Betting on David Black

Major dailies are shedding employees, hemorrhaging cash, and losing advertisers to the Web. So why is David Black swimming in ink?

In Frank Capra's holiday classic, It's a Wonderful Life, Jimmy Stewart's character shouts out to a mob besieging the Bailey Brothers Building and Loan: "Potter's not selling. He's buying! Why? Because we're panicking and he's not."The scene was meant to depict the chaos of a bank run during the Great Depression. For those in the newspaper industry, however, those words can be used to illustrate the growth of the Black Press Empire in the past decade amid the financial uncertainty plaguing the Fourth Estate.Most people living in the Puget Sound region couldn't tell you who David Holmes Black is. But this month, around a million households in Washington will have a Black-owned newspaper land in their front yard, or those householders will pick one up at the local 7-Eleven so they can see which local kid won the Soap Box Derby or check the classifieds for a '77 Camaro.Despite the extent of his media empire, Black himself has stayed out of the limelight. Wikipedia, the repository of all that is true and trendy, has only a single 94-word paragraph on the 62-year-old Canadian publisher. A Honolulu Star-Bulletin article in 2000 pictures Black awkwardly sporting a Hawaiian shirt after his purchase of that paper. In 2005, The Robson Valley Times, a Canadian community newspaper, called him an invisible giant and speculated about his lack of media coverage.Telling is the fact that every time Black is actually mentioned in an article, usually a brief business piece recounting another of his newspaper acquisitions, an obligatory caveat is included that he is not related to fellow Canadian publisher Conrad Black, who has earned notoriety for his flamboyant lifestyle and run-ins with the law.David Black admits he prefers anonymity. "We're not a publicly held company," he demurs. "There's no reason to interview me."Situated in his office in Victoria, B.C., Black works nine-hour days, a good deal fewer than when he was younger, giving him more time to indulge his hobbies: sailing, golf, and tooling around in his old Jaguar. In person, a poker player would be stumped by Black's demeanor, because he lacks any tells. Munching on a cookie at his desk, Black downplays his past triumphs, giving the impression that it's no great accomplishment that his media empire is not only profitable but expanding while other newspaper chains are currently bleeding red ink."It's not rocket science," he says simply.Black freely admits he doesn't come from an editorial background. He is a businessman with a degree in civil engineering and an MBA. Drinking his coffee in the morning—he takes it black, of course—he reads the Daily Mail, Canada's equivalent of the Wall Street Journal, as well as a smattering of financial Web sites.In Black's office, there seems to be little in the way of extravagance. Throughout most of his career, the company was run out of Black's home, and when a phone rings at the current headquarters, odds are good that the caller, rather than encountering a receptionist or a recorded phone tree, will be greeted with a brisk "David Black" by the man himself."Where else are you going to get an organization where the CEO answers the phone himself?" says Manfred Tempelmayr, president of Black-owned subsidiary Sound Publishing, who has known Black for two decades. "No one is screening calls. He's created an organization that is very approachable."This under-the-radar, laconic, conservative persona not only typifies David Black, but also is symbolic of the low-key community journalism he has championed. And while his business tactics have rubbed some the wrong way, they just might be the hope and future of a beleaguered industry.The conventional wisdom regarding print journalism is that it is a dying breed, and that online media is the way of the future. Hence, newspapers across the country are axing employees like Paul Bunyan in a tree-chopping competition.The excuses for such downsizing are legion: competition with blogs, cable news, and online classified-ad sites, readers' short attention spans, rising production costs, overstaffing, understaffing, liberal bias, corporate ownership, the decline of the American educational system, and personal digital assistants. You might as well blame it on the rain while you're at it, because one thing is certain: Traditional "dead tree" editions are a thing of the past.Or are they?The supposed decline of print media is not in fact an industry-wide phenomenon. Community newspapers have generally been profitable ventures for some time, and over the past decade have attracted the attention of media giants looking for publications that can positively contribute to the parent corporation's