October 26, 2009

Business Model Shift Gains Traction at The Dallas Morning News

DALLAS - The Dallas Morning News, the flagship subsidiary of A. H. Belo Corporation (NYSE: AHC), has adopted a business model that is gaining traction as the company adapts to a rapidly changing media environment. The new approach shifts and diversifies revenues and ensures robust, valuable content that appeals to loyal subscribers, who are an attractive audience for advertisers.

The new model incorporates several inter-related elements: (1) a carefully measured step involving increased home delivery rates to migrate more reliance to subscriptions to support the paper's investment in its newsroom through growing circulation revenue; (2) commitment to the strength of the newsroom as the linchpin of the model because it enables the paper to produce what readers value most: exceptional local, relevant and unduplicated content that makes a difference in the community; and (3) a growing portfolio of products, which provides advertisers with quality audiences that can be readily targeted.

"We know that our core competency lies in the origination and publishing of relevant news and information, and we continue to align our business around it," said Jim Moroney, publisher and CEO. "Reactions from our customers confirm that this continues to be the right approach."

Rebalancing revenues

In developing its strategy, The News has emphasized serving its core of seven-day subscribers, a group who are educated, affluent, engaged and loyal. Extensive research as well as newsroom interaction with core readers has shown that they place great value on professional, local journalism that has an impact on their lives, and that they are willing to pay for it.

Through the evolving model, The Dallas Morning News expects home-delivery subscriptions and single-copy sales to provide as much as 40 percent of its revenues, a dramatic shift from the traditional newspaper model where 20 percent of revenues are provided by sales of the printed product. The paper's initiatives have occurred as the traditional advertiser-supported newspaper model has come under increasing pressure industry-wide from competing channels that have put downward pressure on advertising revenues.

On October 15, 2009, The Dallas Morning News filed with the Audit Bureau of Circulations (ABC), subject to audit, a Publisher's Statement for the six-month period ended September 30, 2009. Daily circulation in that period was 263,810 and 390,520 for Sunday, representing a reduction of 22.2 percent and 19.3 percent, respectively, compared with the six-month period ended September 30, 2008 . Approximately 40% of the declines are related to the subscription rate increases, and approximately 60% are related to The News' ongoing strategy to tightly focus its acquisition efforts.

Investing in the newsroom

"We're pleased that during the first months of our new approach, more than 90 percent of The News' core subscribers receiving notices of our increased home-delivery price are renewing," said Moroney. "And while we knew our reported circulation would be down, the key was that we were growing circulation revenue significantly. We've listened to what our readers and advertisers tell us they value most, and we are responding to it by maintaining a robust newsroom focused on original, local reporting."

The paper's newsroom is the largest of any local newsgathering operation in the state, one of the six largest among metropolitan newspapers nationally, and is the centerpiece of the paper's approach to serving readers and advertisers. With leadership from one of the largest investigative teams in the country and a redeployment of resources to enhance local reporting and its activist editorial board, the paper regularly produces content that impacts the community.

"The Dallas Morning News is on a different path; I don't know of another newspaper in the country that is investing in the strength of its newsroom like we are," said Bob Mong, editor. "I am very proud of the depth of our newsroom, which will be enhanced as we recruit top talent to our newsroom. This allows us to drill down deep into the community and truly make a difference in the lives of our readers."

Portfolio products extend reach

In another initiative that sets it apart from others in the industry, The News has built a comprehensive portfolio of print and digital products that meet the news and information needs of audiences beyond core subscribers. These products appeal to advertisers because they provide an unprecedented ability to target audiences.

In addition to The Dallas Morning News and dallasnews.com, the products in the portfolio include Briefing, Quick, Al Dia, GuideLive.com, Neighborsgo and FD Luxe.

On October 22, 2009, The Dallas Morning News filed with the Audit Bureau of Circulations a Consolidated Media Report (CMR) for the six-month period ended September 30, 2009, showing weekend and daily circulation of the printed newspaper combined with supplemental targeted products Briefing, Al D a and Quick. T aken together, these print products offer a combined average weekend (Saturday and Sunday) circulation of 684,931 and a combined average daily (Monday through Friday) circulation of 412,437.

"The extended reach of our comprehensive portfolio is a sustainable advantage and an essential element of our approach," said John McKeon, president and general manager. "By gaining a deep understanding of local consumers, we have been able to create a variety of products and delivery vehicles to meet their needs. This in turn gives us unparalleled flexibility when working with advertisers to achieve the right media mix for them."

Other initiatives to diversify revenues

In addition to offering new advertising opportunities through its portfolio of products, The News has diversified revenues in other ways. Following the consolidation of its production from three facilities to two in late 2008, The News achieved new third-party printing and distribution contracts with such publications as The New York Times and Wall Street Journal worth more than $17 million.

About The Dallas Morning News

Established in 1885, The Dallas Morning News (dallasnews.com) is Texas' leading newspaper. Its portfolio of print and online products reach an average daily audience of more than 1.1 million. The newspaper has received eight Pulitzer Prizes since 1986, as well as numerous other industry awards recognizing the quality of its investigative and feature journalism, design and photojournalism. In 2005, The News received the Scripps Howard Foundation National Journalism Award for its editorial series calling for mandatory record votes in the Texas legislature, and its Web site, dallasnews.com, also was honored for Web reporting. In 2003, the paper launched the leading Spanish-language daily in North Texas, Al D a; the standard-setting free entertainment tabloid, Quick ; and the nation's first editorial blog. In 2008, the paper launched the free, home-delivered quick-read, Briefing. The Dallas Morning News is the flagship newspaper subsidiary of A. H. Belo Corporation .

About A. H. Belo Corporation

A. H. Belo Corporation (NYSE: AHC) headquartered in Dallas, Texas, is a distinguished newspaper publishing and local news and information company that owns and operates four daily newspapers and a diverse group of Web sites. A. H. Belo publishes The Dallas Morning News, Texas' leading newspaper and winner of eight Pulitzer Prizes since 1986; The Providence Journal, the oldest continuously-published daily newspaper in the U.S. and winner of four Pulitzer Prizes; The Press-Enterprise (Riverside, CA), serving southern California's Inland Empire region and winner of one Pulitzer Prize; and the Denton Record-Chronicle. The Company publishes various specialty publications targeting niche audiences, and its partnerships and/or investments include the Yahoo! Newspaper Consortium and Classified Ventures, owner of cars.com. A. H. Belo also owns direct mail and commercial printing businesses. Additional information is available at www.ahbelo.com.