26 September 2012

Countdown For A Cowardly Cartel

There's rumblings that We are about to get new daily newspapers. Two, to take the more specific part of the rumors. At a time when most markets are losing newspapers to web-based news sites, Puerto Rico is gaining--apparently--two dailies.

Why? Why now?

It's not like We are avid readers or consumers of news. I hate to say it: My Brethren look upon reading as akin to inserting suppositories, but less useful. And as far as news, Our general mind-set is geared to PUERTO RICO: GOSSIP/SCANDAL/TRAGEDY with a second set consisting of U.S. of part of A./NY/FL/Scandal and a dot that says "The rest of what other people call 'the world'".

So if it's not serving a reader/news consumer market, what could cause 2 new newspapers to jump into Our market in 2013?

Ad revenue.

Banners of the Farewell Tour

For some reason, the ad market locally is more like a dinosaur than an iPhone 5. Even now, the majority of overall ad dollars spent here goes to newspapers, an estimated 63%. That leaves a paltry 37% spread across TV, radio, Internet and several alternative media.

So newspapers still rule here. And who rules the newspapers and thus the ad revenue stream? The Ferré-Rangel cartel, owners of El Nuevo Día, Primera Hora and more than half the major local weeklies. They control about 65% of the newspaper ad revenue, which means they control about 41% of the total stream, a princely sum, when you consider it represents about $98 million.

Still, why? Why now?

First of all, Puerto Rico is a captive ad market. It's an island. But not just any island: it is an island filled with people who buybuybuy like drones. That means that companies will advertise like mad to lure the drones. It's what We've seen for decades.

Second, the Ferré-Rangel cartel is vulnerable. Their attempts to polish the face of the pig they call "the family corporation" have not helped improve its looks. So the big mega-millions sale they lusted for has not been completed, and as their position and the economy worsened, the prospects of umpteen dollars to bankroll personal ambitions have faded.

Third, thanks to a corrupt passel of smegma-licking thieves, a local failed daily is now a putrid propaganda puppy trainer given away for free. It broke the "free" price barrier and further eroded the ad revenue base for the Ferré-Rangel cartel.

Fourth, the ad market here is ripe for a competitor because the environment has become stagnant. The deaths of El Vocero (now a zombie) and The San Juan Star (a puny half-zombie called The Daily Sun or some such crap) have given one competitor a solid base...with huge cracks. And into those cracks comes a rival.

Yes, one. According to the rumors, the international chain of Metro papers is the King Kong moving in next year. {Disclosure: I worked on a project to bring that chain to Puerto Rico in 2008-2009. The big stumbling block: no large local advertiser would commit to placing ads in the new paper for fear of retaliation by the Ferré-Rangel cartel.} And again, according to the rumors, the cartel will launch its own free daily as a pre-emptive strike.

Which means that the cartel will actually cannibalize itself in a desperate attempt to survive.


Here's the thing: If a company dominates the newspaper industry the way the Ferré-Rangel cartel does, it would behoove said cartel to improve the quality of news coverage and community interaction so that future competitors would have a bigger entry barrier to their market. In essence, be a true newspaper and develop yourself into an integral part of the business, industrial and social fabric. Which means you become an integral part of all of Us.

Is it hard work? Yes. Does it take time? Of course. But the end result is a newspaper or a newspaper chain--in a closed market--that can only be beaten by the Internet, which is still in its infancy here and thus capable of being dominated even by something as horrendous as elnuevodia.com and primerahora.com.

Remember, this is a market where total ad revenue exceeds $210 million and one company is dragging down close to $100 million. Let Me put it this way: that represents roughly $26.50 per person. How many companies get at least $26.50 a year per person in their market?

But of course, the cartel won't do that: they haven't in the almost two decades they've cornered the market. They took the easy route, the exploitation route, and when the going got tough--as it will--they went into "survival" mode, short-term thinking. If they'd had a gram of vision or a smidgen of guts, they could have created a new paradigm for newspapers in Puerto Rico, a potential model for others to emulate.

Instead, they're going to launch a free daily to compete with their two newstand-sold dailies in order to fight off a free daily...with much deeper pockets, talent and vision.

And because the Ferré-Rangel cartel is not really a part of Us, never wanted to be except to exploit, threaten, browbeat, deceive, insult and manipulate Us, We really don't care what happens to them. They've taught Us to not care about the news, to not give a damn whether We read the Truth or not, to not have any concern for them as Our allies because they never were.

Now they need Us to fight off a rival that could become--blind hope--the ally We deserved these past three decades. Regardless of whether that ally emerges or not, the Ferré-Rangel cartel is headed for a crushing defeat. They will want--hell, they will desperately need--allies...and I for one am sure they won't get enough to survive.

I've said for years that the cartel is an obstacle to Puerto Rico's progress. Come 2014, their days as an obstacle may become a visible countdown. And they will have nobody--absolutely nobody--to blame but themselves.

Good riddance.

The Jenius Has Spoken.

[Update: 2 Oct 2012: The battle of the free dailies has its first salvo. The Ferré-Rangel cartel launches Indice and Metro launches a sneak peek of its offering. Oh, We won't be better informed...We'll just be entertained. I can't wait for the Ferré-Rangel cartel to file for bankruptcy.]


Joaquín said...

Well said. Then again, I'm sure they've done their "market research"
in the past and arrived at the illuminated conclusion that what they
put out on the street is "the kind of thing our readers want to read".
We'be ready been proving them wrong for a while now, it's just that
the ill-informed ways of looking at ad impact and extrapolating those
results into "public engagement with the brand" have kept them blind.
Good luck down the path of irrelevance, although I secretly wish they
reconsidered and worked towards a better vision of Puerto Rico. It's
local capital and people in the end.

GCSchmidt said...

I'm with you on this, Joaquín. Maybe what We get with the new papers is more of the same. but We definitely need a change in Our media. Let's just hope it's one for the better.