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Apr-15-2008Investor woes shut down BostonNow(topic overview)
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BOSTON — BostonNOW announced its immediate shutdown Monday after a year of competition with a rival five-day-a-week free newspaper geared toward subway and rail commuters. BostonNOW said Monday's edition would be its last because of tough economic conditions its primary investors face in Iceland. Last week, Iceland-based Baugur Group completed the sale of its media and other holdings to Dagsbrun Media, which decided to close BostonNOW. Companies there have been faced with rising interest rates and the devaluation of the nation's currency, the krona. [1] REPRINTS 'BostonNOW' Folds, Victim of Iceland's Economic Woes By E&P; Staff Published: April 14, 2008 5:20 PM ET CHICAGO In another sign of the globalization of free newspapers, BostonNOW published its last issue Monday, saying the "healthy, growing 119,000-circulation daily" was a victim of economic conditions in Iceland. "The death of any newspaper is a sad thing," a story on BostonNOW's Web site quoted its CEO, Russel Pergament, as saying, "but the death of a vibrant, flourishing newspaper because of economic turmoil thousands of miles away is beyond sad and is something we never anticipated and for which we were totally unprepared." BostonNOW's primary investors, Baugur Group of Iceland, had previously announced plans to sell its media properties, including the Boston commuter daily.[2]
Did you wonder where your Boston NOW person was this morning? The commuter paper, which promised to bring bloggers together with standard print media, has folded. The Globe's business ticker said the paper shut down "immediately" today due to "tough economic conditions being faced by its primary investors in Iceland." Boston NOW's own website (link via b0st0n LJ ) points the finger squarely at the land of Bjork : "This healthy, growing 119,000-circulation daily is suddenly compelled to halt operations due to rapidly deteriorating economic conditions in Iceland where interest rates reached 15.5% Thursday, the krona, their currency, has declined over 20% against the dollar since January, and inflation is now at 8.7%." Boston NOW had its fair share of stumbles from the beginning, but some of that could have been attributed to the merging of new and old media. Their first editor, John Wilpers, whom Bostonist had the pleasure to meet with, had a real vision for where he wanted the paper to go, but he exited fairly early on.[3] The paper's main financial backer is Iceland-based telecom and media holding company Baugur Group. Baugur Group said last week it planned to sell its media, technology and financial investments to focus on its core retail market. "This healthy, growing 119,000-circulation daily is suddenly compelled to halt operations due to rapidly deteriorating economic conditions in Iceland where interest rates reached 15.5 percent Thursday, the krona, their currency, has declined over 20 percent against the dollar since January, and inflation is now at 8.7 percent," BostonNOW officials said in a release on the closure.[4]
Baugur Group has been hurt by sky-rocketing interest rates, which reached 15.5% last week, inflation that's measured at 8.7%, and the decline of the Icelandic currency, the krona, which is down 20% against the dollar since the beginning of the year. "Our overseas investors are honorable people who have endeavored to fulfill all obligations to this newspaper," Pergament said, "but the tumult in foreign credit markets has forced a change in our original understanding and their focus now appears to be primarily upon their core retail holdings.[2] Pergament, an entrepreneur who has started several newspapers, launched BostonNow on April 17 of last year with much fanfare - and in a highly competitive media market. In an interview with the Globe last year, Pergament said his new paper would reinvigorate local coverage: "We are going to break some news. It is not going to be just watered-down wire copy." Pergament said he was notified earlier this month that his financial backers in BostonNow, led by Icelandic investment firm Baugur Group, wanted to modify their agreement and wanted him to seek new investors. Last week, Baugur pulled the plug on its media holdings, agreeing to sell them and its telecommunications investments to a group of companies in Iceland and Denmark so it could focus on its retail business. While other investors expressed some interest, Pergament said, he didn't have the time to put a deal together. Pergament said he was organizing job fairs with media companies for BostonNow employees. BostonNow listed its most recent circulation as 119,000.[5] BostonNow, a free daily newspaper aimed at area commuters for the past year, will cease publication, its top executive said today. Russel Pergament, chief executive of the commuter paper, said he was notified late last week that its foreign investor, the Baugur Group of Iceland, was pulling the plug. He blamed the move on financial problems in Iceland, not on the troubled U.S. newspaper industry.[6]
BostonNOW, the daily free newspaper that targets commuters, has shut down operations after only one year in business. The paper ceased operations Monday, according to Russel Pergament, BostonNOW's CEO. While the paper was growing, the closure is due to the financial difficulties its primary investor is facing.[4]
