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The Curious Quest of Aaron Quixote
Aaron Kushner, the brash young owner of the Orange County Register, says he knows how to bring his newspaper back from the brink. All it takes is an audacious idea, deep pockets, and a willing suspension of disbelief.
At 4:43 p.m. last July 26, in the third-floor newsroom of the Orange County Register, Aaron Kushner, the paper’s new owner and publisher, stepped onto a small platform to introduce himself to about 200 of his gathered employees. The 39-year-old was wearing a double-breasted blue suit but no tie—the one sartorial hint of the radical change he was about to propose: an implausible plan to save the century-old Santa Ana institution.
Few in the room were optimistic about what he would say. The newspaper industry was sliding into irrelevance and potential extinction—sizeable revenues a thing of the past, continual layoffs a thing of the present, and a much-hyped-but-seldom-profitable digital future offering little hope things would improve. In the background about 50 feet away, one of a dozen or more big-screen monitors silently flashed the number of hits that day’s Register stories were getting online, the paper’s primary measure of journalistic success for about the past five years, incessantly broadcast to remind the toiling journalists what really mattered. That approach was clearly failing, and nobody seemed to have any clue what to do about it.
But Kushner did.
From now on, the focus would be on the printed word, not the Internet-driven strategies of the past decade. He said he planned to hire more reporters, editors, and page designers, and empower them to focus on one simple goal: producing quality journalism.
His employees listened in stunned silence. It was as if he’d declared the law of gravity suddenly invalid. No other American newspaper owner was making that pledge.
“We are the Orange County Register,” Kushner told the bedraggled survivors of nearly a decade of decline. “I want you to get your sense of swagger back.”
Whether his manifesto will change everything remains to be seen. As for the omnipresent screens in the Register’s newsroom—those merciless click counters, mindless reminders of a misguided ideology reminiscent of Apple’s fabled 1984 Super Bowl commercial—they’re largely ignored, less frequently updated, and now just remnants of the newspaper at its lowest ebb.
“Newspapers are dying!”
That’s what I heard soon after I began working at the Register in the fall of 1972. Following high school, to help pay for college, my first job there underscored my juvenile status: copy boy. This gofer gig—which still exists under the gender-neutral title “news assistant”—was the bottom rung on the newsroom ladder, but it came with a Harry Potter-esque invisibility cloak that enabled me to eavesdrop on reporters and editors. Within months, I’d overheard a surprising thing: “Newspapers are dying!”
It seemed impossible, at least for the Register. Orange County was booming. In 1972, the population was 1.6 million, up by half a million from the previous decade, and when I left the paper in 2007, it was nearing the 3 million mark. The paper’s circulation followed the county’s growth, until it peaked in 1991 at 372,000 for the daily paper and 430,000 on Sundays. Because its corporate parent always was—and still is—privately held, the newspaper’s financial information has been a closely guarded secret. But in those flush years the paper was fat with advertising, the dominant source of revenue for newspapers since the 1930s.
Orange County’s chief information provider—rechristened from The Register to The Orange County Register in 1985—always was successful at drawing local advertising. Reflecting the county’s growing financial clout, a fair amount of national advertising—notably, department stores—swelled the bottom line. Mounds of tiny-print classified ads, particularly on Saturdays, would fill 12 to 15 entire sections.
I first came to understand that things might be in jeopardy at occasional newsroom meetings held in a telling spot: the chapel of the now long-gone Winbigler Family Mortuary. This faded building on North Grand Avenue was next to the old, one-story Register office, replaced in 1987 by the five-story building visible from the 5 Freeway. Because the old Register site didn’t have enough space for the staff of 125 to meet, the dour pronouncement about the impending death of newspapers was accompanied by a whiff of embalming fluid.
Through the ’70s, we talked mostly about the imminent demise of the evening edition, an increasingly unread relic abandoned by workers who preferred TV as a way to digest the day’s events.
But throughout my career, I discovered newspapers were dying for other reasons, too. The department stores and grocery chains that once competed with one another by buying full-page ads began buying each other instead. Consolidation shrank the pool of potential advertisers. Plus, the newspaper’s base of dedicated readers was aging, and younger generations were defecting to competing media, notably television and later, far more lethally, the Internet.
The Register’s dilemma was complicated by the Los Angeles Times’ incursion into wealthy, advertising-rich Orange County. Through the ’80s and ’90s, the county was ground zero for an old-fashioned, white-hot newspaper war. Reporting staffs on both sides grew, local information flourished, and the Register won three Pulitzer Prizes. It made for a challenging, stressful, and exciting environment in which to work.
