The End Is Here

ARKANSASTIMES.COM

JULY 2019

DISAPPEARINGINKTHE ARKANSAS DEMOCRAT-GAZETTE SHIFTS TO DIGITAL DELIVERY BY LINDSEY MILLAR

PUBLISHER HUSSMAN: His medium is digital; the message is keeping the Democrat-Gazette in business.

THE ARKANSAS DEMOCRAT-GAZETTE MOVES TO STOP PRINTING AND DELIVERING A DAILY NEWSPAPER.

BY LINDSEY MILLAR PHOTOGRAPHY BY BRIAN CHILSON

WALTER E. HUSSMAN JR., the longtime newspaper publisher, has a reputation for making big bets in business that fly in the face of conventional wisdom.

When his family purchased the Arkansas Democrat in 1974 and appointed him publisher, he was just 27. The Democrat was an afternoon paper with about half the number of subscribers of its rival, the Arkansas Gazette. Hussman’s previous experience was a reporting job at Forbes, a stint as general manager of the smalltown Camden News and a year as vice president and general manager of the family newspaper company.

In his early years leading the Democrat, Hussman cut costs and worked to decertify the newspaper’s unions, but revenues remained flat. So he approached the Gazette with a proposal to combine business operations while maintaining competitive newsrooms, a somewhat common practice at the time made possible by a 1970 federal law aimed at preserving struggling newspapers. The Gazette declined. So Hussman went to war.

He made the Democrat a morning paper. He gave away classified advertising. He hired reporters and editors and increased the number of pages and the print quality. He poured millions into the Democrat and weathered a decade of unprofitability. In 1984, the Gazette filed a federal antitrust lawsuit against the Democrat — and lost. In October 1986, the Gazette’s local owners sold the newspaper to Virginia-based corporate chain Gannett.

Against the largest newspaper chain in the country, Hussman continued to bleed money in order to compete. But ultimately, the latter years of the war boiled down to the difference between a family-owned business and a publicly traded one. Hussman had only to convince his family that continued short-term losses would pay off. Gannett had to keep its shareholders happy. In 1991, Gannett bowed out of the fight and shuttered the Gazette, selling the Gazette’s assets to Hussman for $68.5 million. The day after the Gazette published its last issue, Hussman attached the Gazette’s name to his newspaper’s flag and started a campaign: “The Best of Both.” In the early 2000s, when publishers everywhere rushed to capture ascendant digital advertising dollars by creating dynamic websites filled with free articles, Hussman was one of the few who instituted a hard paywall on his newspaper’s website, allowing access only to

subscribers. At the time, he admitted that his goal wasn’t to create a new revenue stream with digital subscribers, but to protect his print product, a position that earned him both praise and ridicule. Paywalls, often with limited free access, have now become the norm. (The Arkansas Times website, for one, instituted a paywall in 2013, but before then, the fact that the Democrat-Gazette put its content behind a paywall may have helped the Arkansas Times’ Arkansas Blog grow its devoted audience.)

This year marks 200 years since the Arkansas Gazette was founded, and the Democrat-Gazette is embracing the anniversary as its own. At the conclusion of the newspaper war, Hussman said that the Gazette had ceased publication and made clear he had only purchased its assets. But he’s singing a different tune today. “I think the Gazette is probably the oldest business in Arkansas,” he told a Democrat-Gazette reporter in June. “It’s obviously the oldest newspaper in Arkansas as well as the oldest newspaper west of the Mississippi. How many newspapers make it 200 years?” (The Democrat also has a long history. Its founding dates to at least 1878.) Former President Bill Clinton will speak at an invitation-only anniversary banquet in November at the Statehouse Convention Center. Meanwhile, the Democrat-Gazette is publishing what it’s calling a “200-day celebration” of the Gazette’s history. Each day, the newspaper runs an archival snapshot of an Arkansas Gazette front page; in total, it will publish one for every year since its founding.

That every day reminder of the centuries-long history of a daily newspaper in Arkansas coincides with the 72-year-old publisher’s undertaking perhaps the biggest gamble of his career. By the end of the year, Hussman plans to stop printing and delivering the daily edition of the Arkansas Democrat-Gazette.