BostonNow entered a market dominated by two dailies, The Boston Globe and the Boston Herald, and several free papers, including commuter paper Metro Boston which Pergament helped launch. (The New York Times Co., the parent of the Globe, holds a 49 percent stake in Metro Boston, which had an audited circulation of 170,514 at the end of 2007.) A veteran newspaper entrepreneur, Pergament is best known for cofounding the Tab group of suburban weeklies in 1979 and selling them to Fidelity Investments in 1993. He later helped launch Metro Boston and amNewYork, another free daily paper. Free commuter newspapers, once seen as an attractive business model, have become a tougher sell to readers living in an era of ubiquitous news and advertisers more inclined to shift dollars to digital media, suggested Ken Doctor, media analyst for research firm Outsell Inc. in San Jose, Calif. "It's not as easy these days to just put some papers by a train and have people pick them up," Doctor said.[5] The shutdown will idle about 50 full-time employees of BostonNow and about 100 street hawkers who distributed the paper at Boston area subway and rail stations on weekdays, Pergament said. He said he was organizing job fairs for employees affected. BostonNow, which launched on April 17 of last year, listed its most recent circulation as 119,000. It competed with another five-day-a-week commuter paper, Metro Boston.[6]
BostonNOW was up against rival free-daily Metro Boston, which also used newsstands and a legion of hawkers to target the city's rail and bus commuters. BostonNOW officials said that management's primary concern right now is to help its suddenly displaced employees. A series of interviews, both on premises and off, are being set up with local media companies.[4]
Stephen Burgard, director of the journalism school at Northeastern University, said BostonNow had been innovative in community journalism by including content from bloggers. He said the paper initially had discounted its advertising rates in an effort to attract larger advertisers from more established area newspapers. "They've been competing in a difficult landscape with the dailies and Metro Boston for the same advertising dollars," Burgard said. While free papers have proliferated in U.S. cities in recent years, it usually takes years for them to become profitable, said Barry Parr, media analyst at Jupiter Research in San Francisco. "You're seeing more experimentation with different formats, different pricing, and different distribution models, and some of them are going to fail," Parr said.[5] The newspaper began publication April 17, 2007, creating a rival to Metro Boston, which debuted in 2001 and is part of Metro International, a chain of free dailies around the world. It was circulating 119,000 copies a day, up from 59,000 when it started, but still below Metro Bostons 170,000 average daily circulation, according to the newspapers latest figures.[7]
Investor woes shut down BostonNow Boston Globe BostonNow, a daily newspaper circulated free to area commuters for the past year, abruptly ceased publication yesterday.[5] North American media is not even a distant second.''' '''This newspaper, not even a year old, is right on track for profits in Year Three, just as the business plan called for,''' says Publisher Mike Schroeder, '''so this decision by our overseas investors, while perhaps understandable, is deeply troubling.''' BostonNOW'''s editorial content, especially its strong local reporting, has been picked up dozens of times by Boston'''s paid dailies and TV outlets.[8] A statement released by BostonNow focused on the deterioration of the Icelandic economy. It cited recent interest rates of 15.5 percent, an inflation rate of 8.7 percent, and a 20 percent decline of the nation's currency, the krona, against the U.S. dollar. In the statement, publisher Mike Schroeder said BostonNow was on track to be profitable in its third year, just as its business plan called for. "So this decision by our overseas investors, while perhaps understandable, is deeply troubling," he said.[5] Pergament, a well-known newspaperman who helped found the Tab community newspapers and even had a role in starting up the Metro, blamed the shutdown on a brutal financial crunch in Iceland, where BostonNow's corporate parents are seeing 15 percent interest rates, a falling krona currency and high inflation.[9] "Economic conditions in Iceland have become catastrophic," Pergament said, citing interest rates of 15.5 percent, an inflation rate of 8.7 percent, and a 20 percent decline of the nation's currency, the krona, against the dollar. "This paper is on track and looks good.[6] This healthy, growing 119,000-circulation daily is suddenly compelled to halt operations due to rapidly deteriorating economic conditions in Iceland where interest rates reached 15.5% Thursday, the krona, their currency, has declined over 20% against the dollar since January, and inflation is now at 8.7%.[8]
Russell Pergament, chief executive of the commuter paper, said he was notified late last week that its foreign investor, the Baugur Group of Iceland, was pulling its funding amid economic problems in Iceland, where inflation and interest rates have shot up in recent weeks.[10] Baugur Group faces sharply rising interest rates and inflation in Iceland, as well as the devaluation of that nation's currency, the krona.[11]
The shutdown will idle about 50 full-time employees and 100 part-time street hawkers who distributed the tabloid at subway and rail stations across the region on weekdays. Russel Pergament, chief executive of BostonNow, blamed its closing on financial problems in Iceland, home to the company's largest investors, not on the troubled U.S. newspaper industry. [5] The newspaper industry in general has been hit hard in the United States and elsewhere. Other recently launched free papers, often distributed to subway riders in varying cities, have been struggling, too. Pergament, however, insisted BostonNow, with a circulation of 119,000, was "healthy" and "on track" to profitability within its original three-year goal. He said he scrambled in recent weeks to find new investors to keep BostonNow alive. By late last week, he said, no deal could be stitched together amid a credit crunch throughout capital markets.[9]
