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Salt Lake Valley
If it was the equivalent of an earthquake, a lot of people didn’t notice at the time.
What took place in 2000 would eventually shake the financial foundation of the Deseret News to its core and lead to questions about the newspaper’s future.
But the upheaval would also set in motion a renewal that transformed the News and its affiliated businesses into a diverse print and digital conglomerate that has national and global reach. With audiences for its products growing and revenues rising, the Deseret News has secured its future at a time when other media organizations are struggling to stay viable.The turmoil and how the Deseret News responded also provide lessons today for managers trying to control technology changes that have completely disrupted the economics of their businesses.
The event that roiled the Deseret News and its rival, The Salt Lake Tribune, seemed unexceptional in 2000. KSL.com, which had been launched four years earlier as a doorway to the websites of KSL-TV and KSL Radio, would now move into the classified ad business.
It was a huge step that Utah’s two biggest papers would come to regret. Classified ads had long been the bread and butter of the newspaper industry. In 2000, classified ads accounted for almost half of U.S. newspaper ad revenue. Papers like the News and the Tribune commanded premium prices for a few inches of space.
Today, KSL.com is a powerhouse in the Utah media landscape, largely due to its classified business. The website now averages 200 million page views a month from more than 3 million unique visitors. The site is one of the top websites in the country. Measured by traffic, it sits at No. 265, according to Alexa, a web information company.
At the outset, KSL.com had no clue how disruptive its classified ad business would eventually become, says Clark Gilbert, president and CEO of the Deseret News and Deseret Digital Media, which runs the online operations of KSL. While he doesn’t share numbers publicly, Gilbert says the loss of profitable print ads to KSL.com and other internet innovators like Craigslist, Monster.com and AutoTrader.com opened a huge hole in the financial footing of the News that had to be stopped if the paper was to remain viable. Aggravating the paper’s woes were circulation declines. Growing numbers of readers were shifting to online sites for news and information.
The steps Gilbert ordered to stem the paper’s losses were painful. To cut operating costs by 42 percent, the Deseret News laid off 57 full-time and 28- part-time newsroom staffers in August 2010.
That might have been the end of it if Gilbert had not worked at Harvard Business School alongside Clayton Christensen, author of The Innovator’s Dilemma and one of the world’s foremost experts on disruptive innovation. Like Christensen, Gilbert has become a leading disruption theorist. Gilbert believes disruption has the power to transform companies and unlock new sources of growth, if it’s managed properly.
“For the Deseret News, from the start this was a growth opportunity,” Gilbert says in an interview recently. “Yes, it’s going to be really tough, but this is a growth opportunity of an unprecedented nature. The Deseret News can plunk along in its old model or it can embrace what’s going to happen and take advantage of the growth.
“To me, it wasn’t a choice. I could stay where I was and watch [the Deseret News] shrink, or for the first time in our history we could have a worldwide audience. For the first time in our history we could have a statewide audience. For the first time in our history we could be the largest media players in the state. Why wouldn’t I embrace that?” Gilbert says.
The vehicles for Gilbert’s growth ambitions have been the 164-year-old Deseret News and a new company, Deseret Digital Media. But while they share the Deseret name and the common purpose of creating and disseminating news and information, they are distinctly different businesses set up to operate independently of each other. The Deseret News continues to be print focused while Deseret Digital Media (DDM) manages the digital media assets of The Church of Jesus Christ of Latter-day Saints, including DeseretNews.com, KSL.com and DeseretBook.com.
“The point there is to say each organization has its own issues to solve. Every platform has its own challenges. Every sales person needs to have a focus of what they are trying to sell. By having that focus, you are able to maximize the opportunities for each platform,” DDM President Chris Lee says.