Other papers have undertaken print-to-digital conversion by gradually reducing print publication frequency and trying to redirect readers to their websites. Hussman is pursuing something different and more ambitious. The Democrat-Gazette is trying to ease its dedicated readers into the digital future with the help of a high-end gadget and a familiar format. To subscribers who agree to continue paying the current rate of $34-$36 a month, the Democrat-Gazette is providing a new Apple iPad so they can read an e-edition of the paper. Through

a Democrat-Gazette app — available for free download for the iPad or iPhone — subscribers get a digital facsimile of the print paper, or an “exact replica edition,” as Hussman calls it, delivered every day, usually before 4 a.m. The app allows subscribers to browse through sections with a flick of the finger, select an article with a tap and read a full-screen version. Stories, especially national reports from wire services, often include videos and additional pictures in slideshows.

The newspaper’s digital conversion won’t be total; it will still print and deliver a Sunday edition to most subscribers. Hussman has said that the Sunday paper, with its advertising inserts, accounts for about 40 percent of the newspaper’s advertising revenue.

Already, subscribers in nearly all of the state’s 63 counties served by the Little Rock newspaper have either seen the end of daily delivery of a printed newspaper or received notice that the end is near. (Subscribers in the 12 counties served by the Northwest Arkansas Democrat-Gazette, which shares content with the Little Rock paper and is also owned by Hussman’s company, WEHCO Media Inc., will continue to receive a daily printed edition, at least for the near future.) In mid-June, the Democrat-Gazette had not yet notified some subscribers in Central Arkansas of the coming change, including those in Pulaski County, home to its largest concentration of paid readers.

In March, a Pew Research Center survey found that 71 percent of Americans believe that “their local news outlets are doing very or somewhat well financially.” In the rollout of the Democrat-Gazette’s new plan, Hussman has told everyone who will listen that’s not the case. Print advertising has cratered. According to Pew, total advertising revenue for all U.S. newspapers was $48.67 billion in 2000. By 2017, it had fallen to $16.47 billion.

The operation of a large daily newspaper — paying the salaries and expenses of reporters, columnists, critics, photographers, copy editors, assignment editors, designers — has always been expensive, but those costs weren’t reflected in the price when the majority of today’s newspaper readers first subscribed. Before the internet, mass market advertising represented as much as 80 percent of newspaper revenues; subscription rates merely covered circulation costs. As targeted online advertising siphoned

OBSOLETE: Once the newspaper goes digital, one-time purchase of weekday papers will no longer be possible.

away much of that revenue, newspapers were forced to raise the price of subscriptions and per-copy sales.

Advertising revenue has declined at the Democrat-Gazette for the last 13 years. “And it’s not just us,” Hussman told me. “It’s everyone. All the advertising has basically gone to two companies: Google and Facebook. They’ve done a better job than anyone else at getting people to sacrifice their privacy. We don’t want people to sacrifice their privacy. We just want them to pay a subscription rate that allows us to keep a robust newsroom.”

In 2012, the Democrat-Gazette raised its subscription rate from $16 per month to $28 and its per-copy price from 50 cents to $1 daily and $1.25 to $2 on Sunday. It was a tough time to lean on readers. The internet changed the value proposition of the daily newspaper. The web provided not just free news alternatives, but also no-cost options for sports scores, classified ads, TV listings and the like. In 2011, the Alliance for Audited Media reported that the Democrat-Gazette had an average of 142,000 daily print subscribers. Two years later, after the price increases had gone into effect, that number had dropped to 129,000. For the first quarter of 2018, when the digital replica conversion had just started, daily print subscribers had dropped to 86,000.

Though profits had been declining for a decade, Hussman said the Democrat-Gazette lost money for the first time in 20 years in 2018. He said he had reduced expenses everywhere he could without undercutting the news operation.

The Democrat-Gazette has laid off newsroom staff in recent years, but at a lower rate than other newspapers. Before the New Orleans Times-Picayune was sold to The Advocate earlier this year, its newsroom staff had declined from 175 in 2012 to 65. The Commercial Appeal in Memphis shed 75 percent of its staff over the last 12 years, according to its online staff directory. It had 138 in 2007; today, there are only 31. The Cleveland Plain Dealer’s newsroom staff dropped from 340 two decades ago to 33 today. The Democrat-Gazette counts 106 newsroom employees today, far fewer than the 200 or so who worked there in 2007. But Ken Doctor, a media analyst who contributes to Harvard’s Nieman Lab, said the paper’s staff count remained higher than average relative to the Democrat-Gazette’s subscription base.

