The City Slickers Taking Back The `Burbs

When Jay Smith scanned the horizon in Atlanta's peaceful northeastern suburbs a few years ago, he saw only war clouds. The New York Times Co. had just bought the Gwinnett Daily News, a well-respected afternoon paper in affluent Gwinnett County. For Smith, publisher of the Atlanta Journal and Constitution, that could only mean Times Co. planned to repeat the familiar battle between an upstart suburban paper and its big-city rival.

Sure enough, the Times launched a frontal assault. It slashed the subscription and newsstand rates of the Daily News. And it poured $40 million into a new color-printing plant. Suddenly, the Journal and Constitution faced the prospect of losing its fastest-growing and most prosperous suburb--much as the Los Angeles Times had lost Orange County a decade earlier.

But the battle didn't follow the usual course. Smith fought the Daily News tooth and claw, matching the rate cuts and offering extra coverage of Gwinnett County. At one point, he personally handed out free copies of the morning Constitution to Gwinnett motorists. In September, after five years and at least $48 million in losses, Times Co. shut down the Daily News. "The metros have become more aggressive," says Seymour Topping, director of editorial development for Times Co.'s regional newspaper group. "They've committed considerably more resources."

FLIP SIDE. It shows. For the first time in years, metro dailies are successfully beating back suburban rivals. The Chicago Tribune recently put down a challenge from Lerner Newspapers Inc., a chain of weekly papers north of the Windy City. And the Los Angeles Times is reclaiming circulation from the aggressive Orange County Register. The L.A. Times has been caught on the flip side of this trend, too: On Nov. 6, it announced the closing of its San Diego edition, which has failed to dislodge the San Diego Union-Tribune.

Of all the fallout from the media recession, the resurgence of metro papers may be the most remarkable. Many experts had written off the future of big-city papers in the 'burbs: They were too slow to adopt such reader-friendly innovations as color. And they would never match the suburban papers' blanket coverage of local news. Because the metros were losing these affluent readers and the advertisers who covet them, the suburban papers threatened the very future of some big-city papers.

But metro dailies are challenging the conventional wisdom. By mastering the tricks of niche marketing--customized editorial content and zoned distribution--big papers have been able to out-hustle even well-financed suburban rivals. These are gains that will last even after the ad market picks up, says John Morton, a newspaper analyst at Lynch, Jones & Ryan. As a result, metro papers "can be pretty formidable competition for smaller papers in their regions," says James N. Rosse, CEO mf Freedom Newspapers Inc., which publishes The Orange County Register.

TEN CENTS A GLANCE. The battle for Atlanta is a case in point. Cox Enterprises Inc., owner of the Journal and Constitution, regarded the Daily News as a threat to its franchise from the moment Times Co. bought it in 1987. Small wonder: Within two years, Times boosted its circulation from 28,000 to nearly 50,000 copies, mostly through cheap subscriptions. Upping the ante further, the News switched from afternoon to morning publication in 1988. The paper, which traces its roots back to 1858, also slashed its ad rates and dropped its newsstand price from 25 to a nostalgic 10.

The Journal and Constitution, which publishes its morning edition as the Constitution and its afternoon paper as the Journal, kept its rates similarly low. Equally important, Smith expanded a weekly section, called Extra, that focused only on Gwinnett news, into a daily section. To boost circulation, he assembled a data base with the name of every family in Gwinnett County. Those who didn't subscribe to the paper were called several times a year. All this cost Cox an estimated $5 million a year. But the paper's Gwinnett circulation ballooned, from 31,000 to 60,000 copies. "Just because you've been around for 100 years is no guarantee you'll be here forever," says Smith.

TOOTH AND NAIL. The stalemate might have continued but for the ad recession. Initially, Times didn't mind spending millions to battle the Journal and Constitution. Indeed, the News even expanded to neighboring DeKalb County in 1991. But then ad linage plunged, and it looked as though the losses might go on for years. The Times Co. finally wrote off the investment by taking a $48 million pretax charge to its third-quarter earnings. Says Topping: "If the Cox people were determined to drive us out of that market, there's no telling to what lengths they would have gone."

The battle for Chicago's suburbs proceeded along similar lines, though with some key distinctions. For one thing, the Lerner newspapers are weeklies and were originally distributed free. Pulitzer Publishing Co. bought Lerner in 1985, because it saw a parallel to its hometown, where a rival suburban chain had taken a bite out of its flagship St. Louis Post-Dispatch. By reducing the number of papers from 57 to 15 and converting some to paid circulation, Pulitzer hoped to inflict similar damage.

Unfortunately for Pulitzer, it bought the chain a year after the Trib made a commitment to go after its own suburbs. First, the paper began producing five zoned sections with news about specific suburbs, such as fast-growing Du

Page County. Next, it added zoned news to features such as its Tempo lifestyles section. "We had to fine-tune a product for them that would be what the Chicago Tribune historically has been for residents of the city," says Editor Jack Fuller. As a result, the Trib's daily suburban circulation jumped 1.6% in the most recent six months, even as its city circulation declined, according to the Audit Bureau of Circulations.

ZONING OUT. Advertisers get even more choice than readers. They can run ads in 9 to 11 zoned editions, depending on the section. And starting last year, advertisers could slip inserts into editions of the Tribune aimed at any of the 360 Zip codes in the Chicago metro area. This makes the Trib a good buy even for small local companies, such as bakeries or auto-parts stores. Those advertisers are the lifeblood of small weekly chains. Pulitzer won't say, but insiders figure Lerner was losing $1 million a year. In October, the company sold off some of Lerner's assets to an employee group for an estimated $4 million.

Now, other publishers are taking a cue from Chicago and Atlanta. The Philadelphia Inquirer just converted its twice-weekly zoned section for readers in southern New Jersey into a daily section. It plans to add four more daily zoned sections for readers in Pennsylvania suburbs. "If readers are going to take only one paper, we have to make damn sure it's us," says Inquirer Editor Maxwell E.P. King.

Such urgency used to be rare in the executive suites of major metro newspapers. But now that publishers sense an opportunity, they're scrambling to reclaim the same bedroom communities that used to keep them awake at night.

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