bottom line.There are plenty of examples in the Puget Sound region of community remoras being attached to media leviathans. In 1996, the Washington Post–owned Everett Herald purchased Enterprise Newspapers, a chain of four community papers with circulations in Lynnwood, Edmonds, Mill Creek, and Shoreline. Similarly, The Seattle Times purchased The Issaquah Press in 1995, and since then has launched papers serving Newcastle, Sammamish, and Snoqualmie. Meanwhile, the McClatchy-owned Tacoma News Tribune operates a pair of weeklies, The Peninsula Gateway in Gig Harbor and The Puyallup Herald.Yet the newspaper entity in Washington with the highest aggregate circulation is not the Blethen-operated Seattle Times and its affiliates, nor is it McClatchy, with its News Tribune, Tri-City Herald, and Olympian. Rather, it's Sound Publishing, a chain of some three-score community newspapers and shoppers that is a subsidiary of the British Columbia–based Black Press.And, wouldn't you know it, the company relies almost entirely on dead-tree editions to get its message across.Black got his start in the newspaper biz as a junior business analyst for The Toronto Star, where his tasks included researching different expansion possibilities for the paper. Subsequently, he purchased the Williams Lake Tribune from his father, Alan, in 1975.The Tribune covers a small burg on the Caribou Highway between Kamloops and Prince George. It was here that Black, a Vancouver, B.C., native, developed the strategy that would become the cornerstone of the Black press empire."It is all about local, local, local," he says. "It works. That's what the market wants."Black operated the Tribune exclusively for four years before purchasing his second paper from a husband-and-wife publishing team in the nearby community of Ashcroft who wanted to retire. Black already published their paper on his press, so the deal was a natural."It became apparent right away, even to slow-moving guys like ourselves, that this was a decent way to make our business a bit bigger and make money," Black recalls.After the first few acquisitions, Black Press grew at an exponential rate. "There was never a big plan to get big," Black insists. "It's just that another opportunity would come over the hill. Usually an independent would phone, wanting to retire or sell out, asking if we were interested in buying them."Soon Black had formed newspaper clusters around Victoria and Vancouver. In 1991, the chain moved south of the border, when Sound Publishing was formed after Black purchased three newspapers on the Kitsap Peninsula. Since then the brand has become one of the dominant forces on the calmer side of Puget Sound, with papers in the San Juan Islands and on the Olympic Peninsula being incorporated into the Sound Publishing fiefdom.It's from tiny seeds like this that mighty maple trees grow: All told, more than 170 publications have been added to Black's corral, including three dailies. In 2000, he rescued Honolulu Star-Bulletin from certain demise due to a joint-operating-agreement feud with the island's larger Gannett-run daily. The Akron Beacon Journal, divested by McClatchy after the breakup of the Knight-Ridder chain, was also bought for $165 million. Then in July 2006, Black scooped up the Little Nickel and Nickel Ads Classifieds from Lee Enterprises, which owns 53 daily newspapers, for less than $50 million.A couple of months later, The King County Journal, along with its press operations and constellation of community papers, was absorbed by Black. Despite the subsequent dissolution of the flagship KCJ and its press facility, Sound Publishing tripled its operating size in the Puget Sound region with the purchase.After Black's purchase of King County Journal Newspapers, local news reports focused on the daily KCJ. Lost in the myopic coverage was the fact that Black's primary motive was to acquire the chain's Reporter newspapers, a dozen community weeklies and biweeklies based in East and South King County (I was once a staff writer for the Reporter newspapers, though well before Black's purchase).Yet Black says he spoke with the chain's former owner, Pete Horvitz, about how to keep the flagship afloat, to no avail. "Unfortunately, we had to give up on [the KCJ], which was not our first choice," Black claims. "With hindsight, we were fortunate to have made that decision early on, because today it would really be hemorrhaging. The daily industry is not good now, and being the third daily in the market would be a recipe for losing money.""He has created a tremendous amount of circulation and produces [papers] at a low cost," says Horvitz, who still owns Peninsula Daily News in Port Angeles. "It is good for local journalism because they are covering local news in the community and doing it profitably. As the result of