Still, the readership decline was relentless. Occasional one- to two-year hiccups in the economy inflicted damage, but there were so many leisure-time options in Orange County that the newspaper’s marketing research at one point determined that “lifestyle choices” were a significant rival for people’s time. So the Register turned to consultants to figure out how to stop the bleeding. For a hefty fee, they periodically would parachute in with slide shows, marked-up newspapers, and messianic fervor. Their advice, delivered with zeal for as long as the consulting contracts lasted, involved countless variations: Stories are too long! Stories are too boring! Write more about people, less about institutions! Photos, graphics, and eye-catching design are potential salvations!
While their recommendations often differed, all of the consultants agreed it was vital to attack the problems immediately. They weren’t necessarily wrong about the industry in general or the Register in particular, but it’s clear in hindsight they were handing out bailing buckets to the Titanic’s crew.
If earlier decades were a preview for a scary movie, the U.S. newspaper industry experienced a 3-D disaster epic in the 2000s—a backdrop that makes Kushner’s faith in print especially astounding. A single set of figures captures the horror: In 2000, American newspapers generated $48.7 billion in total advertising revenue; by 2011, the most recent full year on the books, that figure was $23.9 billion—less than half. Although the steepest declines came between 2005 and 2011, newspapers suffered a large, rarely mentioned blow in 2004: The National Do Not Call Registry blocked newspaper marketers from contacting their most loyal customer base—older people who still preferred their news in print.
The bigger catastrophe, by far, was access to the Internet. With each passing year, real-time information could be pulled up faster and faster on computersand, later, on smartphones. Where previous generations had gradually, but steadily left newspapers for television, the under-35 crowd now stampeded into the digital world.
Seeing this, the newspaper industry made a desperate mid-decade gamble to give away its content on homegrown websites—for free. The theory was that the Internet would become an advertising-driven media, and that online advertising revenue would replace print advertising.
That’s not what happened. Online advertising thrived in some places, but not on newspaper websites. Plus, rates for online ads were so cheap that newspapers couldn’t get anything close to what they had earned from print advertising.
While the Register was racked with those near-biblical plagues, it also suffered an equally deadly Old Testament ill: generational fratricide. The paper was purchased in 1935 by Ohio transplant R.C. Hoiles, and it became the flagship of Hoiles’ privately held Freedom Newspapers, which later became Freedom Communications Inc. At its peak, the media chain owned 33 dailies, some 70 weeklies, and eight TV stations across the country.
Hoiles’ descendants couldn’t get along, though. Four generations on, in the mid-2000s, the Orange County branch of the family and its allies decided to buy out their disaffected relatives, using the Register’s parent company as collateral. And when the general economy went into a tailspin and credit markets began contracting in late 2007, the institutions holding the company’s loans came calling. In September 2009, Freedom entered Chapter 11, owing $770.6 million to lenders. Investors and bankers took over the company when it emerged from bankruptcy in April 2010 with $325 million in debt still on its books. Most of the chain’s other publications and all of its TV stations were sold during the last two years.
Meanwhile, in mid-2007, the newsroom’s mandate changed. Stories were to be published first on the website, and then repurposed for the next day’s print edition. What sounded like a mere procedural switch represented a tectonic shift in the content that appeared in the newspaper: coverage conceived and designed for a Web audience of younger online-addicted readers. The presumption was that advertisers who wanted to reach this attractive target group would follow.
While printing a quality newspaper is largely a reflection of enterprise reporting, creating a successful website proved more akin to running a beauty contest. The goal was less about reporting the day’s events and explaining what they meant, and more about posting the news of the minute as quickly as possible to attract attention. Some traditional coverage—including real estate, crime, sports, and hyperlocal coverage of community news—met the new standards and survived. Topics such as higher education, religion, and ethnic communities largely vanished; in their place came a rise in coverage of lightweight and not necessarily local topics, such as video game companies, the fast-food industry, and consumer deals.
Perhaps the most notorious coverage at the Register was smirkingly referred to in-house as the “T&A beat.” Superficially, it seemed straightforward: cover Irvine-based Allergan, the company primarily known for Botox. In practice, the “In Your Face” blog was a nonstop cavalcade of speculation on which celebrities had had plastic surgery, with tsk-tsking about how good the work was or wasn’t. Headlines such as “Tara Reid Parties, Acts, Copes With Bad Breast Surgery” and “Golden Globes Plastic Surgery Preview” abounded. With its cleavage-filled slide shows, the beat consistently drew top page views. Where for more than three-quarters of a century the paper had been about appealing to readers in Orange County, it now was slavishly courting online viewers anywhere it could find them.
Meantime, home-delivery subscriptions fell to fewer than 270,000 by mid-2012. Strangely, at this point, the Register was among the nation’s 20 largest newspapers in circulation, primarily because so many others had lost even more readers. The paper’s finances remained—as always—a guarded secret, but the diminished size of the paper, a reliable mirror of advertising, left little question about its shrinking revenue.
