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| "We have a relationship with Sunday readers," Mike Fisch said. |
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"I think we’ll make money right off the bat," David Black said. |
By Bob Golfen
Special to The Advertiser
In a high-stakes battle for newspaper readership in Honolulu, the adversaries are poised.
Tomorrow, the talk ends and the competition begins when The Honolulu Advertiser and the Honolulu Star-Bulletin, linked in a joint-operating agreement for 39 years, mount offensives on two fronts and begin publishing rival morning and afternoon editions.
Residents will wake up to two morning newspapers: the familiar Honolulu Advertiser, and a new edition of the Star-Bulletin, published independently for the first time since 1962.
After lunch, readers will be able to choose from two separate afternoon editions of the competing papers, including a new edition of The Advertiser. Soon, there will also be a new Sunday edition of the Star-Bulletin to compete with The Advertiser.
It's an unlikely scenario in a nation where few cities have more than one major daily, where declining circulation is making surviving afternoon papers increasingly rare, and where newspapers that print both morning and afternoon editions in the same market are nearly nonexistent.
In Honolulu, the question is whether there is enough advertising and readership to support two competing publications in what has been a relatively small, stable market without a significantly growing population or retail base. Come tomorrow, the position advanced by the coalition of groups that worked to keep the Star-Bulletin publishing — that the community demanded competing editorial voices and advertising venues — will be put to the test.
"This is a reversal of what’s happening in other cities," said Ben Bagdikian, a newspaper analyst and author. "The viability (of both papers surviving) remains to be seen. It's very hard to predict."
The owners of both newspapers have moved aggressively to try to position themselves ahead of each other in the battle for readers and advertisers. Thus far, the battle has been largely rhetorical, with both papers claiming the more robust circulation, the better customer service, the preferred reader demographics and the most complete news coverage.
Stepping up efforts
More concretely, both newspapers have stepped up efforts to woo advertisers and subscribers, announcing an escalating array of initiatives, including new multimillion-dollar presses and production facilities, news staff increases, content enhancements and tie-ins with local TV stations.
In advertisements and letters to customers, The Advertiser and Star-Bulletin are both making ambitious circulation projections.
Total circulation for a morning and afternoon Advertiser should be in the 150,000-155,000 range, compared with the current morning-only circulation of 110,000, said Michael Fisch, publisher of The Advertiser. Sunday circulation is about 185,000.
"The advantage we have is that we have a relationship with Sunday subscribers," Fisch said. "Some of those receive an evening newspaper today, and I presume they will continue to receive the Star-Bulletin daily. But there will be others who will take the evening Advertiser."
The Star-Bulletin’s new owner, Canadian publisher David Black, said he expects combined circulation for the morning and afternoon editions to hit nearly 100,000 immediately, adding 35,000 sales of the new morning edition to the 60,000 existing afternoon sales. About 25,000 of those morning Star-Bulletins, he said, will go to the Neighbor Islands, schools and hotels, and he expects to pick up the additional 10,000 sales at newsstands.
On Sunday, he expects to print about 130,000 papers. Black concedes the projection is a ballpark estimate that could be adjusted either before its introduction April 1, or after the first few weeks, if demand doesn’t match supply.
For both newspapers to achieve their projected circulations, tens of thousands of new subscribers and newsstand buyers would be needed. Both papers are expected to rely upon aggressive price promotion and sampling — a technique by which potential customers are given a paper for free for a set time while they try it out — to increase their numbers.
Subscribers not a certainty
But it isn’t certain there are thousands of willing new subscribers in the market. On O‘ahu, both The Advertiser and Star-Bulletin have struggled to keep circulation from eroding during the past decade, with the Star-Bulletin losing more than 20,000 in daily circulation and The Advertiser up slightly. Neighbor Island circulation is extremely expensive and logistically difficult for O‘ahu-based newspapers. And giveaways and subscription discounts can’t be sustained indefinitely, since they cut deeply into the papers’ revenue base.