Hussman said he considered saving money by halting expensive distribution to counties on the edges of the state, but ultimately decided it was important to continue as one of the last dailies in the U.S. covering and distributing the news across the state.

“A statewide reader is really valuable to the state because there’s a real commonality of interest,” he said. “Everyone in Arkansas wants to know what’s going on with the legislature, what’s going on with the governor. What’s going on with Walmart, or Murphy Oil, or J.B. Hunt. Or what’s going on with the Razorbacks. ... If you don’t serve the whole state you really lose something that provides a commonality, or something that everyone can really focus on.”

In 2016, the Democrat-Gazette began experimenting with converting print subscribers to digital delivery in Blytheville, perhaps the most far-flung community served by the Little Rockbased paper — and therefore the most expensive place to deliver a printed edition. When the newspaper showed its 200 or so subscribers in

Blytheville the replica iPad edition and asked if they would be willing to switch, it got no takers. Newspaper reps returned in early 2018 and pitched subscribers a special AT&T promotion that would provide them with an iPad at a deep discount of $99. Only four subscribers agreed to convert to digital delivery.

Democrat-Gazette salespeople tried one last time: They offered readers a free iPad as long as they continued subscribing and provided oneon-one customer support to help those readers who were unfamiliar with the devices. It set up appointments at the local Holiday Inn and sent customer service staff to the homes or businesses of subscribers who couldn’t make it to the hotel. (The Democrat-Gazette discovered that offering continued delivery of a printed Sunday edition increased its conversion rate after it had ended daily delivery in Mississippi County and other distant counties. It may resume Sunday delivery to those areas in the future, said Lynn Hamilton, the Democrat-Gazette general manager and president.)

“We had a 93-year-old man in Blytheville,” Hussman said. “He said, ‘Let me just tell you first, I don’t have a cell phone. I don’t have a computer. I don’t know what an iPad is. But I’ve been reading the paper for 60 years, and I want to keep reading it, so just show me what I need to do.’ We got him all set up, and he said, ‘I think I’ve got this.’ So he goes home and calls us the next day and said, ‘Worked at the Holiday Inn, doesn’t work at home.’ So we sent someone out to his house, and he didn’t have internet service.” He got internet service so he could continue to subscribe.

Hussman has said if he can get 70 percent of current subscribers to convert to digital delivery at the same rate they paid for printed delivery, the newspaper will return to profitability and avoid cuts to the newsroom. The savings gained by eliminating the costs of newsprint, production and delivery will be sizable, but it remains to be seen how advertisers will respond once the newspaper completes the digital transition.

Hussman initially said he’s willing to spend as much as $12 million to purchase iPads, which retail for $329. (Hussman has noted that the Daily Oklahoman in Oklahoma City recently sold for $12 million.) But in late May, Hussman said his costs may be more like $10 million. Results thus far suggest that about 15 percent of subscribers who want to convert to digital delivery prefer to read it on their phone or laptop and decline the iPad. The expense of sending dozens of staffers across the state for extensive one-on-one sessions with subscribers at event centers and on home and business calls could amount to another $2 million in nonrecurring costs, Hussman said.

Media analyst Doctor said he thought there was a certain group of older, monied readers who would embrace the iPad offer. “As part of a bigger strategy, I think it can work if it’s cost-efficient,” he said. But Doctor said he didn’t see it as an overall strategy to replace lost print advertising revenue.

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In late May, I met up with my mother in Searcy at a small event center tucked behind a Little Caesars restaurant. She was there to pick up her iPad. When I arrived, a young customer service person directed us to a table where she

SUPPORTING DEMOCRACY: That’s what the newspaper is doing, its bumper stickers say.

presented my mom with a black, 9.7-inch iPad wrapped in an imitation leather case with the Democrat-Gazette flag embossed in gold letters on the front.

“I’m going to show you the app and what it looks like,” she told us. It was preloaded on the iPad. The app looked like the newspaper. She clicked on a story. It got bigger. She demonstrated how one accesses photo slideshows or videos, which are built into articles. She clicked a front page story on President Trump. A video started playing of the president talking. “I don’t think I’ll ever push that on Trump,” my mom quipped.