'''The death of any newspaper is a sad thing,''' stated CEO Russel Pergament, '''but the death of a vibrant, flourishing newspaper because of economic turmoil thousands of miles away is beyond sad and is something we never anticipated and for which we were totally unprepared.''' '''Our overseas investors are honorable people who have endeavored to fulfill all obligations to this newspaper,''' he continued, '''but the tumult in foreign credit markets has forced a change in our original understanding and their focus now appears to be primarily upon their core retail holdings.[8]
About 50 full-time BostonNow workers were called to a staff meeting late yesterday morning and told by Chief Executive Russel Pergament that the financial woes of the paper's owner in Iceland meant it was time to pull the plug. "We're so proud of this paper," Pergament said in an interview with the Herald yesterday at BostonNow's Downtown Crossing headquarters, where stunned workers yesterday were packing their belongings into cardboard boxes before they left BostonNow's offices for the last time.[9] As recently as Thursday, Pergament said there were no plans to cease publishing. "Economic conditions in Iceland have become catastrophic," he said yesterday. "This paper is on track and looks good.[5]
BostonNOW would have turned one year old on Thursday. The paper was on plan to turn profits in its third year, just as the business plan called for, said Publisher Mike Schroeder, who called the decision to fold the paper "deeply troubling."[2] Seriously, though, it is too bad about BostonNOW. I thought they were on the forefront of innovation in the dying newspaper business - they made it the people's paper by including bloggers' articles and photos. Sure, their fact checking could use some work. but as a relatively new paper, it was still working out the kinks. I will be sad to no longer see this paper on the street corners. and even sadder since my non-profit's blog was one of those frequently featured.[3] BostonNOW employed 52 people full-time. "Management's primary concern right now is to help its suddenly displaced employees, who from scratch have created one of the most respected new dailies in the USA, find good newspaper and media work as soon as possible," the Web site story said. It said it was arranging interviews with other Boston-area media companies.[2] Bloomingdale'''s, Macy'''s, TJX, HM, Lord Taylor, along with national telco and airline advertisers have been pleased by BostonNOW'''s ability to connect with a dynamic young readership. Management'''s primary concern right now is to help its suddenly displaced employees, who from scratch have created one of the most respected new dailies in the USA, find good newspaper and media work as soon as possible. A series of interviews, both on premises and off, are being set up with local media companies. This entry was posted on Monday, April 14th, 2008 at 4:20 pm and is filed under general. You can follow any responses to this entry through the RSS 2.0 feed.[8]
Jessica Heslam covers the media for the Boston Herald. She's an award-winning reporter who brings 14 years of daily newspaper experience to the beat. She joined the Herald in 2000. [8] B ostonNow is now gone. The freebie daily newspaper abruptly ceased operations yesterday, just three days shy of its first anniversay as a publishing rival of the other freebie daily in town, the Metro, itself struggling amid a tough industry market.[9]
BostonNOW said it was circulating 119,000 copies a day, up from 59,000 when it started, but still below Metro Boston's 170,000 average daily circulation, according to the latest figures.[1] Since launching on April 17th last year, BostonNOW has grown from 59,000 daily circulation to a CAC audited daily circulation of 119,000. The publication included Bloomingdale's, Macy's, TJX, H&M;, Lord & Taylor, among its advertisers.[4]
BostonNOW competed with Boston Metro, another commuter paper published by a foreign company, Luxembourg-based Metro International,that has talked of exiting the U.S. market. [2] The paper employed about 50 full-time employees, and 100 part-time workers who handed out the paper near transit stops and in other places in the Greater Boston area.[10]
"The downturn in the economy and the reduction in newspaper advertising nationally at the local retail level hurt us, but the upheaval in the international market, particularly in Iceland, really did us in," BostonNOW publisher Michael Schroeder said. BostonNOW had 52 full-time and 100 part-time staffers, who will all be losing their jobs. [7]
SOURCES
1. The Canadian Press: Free commuter daily BostonNOW shuts down after less than year
2. 'BostonNOW' Folds, Victim of Iceland's Economic Woes
3. Bostonist: Boston NOW Folds: Iceland Decides It Can't Af-fjord the Paper
4. Commuter newspaper BostonNOW shuts down - Boston Business Journal:
5. Investor woes shut down BostonNow - The Boston Globe
6. Local commuter paper shuts down - Daily Business Update - The Boston Globe
7. Free commuter daily BostonNOW, owned by Icelandic company, shuts down after less than year - International Herald Tribune
8. BostonHerald.com - Blogs: Messenger Blog» Blog Archive » Bye, Bye BostonNOW
9. Death of a daily - BostonHerald.com
10. Free daily BostonNOW shuts down | NECN
11. BostonNOW shuts down after less than year - BostonHerald.com
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