State of The News presented

Feb. 1, 2016 – During one of more optimistic State of the News meetings of recent years in late January, The Buffalo News reported declines in sales and profits far less severe than its peers, proving itself a continued outlier in a struggling industry.

First, the numbers:

  • Despite an 18 percent decline in operating profits in 2015 to $10.9 million, driven by declining advertising and circulation revenue, The News maintained a 12.1 percent profit margin.
  • Circulation dipped to 174, 392 for Sunday subscriptions, including retail sales, and 111,473 for weekdays.
  • Revenue dipped to $89.8 million, a 3 percent decline from 2014.

“Each year gets a little more challenging,” said Warren T. Colville, the News’ publisher and president.

But he and other executives focused on the positives in a fairly optimistic presentation to employees.

“Our revenue is down, but it’s down so much less than almost any other newspaper company,” said Michael Connelly, the News’ vice president and editor. “Our big goal is unchanged: It’s to keep the print newspaper viable for as long as possible, buying us time to develop our digital audience.”

Bryan Donohue, the News’ senior vice president and chief operating officer, said the newspaper’s ability to remain solidly profitable despite the steep and steady decline in revenues was noteworthy.

“This is a real testament to our ability to overcome challenges,” he said. “It’s been an unbelievable battle over the last 10 years.”

While the News’ traditional newspaper business continues to decline, Colville noted that the company has steadily developed new products to bring in new sources of revenue, from printing other newspapers, such as the New York Times, to new advertising products that target non-subscribers.

The News also is making strategic investments in equipment and training in its commercial print operations with an eye toward developing more revenue from the business in future years, according to Bryan Carr, vice president of production.

New ideas, Colville said, are an important part of the News’ business.

Those new ideas led to the sale of more than 16,500 copies of two books published by the News, “Wall of Snow” and “Buffalo Memories.” The books brought in $200,000 in new revenue.

The advertising department’s BN Bargains product brought in $500,000 in additional revenue last year, and Warren Todd Colville, the News’ vice president of advertising, hopes it hits $1 million in sales this year or in 2017.

This year, the News plans to launch a high-end men’s magazine. It partnered with an advertising company, Grey Line Signs, to install an electronic billboard on the News building to bring in additional advertising revenue along an increasingly active portion of Washington Street.

Even as The News finds new sources for revenue, the reality of its traditional business remains stark:

Circulation revenue fell by 3 percent last year to $26.3 million from $27.3 million. Subscription revenue fell by 1.5 percent, while store sales were off by 7 percent.

Circulation continues to decline, with the number of Sunday subscriptions falling by 37,148 copies over the past five years to 143,251, while daily subscriptions have fallen since 2010 from 120,843 to 95,398. Sunday retail sales of the paper fell from 52,732 to 31,141 while daily retail sales dropped from 31,096 to 16,075 during the same period.

The News has also continued to struggle to sell digital subscriptions, coming in well below its goal of 16,000 digital subscribers at 3,000.

Advertising revenue fell by 3.5 percent to $50.2 million, with most of the decline coming from a $2.4 million drop in national and retail preprints, while classified ad revenue was down 2 percent from last year.

Operating expenses inched lower to $78.9 million, down 0.2 percent. While payroll costs increased by just under 1 percent, newsprint expenses dropped by 21 percent. The News has slashed its expenses by more than $14 million since 2011.

David Adkins, The News’ technology director, said the company is in the midst of a program to upgrade its often-dated technology systems. More than 85 percent of the paper’s staff received new computers last year, and the company plans to start upgrading its servers and network infrastructure, with 90 percent of the News’ servers classified by Atkins as being “beyond end of life.”

“We’re still significantly behind in our technology infrastructure,” he said. “We’re competing with the Apples and the Facebooks of the world for our audience in Buffalo,” he said. “That means we have to be just as good as they are.”