The rep demonstrated an option in each article that would trigger an audio version; a robotic voice droned. She showed us the button to print an article. “How would I connect this to my printer?” my mom asked. “Do you know if it’s wireless or Bluetooth?” the rep asked. My mom didn’t know. (It’s neither). We saw the puzzle page, which includes several crossword, Sudoku and Jumble puzzle options, but not the Cryptoquote.

I asked if the company would ever provide my mother with an updated iPad. The rep said it would every two years. (Erasing most of your subscription revenue every two years by purchasing

thousands of iPads didn’t sound like much of a business plan, and when I checked with Hussman, he laughed and said, “No! I’d go broke doing that. I don’t know where that came from.”) I asked if the terms limited downloading certain apps or using it in certain ways. No, the rep said, this is yours to do whatever you want with. Will you monitor what she does on the iPad? I asked.

“Why would we?” she said. “That’s just creepy.”

For my mom, who is 68 and somewhat technologically savvy — she had an early model of the iPad and has long had an iPhone, which she uses to send text messages, sometimes even with emojis — the biggest point of confusion came when the Democrat-Gazette rep talked about logging into the Democrat-Gazette’s app vs. the Apple app store, which she would need to do if she wanted to download other apps (to take advantage of the capabilities of the iPad beyond the e-newspaper). My mom didn’t know her password for either and didn’t initially understand the difference. The customer rep had helpfully printed out the login information to access the Democrat-Gazette’s app, and my mom left with hope that she’d written down her Apple ID somewhere at home.

I asked Hussman if his company was prepared to field customer support calls not just about the app, but on any iPad-related question: how to charge it, how to connect to email, how to add movies to Netflix.

“We haven’t had much of that, but we do help people when they call because we want them to love their iPad as part of their subscription,” he said. “What we hope is that they use it for surfing the web, for doing emails, for listening to music, for creating photos and photo libraries. … We think it may reduce our churn, or how many subscribers cancel their subscriptions. In the past, we gave them a paper seven days a week with all that content in it. And now we’re giving them the exact same content and we’re giving them an iPad.

“So now when they call and say, ‘You know, I just don’t read the paper as much as I used to. I think I’ll drop my subscription.’ We say, ‘We’re sorry, I wish you’d continue. You’ll have to return the iPad.’

“ ‘Return the iPad? I don’t want to return the iPad. I use it for too many things.’ ”

I asked Hamilton, the newspaper’s president and general manager, what happens if the iPad program doesn’t work. Is there a plan B?

He laughed and said, “No. We’ve had the same conversation using the term ‘plan B.’ We don’t have one. We don’t know what happens.”

Hussman, who remains publisher of the Democrat-Gazette, seems energized by the iPad rollout, but he’s increasingly placed the future of his media empire in the hands of relatives. He’s still the chairman of WEHCO Media, which owns cable and internet companies and 18 newspapers in Arkansas and neighboring states, but Nat Lea, his nephew by marriage, took over as CEO in 2016. Hussman’s daughter Eliza Hussman Gaines got a master’s degree in journalism and has followed a well-rounded newspaper-heir path, working as a travel editor for the San Francisco Chronicle, assistant publisher of the Democrat-Gazette, editor of the Hot Springs Sentinel-Record and now as vice president of audience development for WEHCO, a position she summed up as “making sure we’re providing the best content possible in the right format in the right places.”

In a letter to subscribers printed in the May 18 edition of the newspaper, Hussman said the most popular feature of the digital edition was the ability to make the type size bigger. Doesn’t that, I asked him, suggest a bigger, looming existential problem?

“Everyone knows that the newspaper subscriber base is older,” he said. “The one good thing about that is ... they’re all living a lot longer than anyone thought they were going to live. That’s sort of the silver lining in the cloud. There’s no question we’ve got to get more younger readers. I just think, today, a lot of younger readers are not going to pick up the habit of reading a print newspaper. But they are going to look at screens. They spend a lot of time looking at screens.”

