Q&A
iPad, Kindle Won’t Be Newspapers’ Saviors

In April Mark Contreras takes over as chairman of the Newspaper Association of America, where he’ll become the leading figure of a media sector that’s been battered and transformed like no other. Contreras has seen the carnage close up as senior vice president for newspapers at E.W. Scripps Co., where he oversees 28 daily and community newspapers. A Harvard MBA, he was legislative assistant to the late Sen. Paul Simon and a former Henry Crown Fellow at the Aspen Institute. Contreras came to Scripps after five years as senior vice president at Pulitzer Newspapers. He spoke to Forbes last week.

Forbes: When Steve Jobs unveiled the iPad in January he made a point of demonstrating how elegant The New York Times looked on its screen. Another iPad partner is Conde Nast. Are you talking to Apple, too?

Contreras: We haven’t had any contact with Apple, nor have most newspaper publishers I’ve talked to. But the industry is working on a project that would enable Apple to offer content from multiple newspaper sources. It will probably launch sometime this year. Most of our papers will have iPhone apps for their news sites by the beginning of April.

Scripps’ newspapers are available on Amazon’s Kindle, aren’t they?

Yes, but the Kindle’s terms are very unfavorable to publishers. Amazon.com gets 70% of the subscriber revenue, we keep 30%. My understanding is that the ratio for the iPad is just the reverse. Even if the terms were better, none of this is going to replace the several hundred million dollars of classified ad revenue that newspapers lost over the past four to five years.

The New York Times finally made a decision on its pay wall plans and announced they’ll begin metering content next year. Is that a good idea?

What they do with their content is going to be different than what a regional newspaper would do. If you look at the subscriber and advertising base of a local market and compare that to The New York Times, it’s apples and oranges. Most of our papers get close to 90% of their ad revenue from local or regional advertisers. That said, we had a sports Web site in Knoxville that focused on athletics at the University of Tennessee. Behind the pay wall, we got approximately 2,000 paid subscribers at $5 per month. When we took the pay wall down, the traffic ballooned and so did its revenue. Based on our experience of publishing on the Web for 15 years, pay walls don’t make sense.

Newspapers have suffered three straight years of falling ad revenue. Will that decline be halted in 2010?

The ad declines are becoming smaller on a year over year basis. Will we get back to flat numbers this year? I don’t know. We’re being cautious on our outlook. The visibility of what the next two quarters bring has never been murkier.

Why is that?

You have continued economic uncertainty in the stock market and the economies of Florida and California aren’t out of the woods yet. Until we see some true flatness we’re going to be cautious.

Colossal staff reductions, along with the fact that some newspapers are the last men standing in their respective markets, would seem to put some papers on a sound footing for a cyclical rebound. True?

When you consider the expense cuts we’ve made since 2009–from cuts in pension plans, salaries, 401(k) matches, plus reductions in the workforce–that’s a lot. It all helps, but only for a short time. Until you get stability in the top line, there’s no reason to pop any champagne bottles.

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