again? Perhaps with a new wave TV / online news channel, more ‘infotainment’ than politics, global and interactive…