Digital transformation

Nine months ago, The McClatchy Company began a much-needed redesign. This isn’t a typical redesign or revamp though. It is a complete “rethink” and transformation of the 158-year-old company, including all aspects of the company’s operations. Among the changes are a redesign of all newspapers and digital products, new teams for digital revenue and video, newsroom and staffing changes, new workflow and deadline structures, reduction in “legacy expenses,” regional realignment of newspaper groups, and more.

“This is reflective of necessary changes to accelerate the pace of our digital transformation,” said Chris Hendricks, current vice president of interactive media and soon-to-be vice president of products, in an interview with NetNewsCheck. “We want to manage this business as a digital company.”

In exclusive interviews with key leaders at McClatchy, NetNewsCheck reported that the company’s goal was to move away from being defensive against a changing media marketplace and into growing a profitable, digital-first media company. Though McClatchy weathered the recession and the movement away from print to digital, the company focused previous efforts on incremental changes. Judging by an $11.3 million loss in the first quarter of 2015, those incremental changes were not sufficient to sustain McClatchy.

“With any industry in a recession, the first few years are reactive: there’s a hurricane, you batten down and try to save as much as you can, not thinking about growing. We have to get past that. We’re not in survival mode, and we need to grow,” said Mark Zieman, vice president of operations.

McClatchy President and CEO Pat Talamantes told NetNewsCheck the changes are focused around deepening engagement with subscribers at multiple times and entry points throughout the day, and the company will continue to make changes to its digital products based on reader feedback.

“McClatchy is a 158-year-old company, and so we always take a long-term focus. Financially, we’re set up very well to be able to take the time that we need to get this right. We feel like we’ve got all the time that we need to be able to continue our digital transformation,” Talamantes told NetNewsCheck.

“However, just because we’re long-term focused doesn’t mean that we’re not on it every single day. That’s why we are moving forward with the changes for our print and digital products now and will continue to make further changes throughout the course of the year.”

A new self-image

A critical piece of McClatchy’s transformation is to change its self-image from that of a lega`cy newspaper company to a media company with a variety of news products, including print, digital and video. With this adapted, internal view, McClatchy can focus less on a single product line – like its newspapers – and shift its focus on digital-first and redesigning products that its readers want.

“What’s taking place at McClatchy is nothing short of a reinvention of our company for the digital age,” Talamantes said in his May 14 shareholders’ address. “The pace of change is unrelenting and the speed with which we are required to respond has never been greater. Certainly, technology and new habits and preferences of readers, consumers and advertisers have brought us to this point. But we’re not resisting the change. Instead, we’ve embraced it. We want change to become part of our culture.”

In spite of the company’s massive overhaul, McClatchy currently has no plans to scale back its print operation, and it intends to retain its core mission of public service journalism and watchdog reporting to hold the powerful accountable.

“Without news organizations like McClatchy around, things cannot get better. That’s what motivates me every day,” Talamantes told NetNewsCheck.

Time, research and planning

Major changes like this take time as well as extensive research and planning. The work started last year with hundreds of hours of interviews with readers to better understand their news habits, how they watched videos, how and why they read and shared stories, how they approached big news stories they followed, etc., explained Anders Gyllenhall, vice president of news and Washington editor at McClatchy in an article for Poynter.

Talamantes shared some of McClatchy’s findings with NetNewsCheck: “What we’ve come to find is readers have very important relationships with our writers, columnists and even editors in distinct moments of their day. For us, it’s really understanding that readers need different things from us at different times of the day. It’s no different than television providing different kinds of programming in different dayparts. We needed to be thinking about dayparts much more than we ever had before.”

“There’s a lot of work, but we’re energized for the challenge. It has been great to talk to all of these readers and find they still have significant connections to our companies. Even for those who don’t read us as much as we would like, at least from these interviews we think there might be ways for us to improve those connections,” Talamantes added.

Change is coming

Virtually every aspect of The McClatchy Company will be touched by the company’s reinvention. Here are some of the key changes:

1. Redesigning all print and digital products.
2. Targeting print for in-depth reading and a once-a-day summary of the previous day’s top stories, and digital for regular news updates and interactive features, including video.
3. Implementing an Audience Research Database (ARD) to better understand the habits, patterns and needs of subscribers to deepen engagement at multiple times per day and create personalized, targeted experiences for individual readers.
4. Using data to create more relevant subscriber communications including push offers, pop-up ads, emails and recommendations.
5. Restructuring the advertising department and expanding its digital revenue team.
6. Maintaining double-digit annual growth in digital-only revenue.
7. Putting a greater emphasis on video to attract Millennials. Providing video training and resources to staff. Using a customized video player on its own sites rather than posting videos directly to YouTube.
8. Organizing groups of newspapers into regions, realigning its staff around print and digital products, creating four to six signature topics per market, restructuring deadlines to be more digitally focused, and trimming legacy expenses by $25 to $30 million in 2015.
9. Eliminating redundant positions.
10. Developing a points program to reward readers for reading and sharing stories, making comments and visiting partner sites. Points can be redeemed for tickets, online purchases, exclusive events, etc.