the resources that he has, those operations are able to be successful, while on their own without economies of scale, they couldn't."Sound Publishing president Tempelmayr, who has worked with Black Press since he sold his independent newspaper on Vancouver Island to the chain in 1984, states that consolidation is hardly unique to newspapers. Read the headlines on any business page, he says, which are dotted with stories of mergers involving broadcast entities, banks, grocery stores, automobile manufacturers, and countless other industries."The challenge is to find any sector of business that is not being consolidated," Tempelmayr says. "The fact is the number of choices will decline; the publishing industry is no different."Tempelmayr says Black generally doesn't like to meddle with the editorial side of his papers. For the most part, he doesn't even read the vast majority of his papers, a task he outsources to his son Frasier. With more than 100 newspapers, doing so would probably take up most of Black's day. He says his local newsrooms are quasi-independent entities whose only directive is to cover local news as they see fit.Rarely does Black involve himself in what gets covered by his newsrooms, nor does he use his opinion pages as sounding boards to expound on his political beliefs—in contrast, for instance, to Frank Blethen, who routinely uses The Seattle Times' editorial pages to rail against the inheritance tax and media consolidation by the FCC, two issues of remunerative interest to the family-owned chain.During his purchase of the King County Journal and Reporter newspapers, Black offered to purchase Blethen's Issaquah Press. After that proved futile, a new Reporter publication was started to compete with the Times-owned property. To counterpunch, the Times launched the Snoqualmie Valley Star, a free mailer, to compete with Black's Snoqualmie Valley Record. Blethen and Times management declined to be interviewed for this story.The growth of Black's empire has not come without criticism. About half of the publications affiliated with the Washington Newspaper Publishers Association (WNPA) are owned by Sound Publishing, and Bob Grainger, COO of Black Press, says there are still a few more acquisitions the chain would like to make before rounding out its Puget Sound cluster (insiders claim Black has made multiple offers to the Scripps Howard chain to purchase the Kitsap Sun, a Bremerton daily with a circulation of 40,000). Such consolidation has made some local newspaper publishers, Blethen among them, nervous.Liz Brown, administrative officer for the Pacific Northwest Newspaper Guild, states that from a strictly business perspective, Black's formula appears to be successful. The papers are filled with advertising, and circulation numbers are high. But Brown includes a cautionary note with her praise: "Turnover in [his] papers is very high," Brown says. "We know from people who we used to represent, some didn't stay long because of working conditions."Across the chain, about one-third of Black's newspapers are unionized, with the majority of those employees in Hawaii and Vancouver. On the whole, his papers are thinly staffed. At his non-daily properties, you'll generally find an editor, a reporter or two, and maybe a photographer. Hence, after conducting an interview, young writers a couple of years out of college are likely to set their notepads aside and un-sling a camera to snap a few shots of their subjects.A reporter working for Sound Publishing in Washington makes around $27,000, an average annual salary generally higher than those offered by competing community papers and even some small dailies (compared to job openings posted by the WNPA or at, among other sources). Generally, two different types of journalists are attracted to Black-owned papers. There are doe-eyed cub reporters, fresh out of journalism school, wanting to get experience and build a portfolio of clips. They stick around for a couple of years, grouse about covering homecoming games and community parades, and typically move on to bigger newspapers.The other breed is gray-haired veterans, content to put themselves out to pasture. They're tired of the deadlines at dailies, tired of following breaking news from Portland to Idaho to Los Angeles, sleeping in cheap motels, and not coming home to their spouses and children until late at night.The culling of the King County Journal resulted in the layoff of a significant percentage of its newsroom staff. Those who remained, however, have fared better under Black than under the previous ownership group. Editorial staffers with the Reporter newspapers confirm that they were given raises, upgraded computers, and cameras, and that new Web sites were created to finally give the papers an online presence."In the Northwest, we've had to