I told him that I suspected the Democrat-Gazette would have success at converting older, habituated readers with disposable income to digital delivery on the iPad, but I was skeptical that the facsimile edition — a slight update on a presentation style that’s been available since the early days of the web — would compel anyone 50 or younger to become a new subscriber.

“As long as there’s the same content for free elsewhere, it’s going to be difficult,” Hussman said. “What we’ve got to have is unique, relevant content. If we do, I think people will pay for it.”

We were talking at the onset of the recent Arkansas River flooding. “Yesterday, we sent an airplane up the Arkansas River Valley, taking photographs,” Hussman said. “Now we’re doing something new, which is slideshows and videos. Instead of one photo, you’ve got all these multiple photos. This can be done in the exact replica version. But it can also be on the phone. The unique content is ‘what does the flood really look like in Toad Suck and Morrilton and Russellville?’ ”

The photos and footage were impressive, but if you have a Facebook or Twitter account — or visited the free websites for local TV news stations, which have increased their daily online news efforts in recent years — you know flood pictures and videos were ubiquitous.

I asked Hussman and Gaines why they thought people subscribed to the Democrat-Gazette.

“It’s because we’re the most complete source of news information in the state of Arkansas,” Hussman said. He also talked about the paper serving as a watchdog. “Think about government,” he said. “We spend a lot of money on our taxes.” Is $34 a fair amount to spend for a watchdog to make sure the government is spending those tax dollars appropriately? he asked.

Gaines said, “In the era of fake news, it’s really important to have a resource for unbiased news where opinion is not involved. We have bumper stickers that say, ‘Support democracy. Subscribe to the Arkansas Democrat-Gazette.’ If we’re not covering these things, who’s going to do it?”

The newspaper has managed to recruit talented young beat reporters and retain a fair amount of veteran journalists with institutional knowledge. They provide thorough, informed coverage of municipal and state government, local schools, health care, the courts, and on and on. Their breadth of coverage is unparalleled in the state. That doesn’t mean they don’t miss things. Amid voluminous flood coverage, there was no mention of a 2,400-sow feeding operation in Yell County that was inundated before all the hogs were evacuated, likely sending dead hogs and hog waste from holding ponds into the river. That was first reported by the Arkansas Times’ Arkansas Blog.

The news hole, too, often relies heavily on stories from other WEHCO newspapers, especially the Northwest Arkansas Democrat-Gazette, Hot Springs Sentinel-Record and Texarkana Gazette. A reader in Little Rock might not have much use for word of arrests or park projects in Texarkana or Bentonville, just as a reader in Mena may not care about Little Rock city budget fights. For years, the Democrat-Gazette printed a state and later Little Rock edition with content tailored to each audience and late-breaking news and sports scores in the Little Rock edition. That practice ended June 17; now readers in 63 counties will see the same newspaper.

In his office, Hussman had a stack of other newspapers that he slapped down onto his conference table. He showed a Raleigh (N.C.) News and Observer from last year compared to a Democrat-Gazette from the same date. “This paper is $50 [per month] and 20 pages,” he said pointing to the News and Observer (the Raleigh paper’s published rate is actually $100 every four weeks). The Democrat-Gazette that day was 36 pages. “Let’s find a newspaper that’s our size,” he said. “It’s not going to be in our size market.” He showed a 34-page Dallas Morning News compared to a 38-page Democrat-Gazette

on the same date. The monthly cost of the Morning News is about $70, double that of the Democrat-Gazette.

But the other sections in the paper don’t quite command the same value as the news. The sports pages comprehensively cover the Razorbacks and includes capsule coverage of high school sports, though there’s increasingly online alternatives for consumers interested in that. The style section has seemed trapped in another time for years. It often devotes most of its space to cultural criticism of national figures and topics, a highly competitive landscape. Funeral homes run obits online; classifieds were long ago made obsolete by Craigslist, which now has competition from Facebook Marketplace.

With his time less constrained by running a large company, Hussman has said that he’s involving himself more with the news and opinion departments. He writes editorials himself once or twice a month and makes suggestions for topics “once or twice a week, sometimes more often,” he told me. He said he makes “comments on news articles almost daily, either commending articles or making suggestions on how they could have made them better.”

