The Paper Trade

By Barbara Kiviat

Doomsayers proclaim that the newspaper business is dying, as readers get older and youngsters fail to pick up the newspaper habit. But Doug McCorkindale sees it differently. Next month the 34-year veteran of Gannett Co. steps down as CEO; he remains chairman for another year. Reflecting on his long involvement with the nation's largest newspaper publisher (which owns more than 100 dailies, including flagship USA Today), McCorkindale spoke with TIME's BARBARA KIVIAT about the prospects of a company that gets 68% of its revenue from newspaper ads and 18% from paid circulation.

Recent industry numbers show newspaper circulation down 2% year over year. That doesn't sound promising.

You have to put those numbers in focus. Unfortunately, a few of our friends in the industry had some circulation issues, and I think they were very conservative in their accounting [this time around] so that they didn't have anything come back to haunt them. If you look at Gannett's numbers, we are not down anything, like a lot of the folks in the industry. And in fact USA Today, which just raised its cover price from 50-c- to 75-c-, actually had a positive circulation for the period ending in April. Having said that, there is no doubt that paid circulation has been declining in a very gradual way over the past decade or so.

How are you going to attract and keep younger readers?

Our game plan is to deliver information to people when they want it and how they want it. If that's in print, O.K. If they want to go on the website and get the news, that's O.K. too. Every single Gannett newspaper and television station has a website. And young people do read print if you take a traditional Gannett medium-size-market newspaper and you package the same information but in a way that younger people want to see it--shorter stories, more graphics, easy maneuverability. We have young-people publications in places like Cincinnati [Ohio], Indianapolis [Ind.] and Boise [Idaho]. They're tabloid size, [free] and ahead of our plans in terms of profitability. The world is not coming to an end. [The industry] is more competitive than it was in 1975, but this nonsense that young people don't read is simply wrong.

Have you ever thought about launching a completely online newspaper?

We have looked at that. We haven't been able to figure out if it makes economic sense. There are a lot of things you can do with technology, but whether it's a business is a separate question. There was a cartoon, I think in the New Yorker magazine, of two young computer geeks, and one was holding a newspaper, and he turned to the other and said, "Look at this new invention. Somebody has downloaded the whole page into a user-friendly format." It's a wonderful cartoon.

I'm not sure you should be laughing at that.

Well, it's fun. What a newsroom does is gather information and package it. You press the button on the right, it goes on dead trees. You press the button on the left, now that everything is digitized, it goes out on the Internet. The economics are such that we're still getting most of our money from the old-line print, but we're getting dramatic increases on the Internet side.

How much is online advertising growing?

For domestic newspapers [excluding USA Today], in the first quarter, our Internet revenue was up 60%. Now that's from a smaller base, but it's still big-time improvement--and that's part of our future.

Consultants from McKinsey & Co. recently predicted that newspapers could lose $4 billion in classified-ad revenue by 2007 because of the rise of websites like eBay, Craig's List and Monster. How threatened do you feel?

We think it's an opportunity. That's why we're invested in Career Builder. com. If we sat back and just stayed with the traditional print product, I'd agree with some of the doom-and-gloom predictions, but we're not doing that.

Do you think you'll still be a newspaper company in 20 years?

We don't think of ourselves as a newspaper company. We think of ourselves as a news and information company, with some entertainment pieces in there too, because today a lot of traditional TV is more entertainment than it is old-fashioned, Walter Cronkite news. And we have a lot of investments in technology companies.

Technology companies?

At any point we may have $100 million to $200 million invested in what I would call Internet-technology-related companies, like Topix. net, which searches headlines for the topic you're interested in. It makes searching for news stories easier.

Have you invested in any companies that stream news content to cell phones?

USA Today has a relationship with a couple of the wireless providers to provide news from USA Today on their telephones. Where that's going, at this point, is an unanswered question.

To what extent has the Do Not Call Registry, which allows customers to opt out of telemarketing calls, hurt you?

It's a problem. [Telemarketing] was a comfortable way for us to get subscribers. It has hurt us more in the larger markets than in the smaller markets.

What do you think of the level of opinion in journalism today--cable news, blogs, things like that?

The more news and information that consumers can assimilate, the better they are, the more informed they are. People may be informed through the political slant they feel comfortable with, but they are well informed. I don't see how anybody could complain about having more information.

A reporter resigned last month from USA Today after it was discovered that he had lifted quotes from another paper. You also had the Jack Kelley scandal last year, and the New York Times had Jayson Blair. There are other examples. Have journalistic ethics slipped, and what specifically can you as a CEO do?

Most of the industry does an outstanding job, a much better job than they get credit for. One or two bad stories gives you an image problem. But we've got to make sure it's right all the time, not just most of the time. I can create an atmosphere for our editors to make sure they are supported when they take a tough line on journalism ethics and procedures. Gannett has had a number of meetings on this topic, and that's why the incident at USA Today [last month] was handled so precisely and completely. There is a zero-tolerance level for things that aren't done right.

Banc of America came out with a report that found Gannett executives are the best paid in the newspaper industry. Tell me why you're worth it.

Gannett is big. We have $7 billion--plus in revenue, on our way hopefully to more. The corporate culture at Gannett is one of full performance all the time. We compensate our people well for performance. We do a good job at Gannett. I get paid well.