do that in order to attract and keep decent reporters," says Grainger. "At one time, we were probably a little low down there until we realized it was more important to keep the longer-term employee."One key to Black's success comes from the cluster strategy employed by his empire. In a given region, a centralized press services an orbit of papers, while bookkeeping, payroll, and other operating overhead costs are shared across mastheads as well."It occurred to us after we bought a few papers and started to tie them together, we found there was a little extra profit in this," Black says. "It was obvious the cluster strategy was the way to go."After getting a cluster of papers in place, the company devotes itself to getting as many eyes as possible to scan the papers and their ads. In Washington and British Columbia, Black Press accomplishes this by delivering straight to readers' doorsteps, free of charge. This runs contrary to the standard operating practices of traditional publications, which attach a certain amount of prestige to their paid circulation.But Black has little time for circulation prudery. Newspapers make money primarily by selling advertising, he reasons. And while, by and large, daily newspapers have priced themselves out of the classified-ad business as sites like Craigslist have emerged, Black's ads are generally still affordable, allowing him to undercut the dailies with cheaper rates. (Black Press has itself made a foray into the world of free online advertising, launching the chain of Web sites. Run by Black's son-in-law, the chain has had a degree of success with UsedVictoria and; UsedSeattle recently launched but remains in its infancy.) Although his papers have not been immune to the competition posed by online advertising, Black maintains that because of his free-circulation model and community-focused niche, his papers have been somewhat sheltered from the Internet storm."If you try to sell the Kent Reporter, you won't get that much pickup—maybe 10 percent," Black says. "It is better to give it away and be able to offer a better package to the advertisers than to sell to 10 percent of the homes and attract fewer advertisers. In the suburbs, that's the game."In 2006, when the Reporter newspapers were purchased, they were mailed to homes twice a month. In calculating its bulk-mail rates, the U.S. Postal Service stipulates how much advertising and editorial content a newspaper can contain: The higher the percentage of advertising, the higher the postage charges.This hampered the company's ability to sell ads, particularly those pesky inserts that are the economic bread-and-butter of the industry. So after the sale, Black's circulation team was tasked with developing a delivery strategy that involved hiring enough carriers to drop off 250,000 papers twice a week.Black has successfully implemented this approach in Canada as well as with his Sound Publishing properties on the Olympic Peninsula, where advertisers seem to dig the notion that their pizza coupons or sporting-goods-store flyers will be physically delivered to potential paying customers, not lumped with the typical junk mail dropped off by the postman.But the direct-to-home approach has not been without growing pains. In addition to high turnover rates among delivery staff, there is the problem of people who don't want the paper in the first place. At the beginning of the switchover, employees say the Reporter papers' phone lines were inundated by calls from angry homeowners wondering why these newspapers were getting left on their doorsteps. And hundreds of families going on vacation have returned home to find a dozen soggy papers wrapped in pink plastic sitting on their driveways, a sort of invitation to any would-be burglar casing a neighborhood.Despite these difficulties, it is the promise that ad sales representatives are able to make to their clients—that their print ads and inserts will be seen by 80 or 90 percent of a target audience—that Black says makes the circulation model work. Acting as a sort of news/ink version of a Jehovah's Witness missionary, the Reporter newspapers will be at your doorstep, without fail, whether you like it or not.For the time being, Black doesn't see any need to turn his focus away from the print editions of his papers. Providing readers with the tactile and olfactory sensation of ink on newsprint is still the business model that works for him. Although neighborhood Web sites and volunteer bloggers do provide stories on a touch-and-go basis, the main source of news coverage for rural towns and the suburbs is still the community newspaper."We will certainly grow on the Internet as much as we can," Black said. "But at the moment, the financial model that works is the print model."

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