Case
Teaching Notes
Supplementary Resources
Abstract
Case (A) describes the situation at the Northlands Ledger, a newspaper on its way out of business due in large part to its publisher and editor's focus on what they do and want to keep doing rather than on what their customers (readers and advertisers) want. The value proposition to the reader is that “we deliver the paper reliably and give you the latest national and international news.” The value proposition to the advertisers is that “we print your ads accurately and runs them on time.” Both value propositions are outdated, and, even if they were what the customers wanted—which they are not—neither is executed well. The paper's key performance indicators—circulation, classified ads, and commercial advertising—are all in decline, despite the fact that the community it serves is growing. The senior management of the Paulus chain that owns this paper has forced the publisher, Allison, to retire and brought another publisher, Potter, in from one of its other papers, the Sun Belt City Star, where Potter was highly successful. However, he cannot simply transfer his success formula from the Star to the Ledger. Case (B) details his efforts and may be used as a classic example of good change management and leadership practices. Potter established a clear cut set of objectives, formulated a new strategy of responsiveness to readers and advertisers more in line with finding out why they hired the paper in the first place. To implement his new strategy he terminated senior managers and others who he did not feel could contribute to the new paper, and made significant changes in key dimensions of implementation: culture, structure, information and decision support systems, incentives and human resources. Throughout he used a mix of both authoritative and participative change management—a mix that may provoke an interesting class discussion.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
Resources
Exhibit 1A: Northlands Ledger, Key Account Revenues—Automobile Dealers
In 2008 (pre-recession) the auto dealer segment contributed 4.8 percent of the paper's advertising revenue.
Customer acquisition costs
The cost was $2,000 in salaries for sales and sales support time, and $8,000 in discounting for an average total of $10,000 per account.
Revenue
Annual average revenue of 11 accounts was $113,600 (excluding 2009).
Classification of accounts
- Large Accounts—over $100,000 for five years (n=4)
- Medium Accounts—from 40,000 to 100,000 for five years (n=6)
- Small Accounts—less than 40,000 for five years (n=6)
One account produced $245,155 in five years.
Exhibit 1B: Revenue of Five Accounts (in U.S. dollars)
| 2005 | 2006 | 2007 | 2008 | 2009 | |
| Red's | 174,027 | 99,005 | 38,100 | 144,700 | 94,000 |
| Alex's | 59,670 | 71,391 | 53,600 | 58,500 | 15,000 |
| Cox's | 108,966 | 105,779 | 16,600 | 29,400 | 24,000 |
| Conley's | 102,832 | 46,201 | 31,800 | 64,100 | 15,100 |
| Tod's | 108,662 | 77,109 | 48,600 | 73,000 | 110,200 |
Exhibit 2A: Northlands Ledger, Key Account Revenues—Retail Furniture Stores
In 2008 (pre-recession) the retail furniture segment contributed 10 percent of the revenue of the total retail sector and 4 percent of the paper's total advertising revenue.
Customer acquisition cost
The cost was $2,000 in salaries for sales and sales support time, and $8,000 in discounting for an average total of $10,000 per account.
Revenue
Annual average revenue per account was $85,000 (excluding 2009).
Classification of accounts
- Large Accounts—over $1,000,000 for five years (n=16)
- Medium Accounts—from $500,000 to 1,000,000 for five years (n= 2)
- Small Accounts—from $100,000 to 500,000 for five years (n=10)
One account produced $2,958,900 in five years.
Reasons for keeping customers happy
Average profit per account was $15,000 in the first year and $25,000 in subsequent years.
Exhibit 2B: Revenue of Five Accounts (in U.S. dollars)
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | |
| Patio | 0 | 32,000 | 4,700 | 101,000 | 47,000 | 22,000 |
| Roberts | 308,900 | 587,900 | 669,600 | 215,100 | 553,400 | 0 |
| Stephens | 94,700 | 105,200 | 80,000 | 37,200 | 73,600 | 11,700 |
| Car's Sofa | 0 | 79,900 | 145,000 | 92,800 | 10,000 | 0 |
| Chair House | 147,900 | 161,700 | 183,000 | 189,700 | 192,700 | 29,500 |
Exhibit 3: The Triple Tension of Business, Creative, and Journalistic Aspects of a Media Company
A media company mediates between those wishing to spread a message (the advertiser) for purposes of making a sale and readers/viewers wishing to receive “content” (raw data—C-SPAN; organized data—CNN; synthesized knowledge—McNeil Lehrer; or unique and valuable insight—Burns's The Civil War) for purposes of education, entertainment, self-improvement, or information. A media company stays in business only in so far as it is able to create value for its readers/viewers and advertisers. It participates simultaneously in the business-to-business and consumer sectors. Its challenge is to provide content to consumers who in many cases couldn't care less about the advertisers' selling message, while serving and being paid by advertisers who are interested in selling and only interested secondarily, if at all, in consumers' interest in the content. Media companies walk this tight rope. They are strongly influenced because of the journalistic background of their creative employees to be socially responsible and to “print all the news that's fit to print.” What is “fit to print” may not sell to consumers, may find no advertising sponsor, and may infuriate the advertiser, the consumer, or both. The organizational structure of a typical newspaper reflects this tension. The publisher of a newspaper is oriented to the advertising side of the business while the editor advocates for the reader/viewer. The tension may be destructive or creative, depending on how well the unit is led and how well the two sides realize they are in an essentially interdependent situation. Both constituencies have legitimate needs.
There is a natural tension between the content or creative and business aspects of a paper. The publisher is responsible for revenue and profit and usually has a selling background, having started in subscription or advertising sales. In contrast, most editors have a journalistic background and began their careers as reporters and/or writers. Editors always want more writers, reporters, and equipment (e.g., sky-cam cameras), but they worry that publishers will see the editorial department as a cost center and forget that it is content that brings readers to see the advertisers message. Publishers sometimes argue that consumers buy the paper primarily to read the ads and look for coupons. Lastly, publishers—wanting to increase circulation and make the space more valuable to advertisers—realize that sex, crime, and disasters do sell. Occasionally they put some pressure on editors to ease up on “truthful” coverage of less than ethical business customers (such as used-car dealers) and to add content that editors deem inappropriate.
Source: Robert Dewar
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
