Magazine article Editor & Publisher

A Change in Strategy

Magazine article Editor & Publisher

A Change in Strategy

Article excerpt

AFTER A WEEK that saw the resignation of the head of Thomson Newspapers and first-quarter corporate losses, Thomson Corp. chief executive officer Michael Brown vowed to improve the look and editorial quality of the chain's 150-plus North American dailies.

"Thomson Newspapers has a reputation well-deserved for very poor quality," Brown declared in a rare interview, reported by Jacquie McNish of the Thomson-owned Toronto Globe and Mail's New York bureau.

In the interview, Brown suggested that the chain's spectacular growth during the 1980s -- when Thomson snapped up U.S. and Canadian papers at a rate of two a month -- had been vitiated by a "no-brainer" policy of cutting costs and raising prices.

At the time, Thomson papers -- mostly small- and medium-circulation dailies in monopoly markets -- achieved profit margins that consistently approached 40%.

However, the money-wringing practice, Brown told the Globe and Mail, produced too many "cruddy" newspapers.

Last year, margins were down to 17%, Thomson said.

Brown's remarks came days after the company announced that Thomson Newspapers president and CEO Michael W. Johnston was resigning after four years in the job.

In a statement, the company attributed the resignation to Johnston's dissatisfaction with the constant travel involved in running the far-flung chain.

In the Globe and Mail interview, however, Brown said the "mutual" decision that Johnston resign also stemmed from disagreements with the former executive's past revenue forecasts.

For the past three years, Brown said, Johnston budgeted spending based on revenue projections that proved overly optimistic. As a result, margins fell -- and the once acquisitive Thomson began to shed papers.

"Profit disappointments are not good for morale," Brown told McNish.

Thomson in the past year has sold, merged or shuttered at least two dozen dailies. In February, Thomson announced a number of other papers, which it declined to identify, would also be sold or closed.

In this most recent interview, Brown said no more papers will be added to that list.

At the same time Thomson was shedding some papers, it was investing in others. The company says it has spent more than $200 million for production upgrades last year. …

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