"I don’t think Hawai‘i can support four newspapers, and I don’t think anybody does," said Helen Varner, dean of the communications department at Hawai‘i Pacific University. "This is a war, and I believe it will be very costly for both sides."
Black arranged to purchase the Star-Bulletin last November for $10,000 from Liberty Newspapers LP, which announced in September 1999 that it planned to close the newspaper because of declining circulation and revenue.
When the sale closes later today, the daily afternoon paper with a circulation just less than 60,000 will become the biggest publication in Black's holdings of about 80 community papers in the United States and Canada. In publishing the Star-Bulletin, Black will be going up against the largest newspaper chain in the nation: Gannett Co. Inc. of Arlington, Va.
Gannett, publisher of USA Today and nearly 100 other daily newspapers, owned the Star-Bulletin from 1971 to 1993, when it sold the afternoon paper to Liberty and bought The Advertiser. The newspapers have operated since 1962 in a joint operating agreement in which they shared production, circulation and advertising departments but maintained separate news operations.
Black contends Gannett has most of the advantages mainly because of its deep pockets. "We're just small potatoes, even in Canada," he said in a recent interview. "This is a very important piece of business for us, a huge piece of business. But it’s peanuts for Gannett, they're so big."
Fisch said The Advertiser will spend about $5 million during 2001 to market and promote the newspaper. The paper is hiring more staff in several departments. And last week, Fisch announced The Advertiser will build a $70 million production and distribution center in Kapolei, slated for completion in 2004.
Market will determine
But Fisch said the essence of the issue isn’t the amount of money spent by Black or Gannett, but the quality of the newspaper.
"In the end, the market will determine whether or not there are one, two, three or four editions of two newspapers, and how successful both of us are," Fisch said.
Black has said he will spend about $25 million to set up the Star-Bulletin and promote it to readers and advertisers. He has courted advertisers with parties and mailings, and says he has secured 30 percent of the advertising he needs to make the Star-Bulletin operation break even. He recently announced that a final piece of the puzzle, a newsprint source, had been found in the Philippines.
He has purchased a Windward printing company, RFD Publications, which produces the free weekly Midweek and several other small papers, and earlier this month added new presses to print the RFD papers as well as the Star-Bulletin. Part of his plan is to offer package deals to advertisers that would combine the Star-Bulletin with the RFD publications.
The Star-Bulletin news staff is in place and ready to move today from the building it shares with The Advertiser downtown into new facilities at nearby Restaurant Row. Black said he also has hired a fresh staff of sales, marketing and clerical people. He has about 35 independent contractors ready to distribute the paper.
While Black has said repeatedly he is committed to giving readers and advertisers a choice, in recent days he has emphasized that without the support of the business community he will not personally subsidize the Star-Bulletin.
"I think we'll make money right off the bat," he said. "If we don't, I don't see myself subsidizing it. I'm not going to subsidize something the merchants don't want."
And if the market doesn’t support the Star-Bulletin, Black said, he would close the daily newspaper and continue publishing Midweek.
In courting advertisers, The Advertiser has had to counter the perceptions that its dominance in the market has made it arrogant and overpriced, perceptions that have been seized upon and emphasized by Black.
Uncertain future
But the Star-Bulletin face its own challenges, namely the uncertainty of its future and its ability to deliver its promised readership.
The battle for business has put many local advertisers in the rare position of seeking concessions and special deals from both papers, and many businesses and ad agencies are hoping the competition will put pressure on ad rates.
Chuck Cohen of the Honolulu advertising agency Starr-Seigle Communications said he is advising clients to buy advertising in both publications, morning and afternoon. He expects the competition to result in rate cuts that will benefit the advertisers.
"Our position is that we represent two voices in the marketplace," Cohen said. "I think the changes that will take place at both papers will benefit the marketplace. Everybody will eventually win."
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