Bloomberg Validates Our Concerns That Store Closings Have on Real Estate

For the past year, we've been saying that the retail sector is in trouble, and that the potential impact of Amazonification and the retailpocalypse will be felt in other sectors. 

Our primary concern is that as big box retailers often support local newspaper through ads. So that as an expected 2,500 retail locations shut down through early 2019, there will also be a cut in ad buys in local newspapers. 

That downturn in ad revenue will likely hurt smaller local newspapers.

And that may lead to local newspapers either laying off staff, shifting from a daily to a weekly, or from a weekly to twice-a-month, or shutting down completely.

That could lead to an increase in what are being called new deserts -- communities that don't have access to local news. 

All of that has an impact on PR and marketing because there would be fewer outlets with which to reach key audiences.

But we've also been concerned that the number of store closings will also impact real estate, both at malls and in towns. At malls, we've felt the problem is that if an anchor location remains empty, the entire mail will be written off by consumers. And that precipitates more closings, which becomes a self-fulfilling prophecy that leads to a downward spiral.

In a Bloomberg News article yesterday that was syndicated into a number of papers, including the Boston Globe, "Struggling malls at crossroads as Sears makes exit," reporters Patrick Clark and Justina Vasquez made that same point:

"As Sears shutters stores, landlords will have to overcome the perception that the entire property is failing or risk losing other tenants, said Burt Flickinger, managing director of Strategic Resource Group, a retail-advisory firm."

“You’re going to see an epic hollowing out of the retail malls in America, especially the malls that are co-anchored by Sears” and another struggling large retailer, Flickinger said. “It’s creating an accelerating retail ice age and an economic Armageddon of unprecedented proportions in the US.” 

That's got us worried.

Retail is an important sector for the U.S., and not just to buy things. Retail can a communal activity whereas shopping online is not. And Bloomberg has reported on the negative impact on local towns in the U.K., when shops have closed on main street, and residents then have to drive thirty minutes or more to buy things they once could in their home town. Those towns suffer because there's literarily nothing holding people there.

So, a lot of doom and gloom -- and you don't have to be a big shopper to see that this can affect you. We don't necessarily have a solution. But we feel that raising the issue is important, that discussing this can help lead to awareness. If we ignore the retailopaclypse, it's not going to go away. 

The Need for Thought Leadership: Mayor Bloomberg's editorial initiative underscores the value

You might think that as Mayor of New York City, you might not need to think about thought leadership and expanding ways to communicate your thoughts to the public.

After all, Mayor Michael Bloomberg has access to the media on a 24/7 basis. And not just local New York media -- if the New York Times and Wall St. Journal can be considered local media. New York is, of course, the media capital of the US.

But that's not enough, apparently.

As I wrote last month (Bloomberg to Publish Editorials -- Welcome to the Blogosphere, Mr. Mayor), Bloomberg is launching an opinion section called Bloomberg Views to air his ideas.

Check out "After Business and Politics, Mayor Tests Opinion" in today's New York Times. For those who think thought leadership -- the concept of promoting your thoughts as blazing a path -- is not worthwhile or is just about ego, think again.

Bloomberg, a billionaire who can afford to lose money, still feels that thought leadership is important to maintain his visibility, which in turns enhance the reputation of his media empire.

My point: if Bloomberg feels he could benefit from thought leadership, so could a lot of companies.

Bloomberg to Publish Editorials -- Welcome to the Blogosphere, Mr. Mayor

Last month, the New York Times reported that Bloomberg, the news service, would start publishing an editorial page.

The article, "Bloomberg to Publish Editorials," also noted that Michael Bloomberg, New York City's Mayor and the founder of the news service, would have some input on the unsigned editorials.

Bloomberg is "accepting and embracing the privilege of a media mogul," a City University of NY professor told the Times, adding, "This is what we all do. We try to persuade the rest of the world we are right. Of course we don't have the vehicles to do so. The rich have the vehicles to do so."

Interesting point -- except that the rest of us do have some vehicle for offering up our opinions. It's called a blog. I guess one difference is that we don't all have access to printing our ideas in Bloomberg BusinessWeek. But the fact is we live not in the Information Age, but in the Opinion Age -- everyone has one and nearly everyone (including me, of course) is letting everyone else know!

The Difference between BusinessWeek and Bloomberg BusinessWeek -- Part II

The other aspect of the deal was that Bloomberg said the acquisition was to extend the brand and reach an audience beyond subscribers to the wildly successful Bloomberg terminal.

This makes the firing of popular and well-known columnists like Maria Bartiromo, Jack & Suzy Welch and Stephen Wildstrom all the more perplexing. The personnel changes will help the bottom line, but won't necessarily help accomplish Bloomberg's stated goal.

The Difference between BusinessWeek and Bloomberg BusinessWeek

I read through the first Bloomberg BusinessWeek issue -- the one after most of the columnists and longtime reporters had either left on their own or had been pushed.