The redesign and rollout

McClatchy consulted with the Garcia Media Group to create the redesign along with the Stanford’s Institute of Design.

“This was the project of projects in that we were able to take a well-established media organization with 29 well-known and vibrant dailies and rethink everything from storytelling philosophies, newsroom strategies, content flow and sectioning, and, most importantly, the issue of frequency in the digital age of the now media quintet,” Garcia told the Poynter Institute.

“It is not an opportunity that comes often, but that more newsrooms need to take advantage of. We are at the crossroads of major transition, positive change and this is the time to question what we do and how we can do it better,” Garcia said.

The rollout will occur in waves, starting with the print product. As the changes are rolled out, both the print and online versions of the McClatchy products will include explanations to help readers understand the changes. Here are some of the visible changes readers and subscribers will see:

• Newspapers will have a two or three-section structure, depending on market size, that deviates from traditional categories.
  • For example, The Sacramento Bee will have three sections. Section A, will be a concise summary of the previous day’s news. Short and sweet. Section B is called Insight and will include investigative, personality, opinion stories, watchdog reporting and deep enterprise articles. Section C will vary by day of the week but it will lead with sports and transition into features.
  • The Sunday paper will have a new look but will have the same sections it currently has.
• Three to six stories each day will be enhanced for digital publishing with interactive elements.
• Eventually, the digital page design will be personalized according to a reader’s preferences.
• Websites and apps will have a unified, graphically-oriented design across platforms.
• Sites in different cities will have a similar look, but they won’t be identical.
• All print and digital products will have a new typeface called ‘McClatchy’ and font size will be slightly larger.
• Mobile changes include improved speed, efficiency and utility.
• Daily stories will include more videos and interactive elements.
• The content focus will be on a 24-hour news cycle with digital first. The print product will be a reflection of the previous day’s top stories.

The rollout began in May with three California papers: The Sacramento Bee, The Modesto Bee and the Merced Sun Star. Immediately prior to The Sacramento Bee’s rollout, publisher Cheryl Dell and executive editor Joyce Terhaar offered this welcome message to readers:

“You will see many changes Tuesday, but one thing will never change: our commitment to you as the leading provider of news and information in the Sacramento region. Throughout our 158-year history, you’ve counted on us to create community connections, watch the powerful and share interesting information about the world around you. We appreciate being part of your lives…”

Key Takeaways for Subscription Companies

Most subscription companies are not in McClatchy’s financial position, but they can learn from McClatchy’s massive, digital-first overhaul. Here are some key takeaways to consider applying to your business.

1. Get qualitative data from your customers before making changes. McClatchy performed hundreds of hours of reader interviews to gather data about news consumption and reading habits that can’t be gleaned from analytics and other data-driven tools. They went beyond “what” to ask “why” and “how,” which will help McClatchy better understand and meet its subscribers’ needs. And, more importantly, they did it before and after the redesign, beforehand to learn what needed to be changed and afterward to see how they did. This will help the company to be nimble and responsive
2. Implement a system to gather useful quantitative data. McClatchy employed an audience research database to personalize its products, produce more relevant communications like push offers, pop-up ads, emails and recommendations, match first and third-party data, target subscribers and non-subscribers, and to create variable pricing structures based on user data.
3. Take the time to do it right. Incremental changes can often improve a subscriber’s experience, but McClatchy had been making small changes for years. To create products that will sustain the company into the future, a complete and total reinvention was necessary. McClatchy is being thoughtful as it makes changes, not pushing things through to stop the bleeding. Instead, McClatchy is taking the time to do the redesign right, consulting experts where needed, and training staff about the newsroom and product changes.
4. Support and encourage a culture change. As a 158-year-old company born in the print newspaper era, acceptance that change is necessary must have been incredibly difficult, particularly as the legacy company shifted from a print focus to a digital one. Once upon a time, it was enough to tell good stories and share important news. That’s no longer the case. Business models, being first, being right and being where readers need and want you take precedence, as does profit. Newspapers are no longer the only game in town, and McClatchy not only accepted that but it embraced and supported a change in philosophy and culture, without abandoning its core mission – public service journalism and watchdog reporting.
5. Be transparent. Change is always hard. McClatchy could have been secretive about the redesign, holding its processes and methodologies close to the vest, but it didn’t. It was open and transparent about the process. This, too, requires a culture change and a willingness to be open. In our view, this transparency will serve McClatchy well in not only getting readers and subscribers on board, but employees as well. Some may not like the change, but perhaps they will at least understand it and maybe even embrace it.

The McClatchy redesign is not yet complete, so it is too soon to predict success or failure, but based on McClatchy’s thoughtful approach and its century and a half of loyal readership, we hope the company’s reinvention will not only be positive for all parties involved, but that it will serve as a model for other media companies considering a similar endeavor.

The Sacramento Bee

The Modesto Bee

Merced Sun-Star