It might surprise some, but Ann Caulkins is optimistic about the future for The Charlotte Observer, the region’s standard-bearing daily newspaper that has written its own story of frequent budget cuts to address intense competition in a brutal economy.
For The Observer’s publisher, it’s a crisis that started as early as 2002 when Caulkins noted escalated media fragmentation and a growing propensity among readers to get news from the Internet. Exacerbating these trends was the economic downturn that followed the sale of The Charlotte Observer and other Knight-Ridder newspapers to The McClatchy Company.
To date The Observer has endured five rounds of job-ending buyouts and has consolidated important print sections, but Caulkins sees better days ahead.
“Ad revenues seem to be coming back marginally around the chain,” she says, referring to the McClatchy empire that includes 31 daily and 44 non-daily publications.
“The Observer is typical of that,” she adds. “The fact that our ad revenue is stabilized, is predictable, we really do feel good about that.”
She’s happy to tell other good news: Online advertising is solid and growing, the Web site is more user-friendly, readership for all The Observer’s offerings has never been higher, and McClatchy’s Carolinas newspapers are learning to share content and talent.
All that is reflected in the way she articulates The Observer’s aspirations. “We’re going to provide you with the news and information on our local communities the way you want to get it,” she says. “We need to do that online, on your mobile device and in print. That makes us more of a media company than a newspaper company. We really have to think that way.”
So she sees a future that’s sunny as she sloshes through storms.
Weathering the Storm
Earlier this year, Caulkins says she endured maybe her darkest hours.
She recalls the day she had a conversation with her McClatchy boss who, because of advertising declines, asked for cuts so large that she could not imagine how to comply. She went to bed early that night, fretting about the slashes and how to maintain the integrity of her 123-year-old newspaper. Over the course of the next two weeks, she and her top reports somehow found ways to meet the financial goals without injuring the product inordinately.
Then, only 10 days later, as advertising continued to deteriorate, she got a call from corporate asking for a second round of cuts. Again, she and her team wielded the scalpel skillfully and The Observer survived the operation.
In July, McClatchy reported net income of $42 million for the second quarter, up from $20.1 million for the similar period in 2008. Income for the first half of 2009 shrank but earnings per share grew after adjustments for unusual items.
Gary Pruitt, chairman and chief executive, spoke of an improving trend in ad revenues and outlined a number of measures that he said “reflect our hard work on the expense side.” His report is reminiscent of many financially stressed companies, but the effect on individual newspapers is daunting.
“There was a tremendous amount of angst, everywhere in the building,” Caulkins says.
Yet she and The Observer work force, now 595, have persevered. Everyone, including Caulkins, is taking a week-long furlough without pay. Employees have told her they much prefer these imposed holidays to cutting even more jobs.
Each of the McClatchy newspapers makes its own decisions on how to cope with tight finances, but none of the major publications has dropped production days.
“The daily habit is important,” Caulkins affirms. “If you interrupt people’s daily habit and they start to get their news elsewhere, you have a problem.”
Some rue the loss of circulation, but Caulkins attributes much of the drop to newspapers themselves lopping off distant and hard-to-service customers. The Observer has done this, to the chagrin of some, she adds.
Caulkins knew that The Observer needed help in shaping its online vision. A little over two years ago, she hired technological whiz Jason Silverstein from Yahoo! to make the electronic pages much easier to navigate.
They must be doing something right. The site was most recently recognized by The Web Marketing Association with its 2009 Best of Industry WebAward in the newspaper category, the highest possible honor awarded to only one site. The Observer’s site has also been honored as the N.C. Press Association’s winner for general web excellence (best website) in 2009 and finished as a finalist in the Editor & Publisher’s Best Large Newspaper Website EPpy for 2009. (The Wall St. Journal won the EPpy.)
Further, the Web site has added “behavioral targeted advertising” so that a client can pick out customer propensities and communicate only to readers who share them.
Caulkins admits surprise at the amount of growth in online ad revenue since she arrived at The Observer three years ago. Will online ad money eclipse that of the print product? “Probably,” she says, “but that is many years down the road.”
More targeted online sites can be lucrative, she believes. “You can charge for online content that’s tightly woven around a community,” she explains, “like newspapers have done with college football, or pro teams, or like Raleigh (The News & Observer) does with state government.”
Caulkins says it’s about attracting as many eyeballs as possible to all forms of communications, and adds that more than a million sets of eyes examine The Observer’s offerings in a seven-day period.
As soon as financially possible, Caulkins maintains, The Observer’s business news will get its own daily section, as it once enjoyed, “because Charlotte is such a business city.”
Meanwhile, the Carolinas part of the McClatchy chain collaborates more and more, aided by a front-end system that makes it easier for editors to share stories. Including The Observer, the chain owns seven dailies in the two states.
Corporate sees synergies as the papers cooperate.