Through the bankruptcy and the malaise that followed, Ken Brusic, the Register’s editor and (briefly) interim publisher, resisted staffing cuts demanded by the institutional ownership and the corporate board it had installed. Brusic had ascended during a two-decade-plus career at the paper by pushing for quality journalism, though he also directed its doomed march online alongside the rest of the industry. His most notable achievement during the dark years probably was minimizing, on a myriad of fronts, collateral damage caused by the bankruptcy. Nonetheless, by early last year he had grudgingly cut the newsroom staff to about 180, fewer than half the number at its peak a decade earlier.
On June 11, the news broke: The flagship Register and the six remaining papers in the chain had been sold—but not to the rumored suitor, the recently arrived owner of the San Diego Union-Tribune who extolled online journalism and who’d gobbled up, and then gutted, the staff of a rival paper in north San Diego County. Instead, it was some guy from Boston with a background in the greeting card business who’d never run a newspaper, and who’d failed at attempts to buy The Boston Globe for a reported $200 million, as well as a Maine newspaper group that included the Portland Press Herald; the latter came to naught when negotiations with a labor union failed. The still-staunchly libertarian Register has never been unionized.
Sitting behind his inherited, archaic, oversized desk in the publisher’s fifth-floor corner office, Aaron Kushner mulls the persistent “newspapers are dying” prophecy. Instead of rejecting the theory out of hand, he cites the latest chilling report: The industry had just suffered its 25th-straight losing quarter. “That is the sign of an industry that is dying,” he says. “You can’t consistently lose revenue and have a healthy business.”
I shift in my chair, startled that the new owner is conceding the industry’s ill health. But I know he isn’t throwing in the towel. Just 15 minutes earlier in the downstairs lobby, I’d run into the latest exampleof his financial commitment to quality—sportswriter Rich Hammond. He was returning after stints at the Los Angeles Daily News and the Los Angeles Kings hockey team to be the new USC beat reporter. Hammond stared at me like he’d seen one of Jacob Marley’s ghosts and blurted: “You hired me 14 years ago!”
Now Hammond joins at least 20 other former Register reporters and editors who were part of a professional diaspora as times got lean. Kushner opened the checkbook for Brusic, who has aggressively expanded space in the paper and hired more than 75 journalists from all over the region. Notable among many talented reporters and editors, the paper is hiring nationally known film critic and columnist Michael Sragow, who has written for The New Yorker, The New York Times, and, most recently, The Baltimore Sun. He’s scheduled to start this month.
Kushner brings me back to the moment with a sweep of his hand that seems to encompass both the bulky piece of furniture in front of him and the entire enterprise. “No market, no institution is perfect, obviously. But on balance it was very quickly clear that the Register and Orange County were fabulous for what we want to do.”
In the second half of 2012, readers began waking up to a newspaper that itself was waking up. A beefed-up daily business section, an expanded sports report, and growing entertainment coverage were robust resurrections in previously shrinking priorities. In addition to the already frenzied pace of growth, Kushner wants to add magazines as well. The company for years has published the monthly Coast, and while talk of a new weekly magazine has subsided, plans are apparent to launch special-interest niche titles. In December, the paper announced it had purchased Churm Media in Newport Beach, which publishes OC Metro, OC Family, Southland Golf, and two other titles, which now will be distributed with the paper.
The paper’s 24 community sections have grown from tabloid to broadsheet format, with entire staffs hired to fill them. New topics in its pages range from local weddings to cars to social events. Many of these sections now are printed on a premium paper called Hi-Brite, which costs 15 percent more than the usual newsprint stock. Most pages—even the two pages of daily comics—gleam with color. Most gratifying of all, for me, has been the re-emergence of enterprise reporting, including a masterful series of articles reporting allegations that a couple of local Pop Warner football coaches paid their young players to knock out opposing youngsters during games, and a marvelously written cultural appreciation of the Twinkie the day after its maker became financially extinct.
Though little has emerged about Kushner’s background, he occasionally reveals his Georgia roots by an unexpected “y’all”; he competed on the gymnastics team at Stanford, where he graduated with honors with a B.A. in economics; he lives in Wellesley, Mass., with his wife and three kids, whom he intends to move to Orange County when the school year is over. In person, he is polite and incisive. His overall seriousness periodically is softened by a high, unsettling laugh that reminds me of Jon Stewart’s when he encounters some new folly of mankind.
Kushner is as guarded about his professional background as he is about his plans. According to a 2011 story in Boston magazine, in 1999 he sold his first business venture, a Bay Area dotcom he created called mymove.com that helped people change their address. Both the seller and buyer were private entities, so the financial details were never made public. He re-emerged in 2002 as CEO and shareholder of a small, closely held Massachusetts greeting card company called Marian Heath. The company has three brands of cards—one biblically centered—and describes itself as specializing in “art-based social expression products reflecting the unique and changing voices of consumers.”
