Merging Media Powers Cox’s Digital Drive

Like other legacy media companies, Cox Media Group with 15 TV stations, eight daily newspapers and 85 radio stations has spawned a plethora of digital services. But the new president, Doug Franklin, says much work still needs to be done on the digital front if CMG is to be the force in the future as it has been in the past.

“You’re going to see us focus more of our attention … on how we’re structured to drive our digital side of our business,” he says in this interview with TVNewsCheck. “We have to have a much more diverse portfolio of products to complement the very strong broadcast, print and direct mail businesses that we have.”

Franklin says that the newspapers’ future may be all digital, specifically a service built for tablets with, he hopes, two revenue streams: subscriptions and advertising. And as part of the stepped-up digital strategy, all the properties are moving to a common digital platform.

According to Franklin, all is going well with the 2008 reorganization of the legacy media along geographic lines rather than by media. And he is pleased with the degree to which reporters for the different media have been able to work together — an example, he believes, of cooperation without homogenization.

Franklin is a newspaper guy who has been with Cox for more than 30 years. When the company was reorganized, he was one of two executive vice presidents reporting to Sandy Schwartz. Last March, when Schwartz was named president of Manhein, Cox’s auto remarketing company, Franklin stepped up and took charge of GMG, which also includes the ValPak direct mail operation, Cox Reps and more than a dozen non-daily publications.

An edited transcript of the interview:

Did the 2009 reorganization achieved what you wanted to achieve?

What I would say here is, financially, culturally and operationally, it has gone better than we expected. Our financial performance has been strong. We continue to gain best practices and really good experiences with it and we are growing great media managers because they have a much broader view of the media businesses, the strengths and weaknesses of each.

But what kind of synergies or efficiencies have you achieved?

There are a lot of best practices we can share because we’re primarily all in the same business of gathering relevant audiences and profitably matching them up with advertisers — whether that be newspapers, radio, TV, digital or direct mail. The sales side is where we have the greatest opportunities. I can rattle off all kinds of good examples of best practices.

Go ahead.

So, for example, because television has been in the people-meter business much longer than radio, we were able to take some of our TV experiences and apply that to some of our strategies in radio. Our radio group has always been a great research-based organization and we are using those skill sets to improve our newspapers and it has made a dramatic change in our newspapers — in the way we write, in the way we cover content. And that has helped our numbers. The different media have different relationships with their clients that help leverage each other. Newspapers tend to have deep relationships with large advertisers, while television tends to be more agency-related business. They have been able to open doors for each other and gain more sales.

How has the strategy evolved? You must have made some changes over the course of the past two years.

We have been relatively fortunate with what we have put together. We have a strong stable of group VPs that oversees our markets. Our general managers have been solid. I think you’re going to see us focus more of our attention in the future on how we’re structured to drive our digital side of our business. We have to have a much more diverse portfolio of products to complement the very strong broadcast, print and direct mail businesses that we have.

Is this where we will see more cooperation among the legacy media?

Sure. All of our different media platforms have their own digital platform and we have now built out a digital platform that will be able to serve all the media. It’s a common platform. We will be able to move content back and forth very easily. Basically, the view there is that the Web and mobile business are very similar in the digital space.

One of the things I should point out is that our goal is not to homogenize our media businesses. We think there are some very unique skill sets and important attributes to each of the platforms that we need to preserve and continue to nurture.

Where there are opportunities to have shared services, shared resources or shared best practices, we will do that. But it may not be in the best interest for a local television news program to have a 10-minute interview with a newspaper reporter on air. There may be some absolutely outstanding content and information that our newspaper folks have that should be shared with the television group, but it’s up to the television news director to determine how that’s presented on his newscast and his platform.

Let’s talk about Dayton. In your new, consolidated facility there, you have reporters of the newspaper [Dayton Daily News] and TV station [WHIO] working on top of one another. How is that working out?

There was a fugitive at large and somebody got a tip that the fugitive had been arrested in West Virginia. So, the television station was reporting breaking news while the newspaper reporters were on the phone talking to their contacts in West Virginia. The station broke the news first,  but then we stayed ahead of the competition because of the information that flowed from the reporters with all the sources. Every 15 minutes or so, updates about the fugitive’s arrest were coming from newspaper reporters who were sharing that information with the breaking news desk and the TV news team that was then airing it. They continued to stay ahead of the competition on the story and frankly just did a great job of informing the community of an important event.

So how is that not homogenization?

Because the TV folks have a very special skill set — breaking news and reporting and immediacy. The newspaper folks have the ability for depth. So the combination of the two is a very potent force that gives an outstanding news product to the marketplace. The TV and newspaper folks cross-promote and that helps build awareness. Now as we go on, over the next five to 10 years and people learn the platforms and get new skill sets, and as the young people come into the business, will they be much more multidisciplinary? Yes, and they will thrive very well in the media marketplaces as journalists.

