Two-bit rag

The Examiner's desperate circulation struggle

The ads practically beg you to buy the Examiner. Plastered to newsstands and affixed to bus shelters, the big red-and-black posters broadcast the news that the afternoon newspaper has cut its single-copy price in half, to 25 cents.

Why the slashing? According to James Hale, CEO of the San Francisco Newspaper Agency (the business arm of both the Examiner and Chronicle), the directive for a two-bit paper came from recently installed Examiner Editor and Publisher Lee J. Guittar.

"He wanted to raise circulation," Hale drawls, mentioning in the same breath Guittar's marketing savvy. (Guittar was out of town at press time and could not be reached for comment.)

A clue to Guittar's fire-sale pricing strategy: Every six months, the Audit Bureau of Circulation tallies the paper's circulation, and March is an audit month. The ABC figures that advertisers rely on are almost six months old, dating to before November's circulation-eroding strike.

Industry observers believe the low single-copy price, effective February 26, is the Examiner's ploy to boost circulation and its advertising base, timed to coincide with the ABC audit. Stephen Hearst, the San Francisco Newspaper Agency's vice president of circulation (and a great-grandson of Examiner founder William Randolph Hearst), denies this connection.

Not so David Cole, who worked as assistant managing editor of the Examiner in the mid-1980s and now runs the Cole Group, a newspaper consulting firm. Cole claims that the Joint Operating Agreement under which the two papers share revenues and business expenses requires the Examiner to maintain a circulation of 130,000 in order to preserve its combined advertising deals with the Chronicle. If the ABC audit shows the Examiner slipping, particularly in its core San Francisco market, big advertisers like Macy's and Emporium may elect to flee -- which could easily sink the Examiner, Cole explains.

But if pumping up circulation is the goal, the Examiner's means to that end leave one industry observer "mystified." Paul Farhi, a Washington Post media-business reporter and ex-Ex staffer, reasons that since the city has lost the blue-collar population afternoon dailies target, the cut-rate newsstand price of the Examiner may "sway only a few thousand, but I can't see it picking up tens of thousands of new readers."

Farhi also observes that single-copy buyers tend to purchase the paper depending on the seductiveness of the front page.

"That's a dangerous proposition for newspapers," Farhi surmises.
Publishers dislike the crests and troughs of street sales, he notes, preferring the stability of subscription circulation. (The Examiner's home delivery is about half its total circulation of 123,000.) Farhi notes that subscription promotions are a more cost-effective way to spend the promotional budget -- but since the subscription price rose 25 cents a week in early February due to newsprint costs, that's a hard sale for the PR people to make.

Circulation honcho Hearst reports that single-copy sales of the Examiner for the week of February 26 to March 4 increased 15 to 20 percent, boosting the paper's overall daily circulation to about 123,000 -- up considerably from post-strike lows, when it teetered around 100,000.

The cheap street Examiner, then, may help circulation in the short term. Money temporarily lost at the newsstand may be worth the added circulation -- particularly, as Cole points out, if hawking those 25-cent papers means keeping the Macy's and Emporium accounts on board.

John Sullivan

 
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