Kushner left that company in 2009 and spent two years researching the business of newspapers. During that time, he created and now is CEO of 2100 Trust LLC, a private investment consortium about which little is known—including how much money is behind it. But 2100 Trust agreed to put its money where Kushner’s mouth is and buy the Register for an unspecified amount.
Kushner says he prefers to look forward rather than reflect on previous deals. After elaborating on the industry’s problems, he declares something I find entirely hopeful: “I don’t believe that ‘newspapers are dying’ is fated as such.”
His financial model for keeping his reborn Register alive is complicated. Reduced to the barest bones, it’s fundamentally this: The newspaper now will generate revenue from two sources. In addition to its traditional stream from local advertising, he intends to tap a well that never before generated much profit for American newspapers: subscribers.
It’s hard to convey how much that word causes eye-rolling among industry experts. Search Kushner’s name and the Register online and most of the stories about him buying the paper include analysts’ comments that are, at best, skeptical about a financial model in which a large share of revenue comes from what Kushner charges readers. Newspapers historically have discounted prices to lure readers, because the more readers they have, the more attractive they are to deep-pocketed advertisers.
A key to Kushner’s “subscriber model” hinges on people paying for higher quality information, whether in print or online. New subscribers who sign up for one year now pay $7 a week, or $364 annually, to get the paper delivered to their homes. Online pricing has yet to be set. Existing annual subscribers can renew their paper at this rate, but will receive a percentage discount if they previously paid less.
New subscribers will pay the full amount, and, with fewer than one in 10 O.C. residents currently receiving the paper at home, that’s where Kushner sees potential revenue growth. The ever-coy Register owner doesn’t address the specifics, but says he’s confident people in their mid-30s and older—what he calls “the sweet spot” demographic—will pay more for a newspaper if they receive a quality product for their money.
Skeptics about Kushner’s plan also populate his newsroom, but most of them passionately hope he is right and they are wrong. Others wonder why no other major American newspapers have made money charging readers a higher price during the past 75 years. Kushner doesn’t spend a lot of time on that; he’s not a historian nor, he’s quick to add, any kind of academic. He says he’s a pragmatist. Of his $7-a-week price, he says with a caroling laugh: “[It’s] less than a movie ticket, and I think we’re more entertaining.”
Then he leans back behind his dwarfing desk and echoes the passion of the manifesto he first preached in the newsroom last July. “I think Orange County understands value as much as it wants quality. The health of the local area, the vibrancy and breadth of the economic environment, and a really good sense of community here—it’s certainly a perfect spot to grow a paper the way we’re trying to do it.”
The Register landing on driveways today arguably is better than most of the nation’s regional newspapers. This is in part a testament to the continued decline and fall of papers elsewhere, a reality that now includes the diminished Los Angeles Times. But while the Register’s journalistic resurgence is compelling and significant, a critical question remains: Can value, quality, or anything sell traditional newspapers in the digital age?
It will take at least the rest of this year and probably part of 2014 before an answer begins to emerge. In the meantime, Orange County has one hell of a paper. And that long-held fear that newspapers are dying?
Over a Beer
Two Questions We’d Really Like Aaron Kushner to Answer, and One He Actually Did!
Really, dude, what did you pay for the Register? He’s never said; in response to an emailed question in late December, Kushner wrote “a lot.” Speculation has been rampant. In October, the Los Angeles Times printed an unattributed figure of “about $400 million” that was neither confirmed by Kushner nor anyone else. A back-of-the-envelope calculation by KPCC media writer Matthew DeBord in June came up with $156 million. In the hallways of the Register newsroom after the sale, speculators pegged the price as low as $40 million to $50 million.
Are you planning to stick around for the long haul? If Kushner’s unorthodox formula for generating revenue doesn’t work, some fear he might abruptly sell to cut losses. He wouldn’t really answer when we asked, but speaking to about 75 journalists at an Orange County Press Club event in November, Kushner spoke generally about his long-term commitment to the area, although his family still lives in Massachusetts. Co-owner and Register President Eric Spitz, who arrived with Kushner, bought a house and moved to Newport Beach shortly after the sale was completed.
But even if you stay, you still want The Boston Globe, right? Kushner is said to covet the paper where he still lives, and one theory holds that the Register is a proving ground for his subscriber model and a practice run for the Boston paper he tried to buy in 2011. In a written exchange about buying other papers across the country, he said, “There are only a few that have the strength and characteristics to potentially grow the way we are working to grow the Register.” Is the Globe one of these papers? “Yes.”
by Christopher Smith / illustration by John Ueland
To read the full story, or order a print or digital copy of the February 2013 issue, click here.