I'm sure I'll get used to the new bylines, but if the magazine were a real estate property, Bloomberg basically bought the magazine for the prestigious address. The new magazine has similar columns to the McGraw Hill BusinessWeek, but this new version is clearly different.

I'm sure most former BizWeek reporters will do ok. Steve Hamm has already started working at IBM. But there are a lot of reporters who still haven't figured out what they'll be doing. I wish them all the best of luck, and look forward to reading the articles in some other format and some other outlet.

What Does Bloomberg Get in Buying BusinessWeek

The news that Bloomberg LLC has bought BusinessWeek provides the magazine with a good home, but raises some interesting points and questions.

• According to the Wall St. Journal, "Bloomberg's staff of more than 2,200 journalists is bigger than the combined newsrooms of The Wall Street Journal and the New York Times."
  
• BusinessWeek lost $43 million, and is expected to lose more than $60 million this year.
  
• Bloomberg will have to cut costs by combining bureaus -- like DC, Chicago, San Francisco. Even its NYC headquarters will have to leave its overpriced McGraw-Hill office building to move several blocks east to Bloomberg's midtown offices. But will Bloomberg also seek to reduce staff levels?
  
• Subscribers of the Bloomberg terminal, typically Wall Streeters, will now have access to BusinessWeek information, according to Daniel L. Doctoroff, president of Bloomberg. That means the traders won't need to subscribe to the magazine -- so a loss of some revenue.
• BusinessWeek has lost more than half its advertising pages since its peak of more than 6,000 pages in 2000, according to BtoBOnline.
• “Although Bloomberg has built one of the world's largest news organizations, with more than 2,200 journalists, our primary audience has been our 300,000 Bloomberg Professional service subscribers. … BusinessWeek helps better serve our customers by reaching into the corporate suite and corridors of power in government, where news that affects markets and business is made by CEOs, CFOs, deal lawyers, bankers and government officials who typically are not terminal customers,” Daniel L. Doctoroff, president of Bloomberg, said in a statement.
• Norman Pearlstine, Bloomberg's chief content officer and a former editor in chief at Time where he was responsible for all of Time's publications, will become chairman of BusinessWeek and will oversee the integration of the property into Bloomberg.
• According to MarketWatch, it seems that the "privately owned Bloomberg is doing this deal because of a desire to satisfy an executive's ego. Still, it seems likely that whoever is driving this proposed acquisition will get a great deal of criticism." For one, Bloomberg was not successful with its print personal finance monthly magazine.
• According to MarketWatch, citing "a report on BusinessWeek's Web site, the terms weren't disclosed but Bloomberg's cash offer 'is in the $2-$5 million range and that it has agreed to assume liabilities, including potential severance payments.'"
  
• Jon Friedman at MarketWatch feels the deal doesn't make sense.

I think it provides greater visibility to the Bloomberg name. And I would bet that a lot of BusinessWeek writers would like to believe what Stephen Baker tweeted, "Bloomberg bought us. Seems like good news. They dont want to fire everyone. Others get McGraw Hill severance for next 12 mths. Good combo?"

I also think that the deal gives Bloomberg a well known, popular website that has been developing its own community.

Actually, if the economy is rebounding, it doesn't really make sense for McGraw-Hill to unload BusinessWeek. To me, it seems that Bloomberg is betting that the recovery will start being felt in 2010. Even as the new normal means reduced ad spending, at $2-5 million, plus pension liabilities, Bloomberg is buying a respected brand name and robust website that have a global reach at a significant discount to building one itself. Bloomberg will be able to cut huge costs by combining bureaus, including the overpriced McGraw-Hill offices. I don't think they need to reduce costs by $60 million to make this work. They can leverage BusinessWeek's conferences, too.

The future of newspapers' business sections in the Internet age

The tightening ad market is claiming more victims. The latest: "The Denver Post—which folded its business section into other sections on every day but Sunday—last month became at least the eighth daily since early 2007 to cut its stand-alone daily business section," according to BtoBOnline.

As it is, many newspapers have been pushing their readers to their websites to check out the stock pages, in part as a cost-savings initiative because the cost of newsprint continues to rise (if only I could invest in the futures market for newsprint). And in part because most active traders, these newspapers feel, already check their stocks online.

But getting rid of standalone business sections means:

• Business news becomes a less important section within the newspaper hierarchy.
• Business sections will get fewer resources and reporters. The level of business coverage will decrease because staffs won't have enough time to cover news they would like to.
  
• Business sections will be smaller sections and more difficult to find.
• There will be less room for local coverage.
  

All this will lead to a more challenging ad environment, and a downward cycle.

This is good news for local business weeklies...which should be able to beef up their pages with content and ads.

Meanwhile, the BtoBOnline article cited "a study by Arizona State University's National Center for Business Journalism found that about 75% of daily newspapers today run, on average, one page or less of business news a day, and only one in eight daily papers runs a stand-alone section."

The implications for B2B PR programs is that we need to shift our focus to the business weeklies and AP, Bloomberg and Reuters, and away from local market daily business sections.