OK. If putting reporters together in one place makes sense in Dayton, why not do it in Atlanta [where Cox owns the Atlanta Journal-Constitution and WSB]?

Here’s a couple of things. One, Dayton was where we wanted to start. [It] was the size of market where we felt we could take a good measured risk and really push the envelope on this. Atlanta is significantly larger and with significantly more challenges. We have said we don’t necessarily plan to operate Atlanta like Dayton. There are things from Dayton that we ought to take to Atlanta and there are things that we do in Dayton that don’t fit for Atlanta.

I will tell you that we have recently moved 30-50 journalists from the Atlanta Journal-Constitution and they are now housed at the WSB building. We are moving more content people in with the television and radio newsrooms and I think you will see continued increased shared work there. So, yes, we are going down that path, but prudently to make sure we protect the outstanding brands we have in Atlanta.

The newspaper and TV station in Dayton each has its own website. Will that change? Will you one day have just one site for news in Dayton?

It’s a great question and we continue to ask that. At this point, we have not combined them. It’s important to maintain a brand extension out there, but that by itself is not going to win the day. There’s going to have to be a much bigger portfolio of digital services and products out there to eventually replace the analog business.

Your other two big papers are in Austin [Texas] and Palm Beach [Fla.]. Would you buy complementary broadcast properties in those markets if you could?

What we have said is that we don’t have a lot of appetite for increasing our portfolios of traditional media businesses — radio, TV and newspapers. We’re very happy with the size of the portfolio we have, but we have said that if we find unique opportunities and can be opportunistic about finding markets where we can have some more convergence, we will look at those.

Let’s talk a little bit about broadcasting. What’s the outlook for broadcasting?

First, as a newspaper guy, I have to say I love the broadcast business. I love the business model, I love the professionalism, the talent, the journalists, the programming. I find it extremely fascinating and enjoyable. I’m clearly much more bullish about the broadcast side. I think it has a long life span and continues to be strong. It does have what I would call storm clouds around it that will be a challenge, but many of them are a long ways off.

How is 2012 shaping up for your TV stations?

We will be fine, being that it’s a political year. We came into the first quarter this year very hot and did very well. It slowed down in the summer. I call it the summer doldrums, some of it from the Japanese tsunami and the automotive pull back.

Given Cox’s ownership of AutoTrader and Manheim, do you have any special insight in how the auto business is going to be next year?

We still feel pretty good about automotive moving upward. There’s still a lot of debate about how many millions of vehicles will be manufactured for next year. I think fall will be strong and will increase. Just how much it will increase depends on how quickly the demand sucks up the inventory. The only caveat is if the dealers and the manufacturers burn through their inventory faster than anticipated, that would slow down some of the advertising. But our view is it’s not too likely and we’re most likely going to see really strong advertising.

For someone who started out selling newspapers subscriptions door to door in the ’70s, it must be discouraging to see what has happened over the last five or 10 years. What’s the outlook for printed newspapers?

It is very challenging times for the newspapers, no question about that. Ten years ago we could see this happening and we got involved with the Web and trying to work on things, but I think it was uncertain what the digital pathway would be. I am somewhat encouraged by tablets and how that transitions from print. So newspapers being able to present their content in a tablet format is a very good experience.

This will be a difficult transition, to reset the business from a print business to eventually a digital-only business, but there is a pathway. Ten years ago, I was a little bit more nervous about whether there even was a pathway. So if we can get it right between finding ways to have people pay for content via the tablets and find ways to have reasonable advertising volumes and revenues tied to that, there’s a path. It’s up to the great talent and leadership we have in the newspaper business to see if we can maneuver a pathway there. It’s still very unclear.

Well, the implication of what you just said is that the printed newspapers days are numbered.

I think that’s a fair statement. We want to stay in the print business for as long as possible to allow the maximum amount of time for us to transition over to the digital the right way both for our customers and advertisers and for the business. I think it’s hard to put a time frame on the business.

The other thing I heard there is you’re counting on a dual revenue stream. You want to get paid for this content once it migrates over to the tablet.

There’s still a lot of debate in the newspaper industry about whether there can be paid content on the tablet or not. I generally have the belief that we should try to find ways to charge for our content and the great work our journalists do. If paid content does not hold up over the next couple of years and we have to go free then we will adjust to that, but starting out free and then deciding a couple of years from now that it should be paid will be a tough hill to climb, which is what we did when we opened up our content to everybody on the Web.

Read TVNewsCheck‘s other Executive Session Q&As here.