The Observer and The News & Observer have linked newsrooms, and The Rock Hill Herald recently joined. Soon to come aboard is The Sun-News in Myrtle Beach and The State in Columbia will follow.
Already, Gary Schwab of The Observer is the sports editor for both Charlotte and Raleigh, while the capital publication runs the government desk for both papers.
Caulkins also has a collaborative team. She praises Rick Thames, editor of The Observer, for shaping the new culture of shared work. She meets with Thames regularly, as she does with Victor Fields, The Observer’s chief financial officer, Mark Webster, human resources vice president, and Liz Irwin, advertising vice president. All frequently visit Caulkins’ office.
Caulkins keeps close communications with editorial page editor Taylor Batten and his staff, too. “It’s such a smart editorial board,” she says, adding that she and the editorial writers hold periodic discussions. “Because we have a group conversation,” she says, “whoever writes the editorial writes a better piece.”
Coming Into Her Own
Caulkins herself grew up in Shreveport, Louisiana, and worked at The Waco Tribune Herald while studying oral communications at Baylor University in anticipation of a broadcast career. But she decided against it and instead rose through the business side of Knight-Ridder, starting out at The Fort Worth Telegram in 1984, where she was promoted to retail advertising director in 1992. She attended the Simmons Executive Graduate School Program in 1993.
She spent the next four years at the Lexington Herald-Leader in advertising. She won recognition early on for her leadership in reinvigorating the advertising department, turning in a superior performance during her first year there: Ad revenue increased 13.8 percent and market share gained an impressive 1 percent after a five-year downward trend.
But her goal was to be a publisher. And for that she needed exposure to all aspects of the publishing business. She credits Tim Kelly, Lexington publisher, with teaching her the news side.
“Tim was an award-winning journalist,” Caulkins says. “He said, ‘I’m going to take you under my wing. I’m going to really expose you to the news side of the business.’ And he did. He was fabulous.”
Kelly remembers Caulkins as an apt pupil. “She developed a terrific rapport with the editor, Amanda Bennett, who went on to become editor of The Philadelphia Inquirer,” he says. “We were able to have a lot of discussions about the news side and the editorial pages and how they relate within the community and within the business of a newspaper.”
“Nothing’s hard for Ann to figure out,” he adds. “She’s incredibly smart, and once she sets her mind to do something, she’s going to do it.”
Caulkins was senior vice president of sales and marketing when she left Lexington in 2002 for The State to be its first woman president and publisher. She was closer to her dream of becoming a publisher of a metro daily; and she focused squarely on Charlotte.
The opportunity finally came late in 2005 when Knight-Ridder named her to succeed Peter Ridder at The Observer effective January 1, 2006. Although they sent her back to Columbia when the chain put itself up for sale, the setback was only temporary, because the ultimate buyer, McClatchy, wanted her in the Queen City.
She arrived for good in May 2006, just in time to wrestle a sour economy that caused McClatchy to struggle with digesting its purchase.
Still, Caulkins tells young people this is an exciting time to get into newspapers. Within the paper there are many directions they can take, as well as newer ones not even identified yet.
“That’s very appealing to them,” she says. “For their generation, they are used to a lot of rapid change.”
Caulkins certainly embraces change, not ruling out a sale of The Observer’s complex at 600 South Tryon Street. She acknowledges offers, although not as many these days. She adds that, because the presses are there, they can’t sell the buildings unless they find another printing option.
“This is what should be here,” she smiles as she peers into her mind’s eye. “There should be an office tower, a hotel and a condo development; then, on the bottom, retail and restaurants. And then let me have however many floors I need so I can continue my presence here. That is my fantasy.”
That would fit with Caulkins’ vision of Charlotte bouncing back from the recession. “There are going to be corporations that would not have thought of moving here when our center city office occupancy rate was 99 percent,” she says. “So with every tough situation comes an incredible opportunity.”
She’s excited about partnering with former Charlotte mayor Harvey Gantt to lead the 2020 vision for center city. “I feel very optimistic about Charlotte and the future,” she says.
That 2020 Center City Vision Plan resides at Charlotte Center City Partners. Caulkins is a board member and Michael Smith is president and chief executive.
“We enjoy her broad perspective which provides her insights into economic development, neighborhoods, the arts and culture,” Smith says of Caulkins. “That ‘wider view’ will help us create the inclusive and catalytic plan we intend to deliver.”
At 47, Caulkins professes motivation from knowing the community depends on The Observer to be its watchdog.
“During this rough space in the economy,” she says, “I feel lucky to be in a business that has a mission that is so important. We’ve got to continue. This is worth fighting for. That’s why I’ve always loved what we do.”
But there’s something else, too. “Extraordinary” is her characterization for The Observer’s work force.
“When it’s a pretty bad day, I walk out and see somebody who is really working hard,” she smiles. “I have never been more proud of the team of folks at The Charlotte Observer than I am right now. Our employees are passionate about what we do. And what we do is crucial! We are here to stay.”