As the Seattle Post-Intelligencer’s fate continues to hang in the balance, Steven Swartz (CEO of P-I owner Hearst) and Lincoln Millstein (Hearst’s Senior VP-Digital) have lunch:
Millstein: Steve, we need to make up our minds about the P-I. The 60-day clock we put them on stopped three days ago.
Swartz: Yes, I’m sorry — I’ve been tied up dealing with the Chron, shuffling management, getting that e-reader going, and whatnot. But you’re right, let’s figure it out. I’m running out of time in my “100 days of change,” also. What’s your thinking?
Millstein: I’m thinking we go with an online-only P-I. We’re going to end up facing that choice in other markets, including San Francisco, and Seattle gives us the opportunity to test the model and find out what works and what doesn’t.
Swartz: But can we make money? We’ve been losing more than $1 million a month there — $14 million last year. I’m not interested in an experiment to see if an online-only brand can stand up against a print/only combo — I’m interested in making money. In the immortal words of Jack Welch: “fix it, sell it, or close it.” There’s no buyer in sight, so we’re down to fixing or closing.
Millstein: I say we fix it. We’ve got the numbers down to breakeven. That’s doing pretty well, in this economy. We can build profitability going forward. We’ve got a staffing plan: with just a few dozen content people we’ll have an operation that can cover Seattle well enough. We need to hire a sales and marketing staff, some tech people, some admin types, but overall we’ve cut that $ 14 million loss down to total expenses of $5 million. We can sell ads to cover that — the site is leading the market in unique visitors and pageviews.
Swartz: OK, but just to cover $5 million in cost, you need $100,000 a week in ads, and as I said, breaking even is not good enough — this is still a business. The right number would be $250,000 a week, or more. $13 million a year in revenue.
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