April 15, 2011
This is John Reinan’s weekly marketing column for MinnPost.com.
The future of newspapers in the Twin Cities could hinge on events in Southern California. Sound crazy? Let me explain.
One of California’s largest newspapers, the Orange County Register, is for sale. Industry analysts expect a couple of companies to bid aggressively for it: Tribune and MediaNews Group. Both companies have extensive holdings in the Golden State, and the O.C. Register would help the winning bidder consolidate its position as California’s leading media company. News industry blogger Alan Mutter explains things in detail here.
MediaNews, you might recall, is the current owner of the Pioneer Press. If MediaNews adds to its already-large California holdings, then St. Paul would become even more of a corporate outlier. The Pioneer Press is the company’s only property in the Midwest, a lone ranger in an organization that has staked its future on the economies of scale offered by geographically clustering its news properties.
I suspect that if MediaNews buys the Register, it would be more inclined to look favorably at some kind of deal to dispose of the Pioneer Press. And in that case, the time might finally be ripe for the merger of the Twin Cities’ two major newspapers – either through a joint operating agreement or even an outright takeover, most likely by the Star Tribune.
We’re one of a handful of metro areas that still has two daily newspapers, and analysts have long speculated that we’d someday be down to one. The continuing struggles of the newspaper industry make that scenario more likely than ever.
Industrywide, newspaper revenue has dropped nearly 50 percent from its historic peak in 2005, and while other advertising media have begun a comeback from the recession, newspapers continue to lag. Several publicly traded newspaper companies reported single-digit revenue declines in the fourth quarter of 2010 and the first quarter of this year. That’s an improvement from the double-digit hemorrhages of 2007, ’08 and ’09, but it’s not encouraging at a time when other media have begun to show actual revenue gains – not just smaller losses.
While the Star Tribune made a good showing in 2010, it’s off to a slow start in 2011, as my MinnPost colleague David Brauer has reported. That could strengthen the case for the federal Justice Department approval that would be required for any kind of merger or takeover. (Brauer doesn’t agree with my overall analysis, however; read his reply.)
That’s where the other part of the Southern California equation comes into play. It’s hard for me to imagine a scenario in which the Star Tribune could buy the Pioneer Press unless the Strib can sell its land near the Metrodome for the $40-50 million price tag that’s been bandied about.
The only likely buyer for that land, at that price, is the Minnesota Vikings. And the Vikings won’t be buying the Strib’s property unless they get a deal for a new stadium. If they don’t get it, the team could wind up in Los Angeles, where an investment group has announced plans to build a new stadium to lure an NFL franchise back to the nation’s second-largest TV market. (It’s also possible, of course, that the Vikings could build a new stadium here on some site other than the Metrodome area.)
So if the Vikings do end up in California, the Star Tribune potentially loses out on a big payday. That would make it tougher – not impossible, but tougher — for the organization to make any deals involving a buyout of its rival.
For years, I’ve believed that the Twin Cities would inevitably end up with one newspaper. That’s been the trend nationwide for half a century. Why should we be the only place that bucks it?
Events in California could determine whether we finally succumb to that trend.