Some Arkansans might welcome the decline of the influence of Hussman and the Democrat-Gazette. The paper’s opinion page reflects his politics, which are conservative, disdainful of conventional public education and fulsomely pro-charter schools. Hussman, long one of the wealthiest people in the state, was instrumental in the founding of the growing eStem Public Charter Schools in Little Rock and is on the board of Arkansas Learns, a group that works to advance the charter agenda in the state.

The opinion page columnists that don’t write about politics often delve into the mundane minutiae of their lives or in formulaic dispatches from small towns. The opinion section also might not be to your taste if you’re not old, white and male. (To be fair, the Arkansas Times has not had a great track record of running columns by diverse voices in print or online.)

Some media analysts have suggested that there are no new local newspaper readers. But Ken Doctor notes that there are outfits beyond the big three national newspapers — The New York Times, The Wall Street Journal and The Washington Post — that can serve as models for others. In May, The Boston Globe became the first local newspaper to have more paying subscribers in digital than in print. The Minneapolis Star Tribune has also been growing digital subscriptions and holding onto its core audience well, Doctor said. (Both newspapers happen to be owned by local billionaires.)

The past few decades have been brutal for print publishing, and further disruptions surely lurk around the corner. No one has developed a formula for newspapers to follow to ensure survival. But if there’s a path forward, Doctor outlined what it might look like.

“Ideally, you need capital to invest or reinvest. You’ve got to make sure your content proposition is good enough for the readers however it’s delivered, print or digital. You’ve got to have the products, especially the digital and mobile products, that deliver that content that’s state of the art. When you look at The Washington Post and The New York Times, they are doing that. You don’t need to have their resources to do it, but you do need to have their thinking. And you need to have the technology to convert those

readers who come to you on mobile, which is 65 percent of news reading. The last part of it is really skill. You need smart people to do this. In a declining industry, one of the big problems is that it’s hard to hire smart people because they see it as a dying industry.”

Local publishers everywhere have had a hard time keeping up to date with digital offerings, but it often seems that the Democrat-Gazette especially struggles to stay relevant.

On June 7, the Democrat-Gazette touted a “video editorial” on its front page and promoted it on its webpage. In the video, Rex Nelson, the newspaper’s senior editor, whose voice, my brother-in-law once memorably suggested, sounds like a hillbilly version of Jimmy Stewart, offers a grand introduction: “This is a first for the Arkansas Gazette, the Arkansas Democrat and the Arkansas Democrat-Gazette in the 200- year history of the newspaper. It’s a video editorial.” A video of President Trump at a D-Day 75th anniversary ceremony in the United Kingdom plays. Then, Nelson, sitting in his office chair, reads an editorial on the significance of D-Day.

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The day I interviewed Hussman and his daughter Gaines, my 8-year-old son, who is intimately familiar with the kid-friendly offerings of Netflix, Amazon Prime and Hulu, asked me to explain the concept of a television “channel.” I struggled. But I realized I’d caught him in a moment of acquiescence, so I did the obnoxious “when I was your age” thing parents are obligated to do and told him about how I watched movies at home as a child: by pestering my parents to take me to a store where I’d browse physical videotapes that we would rent on the condition that we would return them in a few days. He didn’t understand what a videotape was, and my suggesting it was like a larger version of a cassette tape did nothing to clear that up.

Then I told him that sometime later this year the newspaper would no longer be delivered to our house. In one of my favorite pictures of him as a baby, he’s in a high chair with a furrowed brow and holding the Democrat-Gazette open with two hands. He and his younger brother used to fight over who would gather the paper from the stoop in the morning. At breakfast, still, they stand in their chairs over their cereal bowls to get a look at a picture or read a headline that interests them. Confronted with the looming end of a printed daily newspaper, my son had about the same reaction as he did when he pressured me to explain where babies come from: big-eyed incredulity followed by, “Whaaaaat?”

I’m 39, which means that I remember the analog past, so much of which has been thoroughly erased by new innovations, but I’m also young enough to have not yet been left behind by technology. My son’s reaction reminded me of my earliest memory of a newspaper being something that mattered: my parents bemoaning the death of the Arkansas Gazette in 1991. I’m sure my son and I identified the same thing: the end of something that we recognized, through daily ritual, as an institution. My now-deceased grandparents read the newspaper the same way every day. My parents read the newspaper the same way every day. I read the newspaper the same way every day. The next generation won’t.